An investor bought two vacation cabins in 2022 — now they're staring down a $150k loss at full asking price. Here's the better way to own real estate

Two things went wrong here, and it had nothing to do with the cabins. The first problem is what happened to cabin prices in Gatlinburg. The second is what happens when you want your money back out of one — and that’s what you should know before you buy.

Why the cabin math stopped working

Gatlinburg was one of the towns the pandemic turned upside down. Using Zillow data, Business Insider found home values there more than doubled in two years.

Then the returns dried up.

Katelyn Warren, a Gatlinburg agent, works with people buying cabins to rent out, and she tells them to aim for 10%. For example, if they buy a cabin for, say $500,000, it should pull in $50,000 a year in bookings. She told Business Insider that most of her buyers are now looking at 7% or 8%, and that’s just too low to drag them in.

Borrowing costs the buyer more now, too. The 30-year fixed mortgage averaged 7.28% in the week ending Oct. 1, Freddie Mac reported, up from 6.34% a year ago. Whoever buys these cabins is financing them at a rate the current owners never had to pay.

Big Bear Lake, California, is going through the same thing. Gary Doss, an agent there, told Business Insider that most of his sellers this year are people who bought during 2021 and 2022, and that people are in no rush to buy because they can just wait for the price to come down.

There’s a cabin in Gatlinburg, 317 Matterhorn Drive, that went up for sale in January 2024 at $850,000. It’s still for sale. The owners have cut the price to just under $600,000, and Kenney is the second agent they’ve hired to move it.

“We’re just chasing the market at this point,” he told Business Insider.

Real estate you can sell the same day

If you want to own real estate, you can do so without buying up risky properties like cabins, despite how charming they may seem in the moment.

You can own real estate without owning a building. Real estate investment trusts (REITs) are companies that buy property and collect the rent, and you buy a piece of one the same way you’d buy a share of any company.

The U.S. Securities and Exchange Commission (SEC) describes an investment in publicly traded REITs as typically liquid — you buy and sell the shares like any listed stock. To qualify as an REIT, a company has to distribute at least 90% of its taxable income to shareholders each year.