My Tennessee cabin grossed $41k last year and I still wrote a check at the end

The $14k on $385k is a 3.6% cap rate and that is the real answer. The asset is priced like a long-term appreciation play, not an income play, and Sevier County got bid up hard in 2021 and 2022 to where the numbers never penciled for cash flow at any reasonable rate. Even at 5% on that loan you are still barely breakeven. Before I decided the asset itself is the problem I would want to know if $41k gross is actually the ceiling or whether pricing, seasonality, or a weak listing is leaving money on the table. If you have already optimized and $41k is real, I would sell into whatever demand is left in that market rather than wait three years for a refi that gets you to flat.

The ratio is the part I keep coming back to when I read deals like this. I've been going through underwriting docs on a few Tennessee mountain properties this past year trying to understand what good actually looks like before I put capital anywhere, and the ones that penciled at purchase were coming in at $18k to $22k pre-debt on properties in the $280k to $320k range. That gap between those numbers and yours is where I'd focus, not the rate.

The rate problem is real but it's also kind of a distraction from what I think the operating number is already telling you. If rates dropped to 5.5% tomorrow your payment falls to roughly $2,100, which turns your negative $3,800 into about negative $700. You're still writing a check, just a smaller one. To actually flip positive at 7.4% you'd need pre-debt closer to $31k on that loan, which on a $41k gross means your expense ratio would have to tighten significantly or your revenue would have to grow about 50 percent. I'm not saying sell, because I genuinely don't know Sevier County inventory dynamics well enough to say that with any confidence. But I'd want to know whether that $14k has been flat over two or three years or whether it's been climbing, because a cabin trending from $10k to $14k pre-debt is a different story than one that's been sitting at $14k since you bought it.

That $14k pre-debt number is doing a lot of work carrying this whole thesis and I'm not sure it holds up. Comparable cabins I've been tracking in Wears Valley and Gatlinburg proper, similar bedroom counts and similar amenity stacks, are running $18k to $22k operating profit on purchase prices in that same $350 to $400k range, so either this property is underperforming on the revenue side or the expense load is heavier than typical. Before you pin everything on rate relief, I'd want to know if that $41k gross is already showing a ceiling or if there's legitimate upside from better management or calendar optimization. Because if the asset itself can realistically push to $20k pre-debt, the math at a 6.5% refi looks very different than it does right now. A $3,800 annual loss on $385k is not catastrophic to hold if the property is genuinely underearning, but if $14k is the actual ceiling on this cabin, no refi gets you to a number that makes sense.

Disagree that rates are the core problem here. If rates dropped to 5% your payment would be around $2,065 and you'd still be underwater by roughly $800 a month, so refinancing doesn't actually solve it. The asset needs to earn more, not borrow cheaper. Sevier County is oversaturated and a lot of cabins that looked like $55-60k gross properties in 2021 are running $38-44k today, so I'd be stress-testing whether you can push revenue before I'd be sitting and waiting on the Fed.