Am I really making $1 Million per new build?
An extremely deep dive into my numbers on my new builds (with receipts)
Don’t let the title fool you. I’m not naive. This gravy train will not last forever for me. After nearly 3 decades of investing (I bought my first stock when I was 20 back in 1995..Iomega for inquiring minds), I finally hit pay dirt in 2020. Looking back on all of my investing over the years in various stocks, ETF’s, Real Estate, my 401K and other things, by far, my most profitable venture has been starting my own businesses. My Ebay business (which morphed into Amazon) and eventually my Building Construction business. Needless to say, even with starting my Ebay/Amazon business as a side hustle, I had the “bug” to chase returns in other things. Maybe it was the allure of clicking a button to buy a hot stock that would 10X or maybe it was just the adrenaline rush of making fast money. I’m not exactly sure what internal psychological components led me to chasing quick returns, but for me, that strategy never really worked out. And I tried. A lot.
After taking a trip to the Smoky Mountains with my kids February of 2020 and seeing the decent returns cabin owners made, I decided to take a plunge into a new venture: AirBnB’s. I didn’t have a crystal ball to anticipate the insanity in Real Estate over the next few years. I just wanted something that would cash flow. During that time I was having some struggles at work, in my personal life, with my side hustle business.
A day after my daughters and I arrived to the Smokies, Amazon sent me an email saying they were shutting my e-commerce business down over a single product complaint (yes they are that brutal). Coincidentally at that time, I also really wanted to get out of corporate America. After 25 years of ups and downs in my career trajectory, the grind had started to wear me down. I was banking on my Amazon business to save me and give me an exit but I realized quickly that I couldn’t be 100% reliant on that income when it could be snatched at any given moment. Pretty much my world seemed to be imploding. I needed another alternative.
I remember it vividly. I woke up before my kids that morning in the cabin and checked my emails. I then opened the Amazon email. “We are temporarily suspending your listings…you can appeal this decision by…”. My heart sank. I began to panic over Amazon, I was stressed about my corporate job, I had gone through a divorce. Sitting on that couch in this small cabin, I started doing the math in my head of what I paid for the stay vs what the owner’s mortgage might be and thinking that I need to find another avenue for income.
I thought…“I paid $1,500 to stay in this cabin for 3 nights. Let me look on Zillow and see what the owner paid for this. Hmmm $200,000 in 2018. So they probably have a $1,200/month mortgage. Now, let me check their calendar. Every weekend is booked and even some days during the week. I just paid this guys mortgage with one weekend stay and these other weekends have paid his mortgage for the next 5 months. Maybe I should get some more info on this cabin rental market”.
Those were literally the thoughts going through my head that morning. I got on the phone with the cabin rental agency that I booked the cabin with and asked the agent if she knew any good realtors in the area. I just wanted to talk someone. She connected me with one and I officially had a realtor in the Smoky Mountains. The realtor presented me with quite a few cabin options. I analyzed the potential income vs all of the estimated expenses I would have with an AirBnb (Mortgage, Taxes, Insurance, Electric bill, Water bill, internet, cable, wear and tear) and decided to pull the trigger on my first one in March of 2020. Granted, my last real estate venture back in 2003 ended in disaster by 2008 with foreclosures, ruined credit, finances turned upside down, so I was very hesitant to ever touch real estate again. But after running the numbers every possible way, I decided to move forward.
And then the world shut down.
I thought to myself, “Here we go again. I just can’t freaking win with this real estate stuff!” and for about a month it felt like a bad dream. Lots of post closing regret, lots of worry, lots of anxiety. But then a remarkable thing happened. Pigeon Forge eased restrictions (their entire economy is based on travel revenue) and it was off to the races.
That was it. That was the life changer for me. One simple initial cabin purchase. I paid $280,000 for that place. Before I closed, I received multiple estimates on what the rental income would be from reputable cabin management companies. High end was $75,000/yr. Low end was $55,000/yr. If you’d like to see some photos of my basic cabin I bought in 2020, the address is: