When considering the purchase of a log cabin in the Smokies, it is important to educate yourself on what makes an investment like this profitable. This is of course if you are intending to use your cabin as a rental unit while you are not using it. A good Realtor is going to put your interests first and make sure that you are educated in the whole process, what works well and what doesn’t, what has potential, and what to avoid. A great Realtor will do all this as well as protect you for entering a purchase that could be a mistake. Great Realtors do not have a grey area when it comes to ethics.
What To Look For When Buying A Log Cabin
I have listed, in no specific order, what I believe to be the most important things to consider when buying a log cabin in the Smoky Mountains.
1) Property Management For Your Log Cabin
One of the most important things to consider if you will be renting your cabin is who is going to manage it. There are 2 main options here. You can hire one of the hundreds of property management companies that we have here in Sevier County or you can handle things yourself with VRBO. If you decide to hire a professional company, you will most likely have to split your cabin’s gross income with them 60/40. That is 60% to you and 40% to them. You would still be responsible for other maintenance related items and upkeep, so after all is said and done you could be looking at something closer to 50/50. There are other splits out there like 70/30 and even the occasional 80/20 but understand that the services provided are scaled back with each tier.
It is important to interview different companies to see what they offer in regards to services and income. There are a few companies around that are guaranteeing first year income numbers depending on the age, setup, and location of your cabin. That speaks volumes to their marketing abilities. It is also important to find out if the management company owns cabins in the very community they are managing. While you would like to think that they would not show their units preferential treatment, you never know. The best source of factual information should come from your Realtor. He/she is going to be able to provide you with more than enough information if they have been selling log cabins for a while.
The other option is VRBO (Vacation Rentals By Owner). This can be a very lucrative way to manage your log cabin, living locally or not. You essentially control the inquiries, bookings, check-ins/outs, etc. There is no split to be had. For more info on this option you can read an in-depth article I wrote on Using VRBO to manage your log cabin for afar.
2) Location Of Your Log Cabin
Location, location, location. Many people visiting the Smoky Mountains want to stay in a log cabin and experience the secluded mountain stay that is synonymous with our area. Some want to be surrounded by trees, others want views from the heavens. They want all these things in addition to ample parking, decent roads, amenities, and proximity to the attractions. While it is not impossible to find all these things in a cabin, it can take some time and is not to be rushed.
3) Features & Amenities
As I stated above, renters want a certain experience when staying in the Smoky Mountains. The log cabin feel with modern amenities. While a successful cabin does not have to be state of the art, it does need a certain level of modernization. Some of the top things that renters look for are:
- Modern kitchen & appliances
- Game room/area
- Theater room
- Flat screen TVs
- Jacuzzi bath tubs and hot-tubs
- Lot of windows
- All wood interior
- Updated furniture
While all these amenities are great to have in your cabin, it is definitely not an “all of nothing” scenario. The goal is to find as many of these features for the best price possible. Which leads to the last bullet point, financing.
4) Financing Your log Cabin
If you intend to pay cash, then there is nothing to worry about and this point does not apply to you. If you aren’t, then financing is an important detail. There are a few ways to handle the financing of your log cabin. You can use the banking institution that you belong to, a local bank, or go through a mortgage broker. All 3 have there have their pros and cons but if left up to me, I am going to put you with a local broker that I have an established relationship with. The reason for this is simple. Brokers have access to more options and plans for financing than banks do. Local brokers also have a high degree of knowledge pertaining to the overnight log cabin rental market. That means that you are more likely to obtain a mortgage that will have better terms, payments, and fees than what you are likely to receive from a traditional bank. At the end of the day it is up to you, but understand and trust that a good Realtor is going to have key people that he/she trust to close deals that others may not be able to.
The Profitability Of Your Log Cabin
While all the points above will directly impact the profitability of your cabin, there are still exceptions to the rule. Understand that our market is seasonal to a degree. There will be bad months, good months, and great months. Every year the number of visitors to the Smoky Mountains increases. In 2013, the Great Smoky Mountains National Park had 9,364,695 visitors. That is the highest amount of visitors to any park with the “national park” designation according to the National Park Service’s website. If your cabin is not performing to your expectations it is not because of a lack of visitors. It may be time to make some changes in one or more of the areas I mentioned above.
For more information about purchasing a log cabin in the Smoky Mountains, contact me through this website or call me direct at 865-719-4930.
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