Why Smaller Short-Term Rentals Could Beat Big Cabins in East Tennessee | Brandon Williams

Brandon Williams (00:00)
During the last seven years, everybody wanted to go big with their houses, with their investments as far as short-term rentals, the four bedrooms, the six bedrooms, the twelve. I’ve seen twenty bedrooms. It’s oversaturated. We are starving for one in two bedrooms. If one in two bedrooms are going to hit the occupancy rates much higher, and there’s a great need for those.

Scott Bursey (00:54)
Welcome back to the Real Estate Pros Podcast, powered by Investor Fuel. I’m your host, Scott Bursey. Glad you’re with us. Today we’re delighted to be joined by Brandon Williams, principal broker and founder of SCALE with LPT Realty in East Tennessee. Brandon brings nearly two decades of real estate experience since getting licensed in 2007. Listeners, you can expect a deep dive into high-level strategy, scaling a modern brokerage, Navigating residential and commercial markets with disciplined financial analysis and raising the standard of professional representation. Brandon, welcome to the show.

Brandon Williams (01:33)
Glad to be here.

Scott Bursey (01:34)
Excellent having you here, Brandon. And to help our listeners get up to speed. Please give us the 90 second highlight reel, if you will, of how your career ignited and where you’re pouring your fuel now.

Brandon Williams (01:47)
I got started in 2007. It was on a vacation happenstance. So we ended up coming to the area, loved the Gatlinburg and Pigeon Forge area. Decided to go into real estate, ended up moving here, and I’ve just developed my career over the years. Very investor driven. That’s what fuels me. I love to see people succeed and just continue to grow their portfolios out and make money. I really thrive off that and I love helping people build their portfolios.

Scott Bursey (02:12)
Thank you for highlighting your incredible journey. And Brandon, what really caught my attention about you was the way you’ve been able to combine a strong academic foundation, holding both an MBA and a Master of Science in Management and Leadership with hands on mastery across residential, short term rentals, land development, and commercial real estate. Expanding on that, curious to know how. What’s working best for you right now over at SCALE?

Brandon Williams (02:42)
Right now we’re really just focusing more on the individual investor, trying to help people grow their portfolios. I’ve got a lot of tools in place that we have discussing. I help people analyze short term rentals down to almost any metric. You can put in whatever the cost is of the properties down all of the loan aspects of it. It’ll calculate out the more mortgages and everything, all of your costs. And it just simply tells you whether or not it’s a good or bad investment. I can I’ve expanded that out to development management as well. I’ve helped developers with their marketing, helping to sell all their properties. And I’ve dabbled in some commercial. Commercial hasn’t been my focus primarily, but through the years I’ve gotten some commercial properties and stuff. But really short-term rental, helping that investor, whether they want to buy one cabin or fifty or a condo or whatever the case may be, that’s really been my fuel and what I’ve really driven to try to help people understand and make wiser decisions.

Scott Bursey (03:38)
If someone wanted to execute that, let’s say tomorrow, where should they start?

Brandon Williams (03:43)
If they wanted to take a look at just the cost perspective and get all of their numbers in line, I actually have a page on my website. It’s scale-group.net/analyzer. And you can put it all in yourself. You can and I I’ve tried to make everything as open and public as I possibly can because I want to educate people. That’s the primary thing I want to do. I want to make sure that they get the education that they need to make a wise decision. Of course, the information’s given to me, I will do a follow-up so we can do a deeper dive on the conversation. But that would really be the place to start is just to take a look at the analyzer. I’ve got a cost segregation on there as well. I’m not an expert on cost segregation, but the tools are in there just to give a guide. and you can get home valuations and everything. But and that’s to help the buyer and the seller on the home valuation. Because if you want to know what you feel like the house is worth, let’s run some comparables on it. Let’s make sure it’s a wise decision. then like we can dive into the cost of everything and make sure that the numbers work.

Scott Bursey (04:38)
Appreciate that excellent breakdown. And wondering, what is the biggest struggle in the business today in your market in East Tennessee?

