A look at the second half of 2020 in Smoky Mountains real estate

As we move through the second half of the year, many of the people who contact us about buying cabins first ask if the challenges from COVID have affected the market. It’s a great question, and something we are constantly monitoring. The answer, though, is not really. The condition we were in with our market through most of 2019 still holds true today. We have a shortage of properties – especially with vacation cabins – and a flurry of ready, willing, and able buyers who are looking to own a second home or investment property in the Smokies. I do still expect there to be some people who need to get the cash out of their cabins for other life pursuits and may be under some pressure to sell, but this is still a sellers’ market. I don’t foresee that changing this year.

The number of buyers hasn’t dropped off, either. This is due to lowered interest rates on financing and a strong tourism market that keeps the rental cabin business profitable. Cabins are booked solid through September and we are seeing an uptick in the number of visitors to the area. Many of those bookings have been scheduled at the last minute. Our guests can stay in a cabin and practice social distancing just as easily as they can at home, so many people find that appealing.

New construction is still an option, too. It’s taking a little longer and it’s still as painful as ever. We’ve seen price increases in lumber and other materials, but lenders are still offering loans on new builds and the rates are as competitive as buying an existing cabin. So, it’s still a viable option if you’re in the position to be patient with the process of waiting to make your money back while it’s being built.

The most important thing to keep in mind is that the rental vacation market is still very strong. We are excited for people to come and visit our area, enjoy the national park, and enjoy the comforts of our vacation cabins. Just remember to be wary of your surroundings, be respectful of our residents and other guests in what is a difficult, stressful time for a lot of people, and bring your mask. But most of all, enjoy the treasures that are here, and enjoy the time with family and friends who come with you!

July featured ‘Cabin of the Month’ in Sherwood Forest

Sherwood Forest’s “Splash Lodge” is our featured “Cabin of the Month” for July!

Splash Lodge is one-of-a-kind spacious 11-bedroom luxury cabin with all the amenities you could ask for or think of – a fantastic investment, and the cornerstone of the Sherwood Forest Resort! It is positioned right beside the resort pool for flat huge parking of buses and lots of guests! The drive to the resort offers easy access and no winding roads. With the most dramatic grand floor plan of the large cabins, it is open and airy. You have a large over-sized kitchen and a dining area that can accommodate up to 44 guests. The cabin also comes equipped with a game loft, a game room, and a theater that is second to none offering a 60′ TV- luxurious tiered seating! Hot tubs are located on the outside decks, but the best of all: a huge indoor pool anchors the fun! It absolutely doesn’t get any better than this!

Over 8,000 square feet of the most upscale design and appointments possible. This cabin is sold fully furnished. The owner’s expectation is this cabin will bring in gross rental of $300,000 by the end of the year. (The owner has another large cabin that generates this level of revenue and this cabin has just been switched to that same program.)

To schedule a showing at this cabin, call my team line at 865-654-2111. To learn more about the cabin, click or tap here.

Looking to save on your tax bill?

I’m excited to share with you information on a new law that went into effect a few weeks ago to help us vacation cabin owners as a result of the COVID pandemic we are working our way through.

The law, called the CARES Act, includes a provision that will allow cabin owners – and other businesses – to charge the losses against taxes we paid in previous years for up to the last five years. Some of the relief you can seek on your taxes under the CARES Act (as listed on the irs.gov website) include:

  • waiving the carryback period in the case of a net operating loss arising in a taxable year beginning after Dec. 31, 2017, and before Jan. 1, 2021,
  • disregarding certain amounts of foreign income subject to transition tax that would normally have been included as income during the five-year carryback period, and
  • waiving a carryback period, reducing a carryback period, or revoking an election to waive a carryback period for a taxable year that began before Jan. 1, 2018, and ended after Dec. 31, 2017.

I’m working with a company called ACRS (Accelerated Cost Recovery Solutions) that specializes in helping with tax reduction on vacation cabins through a process called Cost Segregation, “a strategy for accelerating depreciation, reducing taxes, and increasing cash flow,” as their company puts it. The process is simple. Every item in your cabin has a monetary depreciation value that can be determined by someone like ACRS. Whether it’s a pool table, a kitchen set, or even the lamp in the corner of the living room, all of these items can be checked to determine what the value will be for reducing your bill at tax time. Having this study done can save you a bundle, and you only pay about 10 percent of what you get back in taxes for the study.

You should talk to your tax attorney or CPA to see if a cost segregation study is right for you, but in the meantime if you’d like to learn more about it you can check out the ACRS website for a bit more explanation on how the study works.

Right now they are doing a study of my cabins to help me figure out where I can save on my tax bill.  I’ll let you know how it turns out!

