Investment Property or Vacation Cabin?

Are you thinking about buying a vacation cabin in the Smokies?

vacation cabinLast month, I wrote a blog about the key steps to helping you decide if you are ready to own a vacation cabin in the Great Smoky Mountains. If you are, congratulations! You are about to start your very own adventure. The next thing you need to decide is what you are going to do with your new piece of property once you claim it.

You have two ways to go with your “second home” cabin. The first option is to keep the vacation cabin as a personal treasure, refusing to share it with anyone but friends and family. Alternatively, you could decide to put your cabin on a rental program for visitors and tourists. That will be an appropriate choice for many of you. It’s tempting to keep the cabin to yourself in order to be able to enjoy it anytime you want. However, it is incredibly more lucrative to you allow a rental company to rent your vacation cabin out when you are not staying here. I also encourage vacation cabin owners interested in generating rental income to work with rental companies in the area. This way, you have someone watching after your vacation cabin day in and day out and you can generate substantial income that will pay for your mortgage, pay your utilities, and best of all, provide you a profit that will supplement your income.  If you are able, you may prefer to rent your vacation cabin out yourself through websites like Vacation Rental By Owner (VRBO) if you like. That is a whole subject for another article which I will cover in an upcoming blog.

For now, let’s look at the differences between holding our cabin for just you and your family and friends versus allowing others to rent it as a vacation cabin.

Here are several considerations I am frequently asked about when showing rental cabin property:

  • How hard are renters on a vacation cabin when they are staying in them – do I wish to share? Well it depends. The really good news is that many of the materials cabins are constructed out of are very, very durable. Actually, this is the largest objection our cabin dreamers have. “But the renters will tear up my cabin!” We have not found that to be the case if you will follow a few important guidelines. You will find that log walls and wood floors don’t scuff and show wear like your residence, which is full of dry wall and surfaces that damage easily. The tongue-in-groove is practically indestructible and the log railings are already distressed, so when a suitcase nicks them they look further aged – oh how beautiful! Stone fireplaces, hardwood floors, granite counter tops, slate looking ceramic tile, furniture that is made of twigs, log beds and bunks, etc. – these are all basic elements of cabins in the Smokies! So with a careful eye to choosing material that wears like iron you can maintain a cabin over many years and it will seem timeless.On the other hand, materials to avoid include Chinz, light weight fabrics on furniture, light colored, solid fabric, and flimsy, poorly made furniture. A good rule of thumb to remember is you might as well not even buy it if you will be replacing it. Instead of shiny, slick surfaces that show scratches, opt for heavy, already distressed finishes. Also, carpet is an absolute no-no. You just can’t keep it from staining unless it looks like cameo.So we’ve covered the décor and structure, but there are other factors to look at when answering the question, “How hard are renters on a vacation cabin”? Our experience has been that low-end vacation cabins renting for the lowest nightly rates tend to be treated the harshest. Also, cabins that would be attractive to “frat/sorority parties” fall in that category. The cabins most cared for by renters are those who cost the highest nightly rates. We also find that renters who pay for a vacation cabin in the higher price range don’t damage fine items. They know how to turn on a gas fireplace and light a grill, whereas the renter who is paying the discount rate often makes bad decisions that might end up damaging a vacation cabin. Therefore we encourage our owners to purchase as “nice” a cabin as possible and outfit it with as high quality and upscale of items as possible in order to appeal to the more discriminating, neat renter. This is not a perfect plan, but it is a really good one. Also, I would encourage you to pay attention to your décor – who are you attracting? The rental company you choose also plays a part in this. Who does your rental company market to? We find certain companies focus on “packing them in.” Their vacation cabins are as my grandma would say, “rode hard and put up wet”. You will need guidance so spend some time considering your rental company’s approach. We have a handful of companies that market to the “high end” and are very particular about who they rent to. Their vacation cabins are pristine when guests arrive and the guests rise to the occasion leaving the cabin in great shape.
  • Can I get into the cabin when I desire to use it myself? Yes, rental companies will allow you to block off anytime that you and your guests would like to come and enjoy a vacation. Most rental companies will not restrict you. If you are interested in realizing as much income as possible however, we advise that you plan your vacation in the “off–season” moments. Try to never come on the holidays. Actually, the nightly rental rates will sometimes double for holidays. If you can be spontaneous, the best option for you is to watch your booking online so you can run away to your mountain getaway between rental bookings. If you have a very difficult schedule and can only come when your responsibilities allow, it might be best to own a vacation cabin as a second home instead and just rent out to friends and family, or even no one at all! It can be your secret getaway that refreshess your life and gives you the energy for the high level at which you are required to perform day in and day out.
  • What about stolen items? Our clients report they have very little stolen. Though again, it seems to follow high end cabins vs. the Birds_Nest-14discount low end vacation cabin. Someone paying a high nightly rate doesn’t need your bear soap dish, but someone staying as “cheap as possible” may want to add to their savings by swiping a bear statue. Rental companies have an inventory list and are supposed to check it, but it is difficult and not always perfect. This is another reason that interviewing and checking reviews and references for rental companies is critical. We are happy to guide you to some wonderful companies to interview and consider. You might be surprised to find that our VRBO clients do the best. It seems that when a renter talks to the owner they feel a heightened since of responsibility and accountability.If you stomach is turning over just reading this month’s installment in the series and your imagination is going wild, then you need to really reconsider whether a second home is a better choice for you than an investment cabin. You can make money another way and enjoy your vacation run away!
  • Is maintaining a cabin a nightmare? Is it intense? Is it expensive? Maintenance is important as this is an investment and also will bring more rental income if it is in tip-top shape. But here’s the good news – we have a huge local industry built around maintaining property for long-distance owners. Most of our cabins are owned by out-of-town folks. Around here, there is someone to do everything. We even have people in the Smokies region who are willing to work as supervisors. These are people you can hire to check in on your cabin. They will send you pictures, organize and arrange your cabin, and coordinate maintenance. If you are working with a rental company, they also will be onboard for helping with this aspect. If instead you love to take care of property yourself – if you are a “do-it-yourself” type ready to go with a paint brush in hand, if a shower to tile just makes you smile, then you can save money, make money, and enjoy the Smoky Mountain all at one time. (If this describes you, then you are probably a really good candidate for VRBO.) It isn’t extremely expensive to maintain a cabin. You do need to budget for a really good high end staining of the exterior every 5 years. Don’t skimp on the stain either, Sikens is a product all others are compared to. If you go cheap, it will need restaining in 2 years.While we’re on the subject of exterior cabin maintenance, you will also need to keep it under a pest inspection service contract. Wood bees and other insects can destroy a cabin in short order if someone isn’t keeping it treated. Every once in a while, a deep clean needs to be done and windows reached and cleaned.

So that’s it. Making money with cabins is such a wonderful way to enjoy your vacation home, and can give you the resources you need to enjoy a vacation of your own! But it’s important to go into the cabin buying process with your eyes wide open. I hope I have given you some items to consider that may help you decide if you are ready to own a vacation cabin overnight rental. Just a warning, they are contagious. I have many owners who after getting their feet wet with one now own three and four.

Of course, I also have very happy second home owners who wouldn’t think of allowing someone in their special mountain home. They too are benefiting from owning a cabin. Whichever way you decide to go with it, cabins are meant to be enjoyed, so there’s no wrong decision as long as you are happy owning one. If you don’t think you will enjoy it, then that’s okay, too – it’s not for everyone.

If you would like to learn more about owning a vacation cabin or if you have other real estate related questions, please call my support line at 865-654-2111 or my office at 865-429-2121.

Please follow and like us:
Facebook
Facebook
Pinterest
Pinterest
RSS
Follow by Email
Subscribe to Deborah Korlin's Newsletter
Subscribe

Leave a Reply

Your email address will not be published. Required fields are marked *