Brandon Williams (04:47)
Well, really a lot of the cost is, outside influences with interest rates, fuel, everything like that, that’s affecting everyone. We’ve also experienced increase in prices during the COVID years, but there there’s two different markets and you’ve got the people who bought during COVID, you’ve got the people who either bought before or after. So we look at what’s called the absorption rate and I do an investor report every single month. That investor report does a deep dive into two different counties, Jefferson and Sevier, their neighboring counties, both are experiencing quite a bit of growth. Sevier County is my primary focus because that’s where Pigeon Forge, Gatlinburg, Dollywood, and everything is. And with that, I’m looking at the planning notes, I’m looking at what the developments are that are coming along, the different rules and regulations, I’m looking at median price points, I’m looking at everything involved. Going back to what one of the biggest threats is or problems, in that absorption rate that I was speaking of, it is broke down realistically into two different markets. You’ve got the people who are overpaid and are now still trying to capitalize on that overpayment or just simply recoup the money that they put in. Those houses are sitting, they’re sitting for eleven and a half, twelve, fourteen, sixteen months. And you have the people who bought pre-COVID or new construction, and they’re pricing, very competitively in comparison. They sell in 60 days. So you have to really understand the market, but on the surface it looks poorly. And that surface level metric is a very problematic thing if you’re looking at it and you’re trying to market. So you really need to understand, and that’s where I try to come in and educate people a little bit better. Sure, on paper things look one way, but you need to really dissect that and get in to know what’s going on. Is the market really suffering? Look around. Looks what look what’s being built. look at the commercial growth that’s happening around here. We’ve got the Catawba Indian group that bought 400 acres down next to the exit coming off of I-40. They’ve got a Sports Illustrated water resort that’s going in. There’s Bucee’s, the Old Smokey Stadium, the Torque Group has commissioned that to turn it into an amphitheater. You’ve got old attractions around here that are being re renovated into we’ve got a Nerf attraction I don’t know what all that is Dollywood’s committed five hundred million dollars over the next 10 years if you take a look at those things you’re not going to invest that type of commercial capital into an area that’s going to be depressed they’re putting more money in to get the repeat business along with the new business so we’re going to continue to see further investment so if you’re looking to develop property Just position it correctly. If you’re looking to capitalize on the vacation renter and you want to do short-term rental, that’s a good option. Hotels, they’re growing like weeds around here. So whatever it is that you’re looking at, as long as you measure it correctly and you take a look at, how many people come here with 12 and a half million visitors per year to the National Forest. Dollywood had their number one year. I think it was four or five million visitors for the year. Those numbers matter. Those matter, those matter more in my opinion, than what’s the cost of the property. That can be negotiated. We can get the cost in line, we can get the expenses in line and make sure a property or whatever investment it is going to make sense, but the area is not depressed. So there’s a lot of surface level stuff and a lot of headlines that you see that really hurt.

Scott Bursey (08:47)
And that makes total sense. Thinking about growth, Brandon, where are you seeing the best opportunity right now in the very competitive market in East Tennessee?

Brandon Williams (08:57)
Down around the 407 corridor, there’s going to be a lot. They’ve added a lot of roads in that people need to pay attention to. There’s Sevierville in Newport. They just completed a huge four or five-lane highway. That road’s going to be connecting. Lots of businesses are going to be going in there between Dandridge and White Pine. They just finished another major corridor. There’s going to be a lot of industrial stuff. If you’re looking for a residential investment, you want to be buying out in the White Pine Dandridge area because you’re going to see a lot of residential growth. It’s more of that. If you’re looking more from just a commercial, you want to get into your retail space, I would start looking at the 411 corridor going out towards Newport. And if you want to capitalize on the short-term rental, you would say around the Pigeon Forge in Dollywood. But you need to make a wise decision. You gotta make sure that you’re keeping up with customer demand, what the amenities they want, the outdoor experiences, keeping up with all of that, and that’s what I help with as well.

Scott Bursey (09:55)
Love hearing how you spot those angles. What does your next big move look like?

Brandon Williams (10:00)
I would say the next big move would be to really try to get some people in for more commercial development. find something that’s a little bit different. I’ve done as I had a few properties that I think would make good storage, monthly storage, doing R V parks. I’ve got some properties that I’ve identified that would make a great hunting lodge that, it’s 80 acres, put a hunting lodge on it, great recreation, very private. There’s opportunities, j just really growth that people don’t need to think really the individual unit. And if they’re thinking the individual unit, they need to go smaller. During the last seven years, everybody wanted to go big with their houses, with their investments as far as short-term rentals, the four bedrooms, the six bedrooms, the twelve. I’ve seen twenty bedrooms. It’s oversaturated. We are starving for one in two bedrooms. If one in two bedrooms are going to hit the occupancy rates much higher, and there’s a great need for those. So if you’re in the market to purchase, I would say and if you want to borrow buy a large cabin, unless you absolutely have to have it, I would say buy several small ones.

Scott Bursey (11:06)
Let’s shift gears here now. What are you most concerned about in this market?