The future of rental cabin investments

As we continue to navigate the global challenge of the coronavirus and its impact upon the economy, many are asking what the effect on the real estate market will be over the next few years. In a recent article, I shared about what we learned from the downturn in the last decade when we saw foreclosures and short sales. I don’t expect we will see that sort of thing this time around, for several reasons.

One of the main differences this time is the stimulus and business loan programs that are being offered. The federal government has already issued one-time payments to families – something that didn’t happen during the crash in the late 2000s – and they are considering more. Also, even people who aren’t normally eligible for unemployment are being allowed to sign up for it now due to loss of work. These stimulus packages, if they are all approved, will lead to people earning up to three times as much than they made when they were working – particularly those who were considered lower income earners. The result of this will be seen as early as the third quarter of next year, with an inflation increase of 3 to 4 percent. It will also probably lead to increases in mortgage rates during that same time period, probably closer to where they were before the current pandemic all began.

Right now, interest rates are incredibly low and it is a fantastic time to buy, especially if you are looking at options for long-term investment. As we move into a new season, property values for the strongest investments are expected to increase. Coupled with higher interest rates in that next season, the window of opportunity to buy will close.

On the sellers’ side of things, this is a fantastic time to sell if you own a investment or vacation/second home cabin. Inventory continues to be low and market prices are holding steady, however we know from our past experience that as summer approaches there will be people who need the cash equity from their cabins. Perhaps it was something they were using strictly as a vacation property or it wasn’t earning enough on rental to help the owners stay ahead of the mortgage payments. Those cabins will be priced below market value and their sales will impact appraisal values on cabins that are sold after. So sometime around September we will begin to see a slight shift in appraisal values. Cabins that continue to cash flow will be less likely to be sold during this time, and so inventory will continue to be low. This will also mean new construction will continue to be a popular option for many people.

And it will be worth the wait for the cabin to be built, as the new construction options will include newer, more popular amenities, upgraded materials and design to match what is most appealing for our guests. So when it is done it will be worth more than something that is older and outdated, and will generate more in gross revenue rental income as a result.

As always, I am always available to talk with you and answer any questions you may have about the current real estate and rental cabin market. Stay safe!

Newly built in Starr Crest Resort

The incredible craftsmanship and attention to detail creates the perfect blend of Smoky Mountain cabin getaway and contemporary rugged living in this 3-bedroom cabin! Its 180-degree (and then some!) views of the Great Smoky National Park from the 3 stories of decks, its soaring cathedral ceilings, handsome grey-stained tongue-and-groove wood floors, and modern finishes all bring this masterpiece together. The main floor boasts a spacious and open kitchen as well as dining and living spaces for easy entertaining and gathering. The generous master bedroom on the top floor features a wall of glass for privacy and allows you to take in the view while lounging in bed. The downstairs offers a common game and sitting area along with 2 bedrooms and full bath including a double vanity. All cabinets and vanities are painted maple with soft close hardware from Maddron Cabinetry.

This cabin, built this year, is located in Starr Crest Resort – one of the most popular resort destinations in the Pigeon Forge area!

Click or tap here to learn more about this cabin.

To schedule a showing, contact our team at 865-654-2111.

Introducing Lake Haven Resort at Douglas Lake

As we work our way through the challenges with the coronavirus, one question we are frequently asked is how the real estate market here is doing. Before this happened, we were in a sellers’ market due to a low number of properties for sale and a high demand among buyers. The result of that sellers’ market has been a strong focus on new construction with many new construction projects planned for this year.

That hasn’t changed. The need for new residential and vacation cabins is still there, and the good news is that there are developers and builders working to meet that demand. One of the areas we have been working with developers is a new resort at Douglas Lake. We are very excited to announce Lake Haven Resort as our most recent construction development project!

Work has already begun to create this gated community. Several of the cabins planned for the resort in the first phase of construction will have lake views in a high-ridge pristine park-like setting. These cabins will be built as one and two bedroom homes that can be placed on an overnight rental program with gross rental income projections of up to $40,000 depending on how much you use the cabin for yourself. As we move into the second phase, owners of cabins built in the current first phase will have the first option on owning in the second phase.

The purchase price for these cabins starts at $199,000 and we have several lenders who will finance the construction project. Contact us to find out more about this project and see if it is right for you!

Effects of coronavirus on Smoky Mountains tourism

The coronavirus has definitely taken most of us by surprise.  This is an unusual challenge we are facing as a nation and as a world community.   However, mankind has an amazing resilient nature.  In times of deep suffering and challenge we see what we are made of, and we often find sacrifice, love and honor in new and unusual places. 

Three years ago we weathered a major fire that burst out of the National Park, just as we were recovering from an economic downturn that had hit the nation.  We found then that we were “Mountain Strong” and I believe we will find that we still are.  And I am sure that we will also find that “God’s Grace is still Amazing!” as well.

