Brenna Carles drives along a winding country road in the Great Smoky Mountains, a get-rich real estate podcast playing on the speakers of her brand-new Lincoln SUV. Not long ago, Carles was belting out tunes at Nashville honky-tonks as she struggled to make it as a country singer. Now, at 32, she’s one of the region’s most successful mortgage brokers specializing in loans for vacation home rentals.
Carles, who started her company less than a year ago, says she’s embarrassed to admit how much she’s clearing these days: $100,000 a month, give or take, on track to earn $1 million this year. “People ask how much I make a year, I try to lie now, because I think people wouldn’t believe it,” she says.
For as long as the market allows, brokers, lenders, and investors are cashing in on the real estate boom in America’s prime vacation spots. They include Carles’s turf, near Dollywood theme park in Pigeon Forge, Tenn., as well as the areas around Disney parks, Colorado ski resorts, and Gulf of Mexico beaches in Texas and Alabama. It’s a fast-growing and potentially risky business, especially now, as the real estate market cools because of higher interest rates.
Landlords have assembled mini empires, managing them from afar using smartphone apps. Software engineers, middle managers, teachers, military personnel—even TikTok influencers—flood social media with stories of newfound wealth. They’re snapping up properties, often sight unseen from out of state, at once unheard-of prices. Some longtime residents complain that these investors are changing the character of their communities and making their housing unaffordable.
A special kind of business loan is fueling the boom. It lets borrowers, including the self-employed, qualify based not on their salaries but on the projected future income of the property they’re buying. In industry jargon, they’re known as “debt service coverage ratio” loans, referring to the way that rents must be at least enough to cover monthly mortgage payments. Last year investment-property loans without taxpayer backing totaled $9.9 billion, an eightfold increase since 2018, according to industry publication Inside Mortgage Finance’s analysis of mortgage bond offerings. The vast majority qualified because of rental income.
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