Brandon Williams (11:11)
There again, that’s going back to the perception of the headlines. really just get with someone who’s knowledgeable, someone who really understands what’s moving the needle in this market, someone who’s paying attention to the road development, the infrastructure that’s being put into place. Look where those directional things are going and just don’t look at the numbers on surface level because that can really change and distort how you interpret things. You really want to get into Understanding what’s happening, where it’s happening, where the things are shifting. So looking at prices are coming down, like the median price point fell. The median price point didn’t fall because prices are coming down. The median price point fell because cheaper houses are selling. So the entry point level of purchase has grown significantly, which is encouraging, and the more expensive stuff is sitting. So it moves that needle because the median is not. what’s the value of the property. It’s how what’s the aggregate and almost average the median of those price points. So we’re seeing cheaper houses sell. And it it’s just a perception. There’s really a perception that people can get from looking at numbers without understanding them.

Scott Bursey (12:20)
Brandon, what could throw a wrench in your plans if you aren’t careful?

Brandon Williams (12:24)
There’s a lot of things. it all boils down to one simple thing. It’s cost. I say there’s a lot of things, but if we want to umbrella that, cost is the biggest driver. you see the increase in cost from interest rates to supplies to fuel, whatever the case may be. As soon as things start to inflate, the secondary market goes away, the investment market starts to soften. So if we start to see a depression in cost, then investor activity goes up. It’s just simple supply and demand, really. As cost goes down, demand’s going to go up. So if we can start to see things soften in that arena, which hopefully we will soon, nothing’s expensive now. People think it it’s expensive now because of the COVID era with interest rates and everything. Interest rates are really stabilized. Stabilized interest rates really around six to seven percent. And that’s a stabilized market. anything below that is highly aggressive. Anything above that, you’re getting into a much more depressed market. And it’s just that ideology of people understanding that and getting back to the reality of what a true healthy real estate market is.

Scott Bursey (13:22)
Very important to stay ahead of cost. And looking at raising the standard of brokerage representation, where are you excelling at hands down, Brandon?

Brandon Williams (13:32)
I think I really excel in the education aspect. That’s pretty much the fundamental of the whole basis of my model around SCALE. I want to educate the consumer. I want to educate the investor, the buyer, the seller, whatever. When we get into a transaction together, one of us, if not both of us, are going to leave more knowledgeable. Whether I’m learning from the investor or the buyer, the seller, or they’re learning from me. Hopefully, it’s them learning from me. Because I want to ensure that they understand everything step by step by step. most investors, especially in this area, a lot of them are one the first-time investors. They don’t really understand what it is that they’re getting into. And a lot of people take advantage of that. They’re chasing a sale. Every person that’s in sales wants to make a sell. I don’t want to make a sale that I feel bad about. so I will definitely discourage, if not completely talk an investor out if I don’t feel like the it’s a wise decision. I’ve done that multiple times in my career. And the whole idea is I don’t want you to buy one home or I don’t want you to invest one time. I want us to have a great relationship and you invest 50 times. So we can build your portfolio out. We can have that longevity of the relationship. And when you leave the table, you feel good about what you did. and then you see the fruits of that labor as the years go on.

Scott Bursey (14:49)
That is leadership in action. Brandon, if you could describe to our listeners, what does your professional network look like right now?

Brandon Williams (14:57)
I run a group called Southern Networking Partners and we have about a thousand members. We originally started that as a southeast based networking group, but we have expanded and opened up. We’ve got people in multiple countries all over, really try to connect people through that. We do some in person networking meetings. I attend some that are local around here and I b I actually travel between two different states, Georgia and Tennessee. Most of my business is in Tennessee, but I try to network in both Areas as much as I possibly can, get out to as many events. But Southern Networking Partners is something I’m really proud of. Me and a woman named Kristen Kyle. we brought this up about five years ago down in Georgia. There wasn’t there was a need for a local networking group, so that’s kind of how it spawned. Then we just continued to grow this out because I traveled so much. I was like, we don’t need to limit ourselves, we really need to expand that out. get to know as many people as you possibly can because you never know who knows who. And that’s really worked well for me. we’ve helped a lot of businesses grow. I like to do spotlights too. I used to do something similar to what you’re doing. I did it on a very local bit perspective where I would go out and I would interview business owners and what have you to try to help small businesses. I really like to see small businesses grow and that’s what Southern Networking Partners was all about.

Scott Bursey (16:11)
Appreciate you giving us a look into your circle. Brandon, let’s dive deep. What’s the one tactical piece of advice you’d give an operator trying to build long term value instead of just closing transactions?

Brandon Williams (16:25)
Know your product, know what you’re buying or you’re selling, be an expert in that. Make sure that you understand every possible avenue inside and out and any outside influences that are going to impact that. And if you’re an investor, you really need to be sure that you’re looking at your holding cost and your margins. if it’s works at a six percent Capitalization rate, what happens if you’re on a variable rate and goes up?