Sevier County has always been the destination to “GO TO” when there is uncertainty.  When the terrorist attacks of 9-11 of 2001 made flying overseas or across the nation seemed highly risky we became the go to- vacation destination.  Even a few weeks ago when cruises seemed like not such a good pick- vacationers reported then that they drove to “their Smoky Mountains” instead.  I expect that to continue through this time as we wind down the coronavirus threat throughout the summer. 

I think we can expect that large gatherings will continue to be avoided.  Hotels and close quarter venues will not be popular for some time, probably until the end of the year.  We will continue to have large crowed entertainment areas opening very slowly or sitting out the next tourist season.  Outdoor events, hikes, camping and nature herself will be the focus of family or group getaways. 

Cabins that have their own entertainment centers in them will rise in popularity as a destination in themselves.   A luxury cabin will allow for private dining and safe cooking, something we have come to take for granted, and that may become a special amenity in itself or at least a comfort.  I for one would rather cook with a view!

The Great Smoky Mountains are within one day’s driving distance for 75% of the population of the US, making transportation by car easy.   This will be in our favor.  We are the most visited National Park giving freely its beauty and rest to America without any charge.   The Great Smokies will continue to be and may even be stronger.   We ended 2019 with 12.5 million visitors to our National Park.  That was over a million more than any other year.  The good news for cabin owners is that we could reduce that number significantly and still have an amazing rental revenue for our overnight rental cabins.  

If the manner in which we were able to work through the last economic downturn is any indication at all we will weather this challenge as well.  The last downturn hit many tourist destinations hard but it did not affect the luxury cabin rental market. 

Hotels and low end cabins and chalets were negatively affected however.  The budget renter is often hit the hardest when there is a crisis.  They often do not have savings, they can struggle with discretionary income when jobs are squeezed and they will often not have the money to travel.   I think we can expect the same for this crisis.    

We have three months in our calendar where visitation to our area is at its lowest: January after the first week, the month of May and the last two weeks of August (with the exception of Labor Day weekend) and the mid two weeks of September.  

This April and May I expect to be very quiet.  If you are a cabin owner prepare to not count on much income in May;  plan to come and stay yourself should the coronavirus allow!  That or send your favorite cleaner to do a deep clean in exchange for a complementary stay.  Or if you have a friend that lays tile or is a splendid decorator send them to work on your cabin. 

Take heart – we noticed that in the last challenge, the high-end cabins that were special, taken care of and updated did not drop off in rental revenue.   However, they did take rental revenue away from the outdated cabins; cabins that have not been keeping up with amenities and décor will feel the pressure to compete with a smaller pool of renters as we pull out of this crisis.

With this in mind if you purchased a cabin ten years ago and have not spent money updating it, you should perhaps consider selling it now or updating it.  Do not sit back but proactively place yourself in a strong position for this next season.  Now is still a good time to sell as we may have hit the peak in appreciation for this year.  We still have the sold comparables from this last season to price your cabin at the top of its value.  

When times are tough people love to retreat together, refresh, renew and let nature encourage their souls.  We did not see Americans stop vacationing during the downturn.  They didn’t buy as many souvenirs but they did visit their Smokies.   I expect the same this time.

Entering a new season in 2020

I hope you and your family are staying safe as we navigate the global challenge of the coronavirus.

As a cabin owner, it’s important to me to keep you updated as to the values of your real estate in the Great Smoky Mountains. This is a very unusual time, and a very difficult time to predict what the aftermath of this crisis is going to mean to real estate values. However, we do have data from our last challenge with the National Park Wildfires. And, we have insights that we gained as we worked our way through the national economic downturn more than 10 years ago. So, we can see ahead at least to the end of this year.

To understand it a little better, let’s look at where we were right before this all began. We just came through the first quarter of 2020, with record sales and high values. Visitation to our area and occupancy rates broke records. We saw over 12.5 million visitors to the National Park (setting a new record). We climbed to the top of the market in terms of property values and reached pre-economic downturn figures. Inventory continued to be down being a part of keeping values high. Then the coronavirus happened…

So what to expect?  Of course April and May will be very extremely quiet. The National Park is closed at the moment as well as all our large venues, Dollywood Theme Park, our shows, our convention centers.  Rental income will be fairly dismal.

We believe two new sellers emerge out of this crisis.  Most of our cabin owners have significant equity in their cabins. We are fairly certain that there is going to be flurry of cabin sellers over the summer. These new sellers are going to use their cabin equity through a sale to help their families heal financially. The other seller is a second home owner who did not make a purchase that pays for itself and will need to sell as their discretionary income will not allow them to continue this luxury as the rental market makes a comeback. It will be about the middle of the summer before these sales will be recorded. This is important as these sales will almost surely drive values down. However we expect there to be continued demand among buyers.  So it’s not likely that we will see dramatic shortsales or high rates of foreclosures the way we did in the downturn. We believe that lending will continue to offer low rates making it attractive and possible for buyers to purchase. We think some of the more creative loans will disappear and banks will become more conservative on terms and approvals of loans. But healthy sales will continue but not at the level of 2019.

