862 Sourwood Dr

Gatlinburg, TN 37738

$775,000D-

3 bd · 3.0 ba · 1,774 sqft · Built 2018 · SingleFamily · Active · 106 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $4,995/mo
• Mortgage (P&I): −$4,064
• Tax + insurance: −$480
• HOA: −$47
• Vac / Maint / Mgmt: −$1,049
• Net cashflow: $-645/mo
• Annual: $-7,736/yr
• Cap rate: 5.29%
• Cash-on-cash: -3.56%
• DSCR: 0.84
• 1% rule: 0.64%
• Cash to close: $217,000

Investor read

• This is a 3-bed/3.0-bath single-family listed at $775k.
• At list price, monthly cash flow is $-645 ($-8k/yr) — negative.
• To cash-flow at today's rent, offer at most $661k (14.7% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $500k (35.5% below list).
• It's been on market 106 days — a 9% lower offer ($705k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $500k (35.5% below list) — sets the bar for 1% rule.
• Local home prices are declining (-3.0%/yr); year-one equity from $5k of loan paydown is wiped out by about $23k of value loss. Plan a longer hold.
• Location reads 73/100 on livability (#27 in TN) — a middle-class / working-renter tenant base. Strengths: commute A+, cost of living A; Watch: schools D-, crime F, amenities F.
• Sevier County (rural): math 31% / reading 28% proficiency, ranked #62 of 139 in TN (top 45%) — low school quality limits family demand, transient renter base, plan for 1-2y turnover.
• Market conditions: 696 active listings in the ZIP; 1 comparable units currently listed for rent nearby; 1,594 units permitted in Sevier County in 2024 (456 in 5+ unit buildings).
• Sevier County population projected at +22% by 2050 — long-run rental-demand tailwind backs the buy-and-hold thesis.
• 4 sale attempts with the ask held roughly flat each time — persistent listings suggest the price (not the market) is what's stuck; bring a comps-based counter.
• Climate carrying-cost: moderate wildfire risk — expect insurance premiums to compound above CPI over the hold.
• Cap rate 5.3% vs local median 1.3% in Gatlinburg — top-decile yield for the area; either an underpriced asset or a hidden risk that comps aren't pricing in. Stress-test before assuming the spread holds.

Questions for listing agent

• What do current leases actually rent for vs. the listed asking? Can we see a recent rent roll and the last 12 months of T-12 income?
• It's been on market 106 days. Have you received any prior offers? Is the seller open to a 36% concession, seller financing, or rate buy-down credit?
• What does the HOA fee cover, when was the last increase, and are there any pending special assessments or reserve-fund shortfalls?
• Why hasn't it sold? Are there any deal-killer items the seller is aware of (foundation, flood, title, zoning, code violations)?
• Is there a deadline driving the sale (1031 exchange, divorce, estate, relocation)? That informs how much negotiation room exists.
• Schools are D-rated, which usually means shorter tenancies and higher turnover. Who's the typical renter profile here, and what's been the actual vacancy rate?
• Crime grade is F in this area — have there been break-ins, vandalism, or insurance claims at this property in the last 3 years? What carrier currently insures it and at what premium?
• The area grade is low — what's the realistic commute time and amenity access for the typical tenant pool here? Any planned neighborhood developments (good or bad) we should know about?