Therefore, we are going to recommend that if selling is to your advantage you go ahead and get ahead of this group.  If you are in a position to hold your property we recommend that you remodel, deep clean, enjoy your property. We are here for you if you want to discuss this in more detail.  We are working from home at the moment! But so are you! My cell is 865-765-6157, or you can email me at deborahkorlin@gmail.com – text is always wonderful as well. 

In the meantime, if you have time and want to read more sign up for my monthly email newsletter and get on my blog site.  I will continue to follow the results of this crisis and what it means to Smoky Mountain Real Estate values.  We will also update you on events as we open the National Park again and all our attractions, shopping and restaurants in the Gatlinburg/Pigeon Forge area.  We will also list investment opportunities as they appear, featuring homes and cabins currently on the market.  If you have money to invest in a cabin, let us know that as well. We have sellers who won’t list their properties on the market  publicly as they do not want their rental company to withdraw marketing efforts but they would sell.  They want to buy stocks – imagine that. They expect a rebound in several years, believe they will double their money, and then return to the Smokies to build some more over-night rental cabins with their profits! 

Goodness! It’s a crazy time no doubt!  My company and I sincerely hope and pray you are weathering this storm well and I know we will all appreciate the sunny days ahead.

Building in 2020

As we approach spring of 2020, we continue to see a strong sellers’ market for our vacation cabins here in the Smokies, meaning we have a low number of cabins for sale and a rising market value for properties with strong rental potential. Our theme for last year was “building is making a comeback,” and our theme for this year is “a season of building.” Many new construction projects planned in 2019 are now underway and more lots are continually being developed as places to construct cabins (and traditional homes, too).

If you currently own a vacation cabin, this is the best time to sell. The market value compared to building has not plateaued, and if you’ve owned your cabin for a while, it’s likely you could take what you make from your sale and put into a new construction. This will mean new amenities, updated designs in line with the current trends, and a concept utilizing both of those ideas that will translate into higher passive income for you. For example, cabins with indoor pools are performing better than ones without because they attract people at times of the year such as January when there are less people coming in for a visit. The National Park is closed during the winter, but people will still rent a cabin to go swimming in its indoor pool.

Those of you who have followed my newsletter will know our top local resorts are Sherwood Forest, Starr Crest, and Legacy Mountain. Last year, cabins in those resorts sold at prices that hadn’t been seen since before the downturn in 2008. Along with that, we saw the time to receive an accepted offer for many cabins – not just in those resorts, but in general – drop from a few weeks to a few days. This trend is continuing even now. So if you’re thinking about selling, now is the time.

One of the first steps to take in considering selling is to see for yourself what your cabin is worth in today’s market and compare it to the price you paid when you bought it. We can definitely help you with finding those two things out! Just give us a call or send an email or text. I look forward to hearing from you! I can be reached at 865-765-6157 or 865-654-2111, or by email at deborah@deborahkorlin.us.  You will be pleasantly surprised by what you discover.

And if you’re considering buying, this is a great time for you as well if you are able to make the decision quickly. I’ve talked before about how to put the strongest offer forward for the cabin you want. Although prices are higher, the rental income for these properties continues to be strong. You will want to hold onto the property for as long as possible until you reach a point where you can sell it and invest the money in what you have planned for your next season, whether that is a bigger cabin or another life goal you are working toward. Our tourism industry attracted a record number of people in the last year, with totals breaking more than 12 million people. And we know that the majority of people who come here want to stay in a vacation cabin.

If as a buyer you are more interested in building, that is definitely an option. The most important thing to keep in mind is that you will have to wait a little while to start making money, as it takes between six to nine months to build. Some builders are financing their projects and then selling when completed, but most are requiring buyers to secure their own construction loans to fund the project.

Remember, now is the time.

Resort cabin is ready to rent!

If you’re looking for an investment that is ready to go, you won’t want to miss seeing this recently remodeled cabin at Hidden Springs resort! The basement is finished, with a newly added game room and additional bedroom! The cabin’s recessed hot tub and generous game room provide plenty of space for guests to relax and take in the mountain location of this home. Just minutes from Dollywood and Pigeon Forge, this cabin is conveniently located within a short drive of the area’s major attractions! Resort features and indoor and outdoor pool that allows guests to swim year round!

To learn more about this cabin, click or tap here.

To schedule a showing at this cabin, call or text our team line at 865-654-2111.