Building is making a comeback

As we reach a point where listings are scarce, we are entering a new season where building is making a comeback! It is an exciting time, as we have not had much new construction since the downturn more than 10 years ago. Since that time, it’s been cheaper to buy than it has been to build, but these past few months we have seen that trend began to shift. The number of residential properties for sale in our market is the lowest it’s been in quite some time. This has resulted in prices – especially for vacation rental cabins – increasing significantly, finally reaching a point where they are selling for amounts during the peak times in the early 2000s.

The top 3 reasons to choose building over buying

Over the last year, we’ve seen many buyers become discouraged with the market prices, which is understandable. But if owning a vacation cabin is something you’d like to pursue, there are a lot of great reasons to consider building. The best reason to pick building over buying is that you can create your cabin to meet the current trends that make it as profitable as possible. For example, a cabin with an indoor pool will gross significantly more than a cabin without one, and there are options for building a cabin with an indoor pool at a price that makes sense. It doesn’t even have to be a big cabin like it once did as the price for building a 1-2 bedroom cabin is much more in line with where the prices for buying an existing cabin are now. Indoor pools pay for themselves.

Secondly, you can pick your location. That doesn’t sound like a big deal until you consider the fact that with so few cabins, the ones in the best locations that are priced correctly will have offers on them even before they are listed due to the high demand, or multiple offers on them within a day or 2 of being listed. But there is an abundance of lots in a variety of places and many of these have fantastic views. So with the number of lots so high, you can almost assuredly find a place that will have the surroundings you want, whether that be a wooded area or one up on top of a mountain where your guests can admire the view.

Third, lenders are providing competitive options for building as it becomes more popular. We’ve had several lenders reach out to us about their construction loan options in the last few months, some of whom have revamped what they’re doing to keep up with the changing market.

If you haven’t found the vacation cabin you are looking for, building may be the best option for you. We’d love to talk with you about how we approach new construction and help you find the perfect lot for your goals!

(Or if you just want to know more about the pros and cons of building, we are here to help with that, too!)

Selling in a sellers’ market can mean increasing your rental income

Many of you who have been keeping up with my monthly articles know that our market here in the Great Smoky Mountains is a sellers’ market, particularly in the area of vacation cabins that provide rental income. A good cabin with strong rental income potential – even when it isn’t already performing at the level that it can be producing – are under contract with a buyer in about a week. In some cases, real estate agents in the Smokies have buyers who are waiting for a cabin that fits their goals even before we get the listing, and so it’s not uncommon these days for a rental vacation cabin to be sold before it’s listed. It’s also not uncommon for a cabin to get multiple offers within a day or two of being listed and then being sold for the “highest and best” offer shortly after.

For those of you who own a cabin and are thinking about selling, this is awesome news! It means you can probably sell the cabin for quite a bit more than what you paid for it if you bought it after the housing market crash nearly 10 years ago. And if you bought it before the crash, I have great news for you, too: our market is reaching the price levels of that time, so you can sell it for what you paid. Just recently, our MLS saw a 2-bedroom cabin listing in Starr Crest for a little over $400,000. I haven’t seen a 2-bedroom cabin of that size around here go for that much since before the market crash in 2008!

Increasing your rental income

If you love your cabin and are blessed by the value its rental income is adding to your budget, maybe it’s time to start thinking about how you can turn that cabin into an even bigger profit. Many of our clients who worked with us during the downturn are now reinvesting their profits from the sale of their cabin into a bigger cabin, or one with better amenities such as an indoor swimming pool, that is opening up the opportunity for them to earn more rental income.

My staff and I would enjoy the opportunity to talk with you about how this works and determine if selling your cabin to buy a newer one is something that would be a great fit for your financial goals.

Call me at 865-765-6157 or Greg at 865-643-2103 and we will be glad to show you how you can increase your rental income.

Mountain home can be the perfect rental investment!

Our featured “Cabin of the Month” for February is this beautiful private mountain homemountain home situated in the heart of Wears Valley! Its gorgeous mountain views from the double back deck and an open spacious floor plan are perfect for entertaining a large group. With its 4 bedrooms each set up as master suites and large game room, this mountain home makes for the perfect overnight rental!
Conveniently located just 15 minutes from Pigeon Forge, this mountain home provides instant access to the newly opened Foothills Parkway addition! Located on easy to drive roads, plenty of privacy, and a mountain view all make this home a dream getaway for you and your guests!
If you’d like to know more about this property, click here.

If you’d like to schedule a showing at this mountain home, call or text me at 865-765-6157 or call or text my support line at 865-654-2111.

Custom built lodge offers investment potential

custom built lodge

This featured “Cabin of the Month,” a custom built lodge in Wears Valley, can easily be converted into an investment.

You’ll admire the stunning long range mountain views from this custom built lodge retreat located just 15 minutes from the Pigeon Forge Parkway and only 5 minutes from the “back door” entrance to the Great Smoky Mountains National Park.
Situated in the heart of Wears Valley, this 3-bedroom, 3-bath custom built lodge is built with soaring cathedral ceilings and walls of glass that give dramatic effect to the great room. Anchored by a handsome mountain stone fireplace, the custom built lodge’s spacious open kitchen flows through to the dining area with plenty of seating and space to entertain large groups. Views can be had from every room and every angle of the interior. This custom built lodge’s generous floor plan offers a private lofted master suite with a walk-in closet, bidet, dry cedar sauna, and attached office. The home’s 3 bonus rooms, recreation room, and wet bar are offered in the fully finished basement.
Outside, enjoy the landscaped yard and hundreds of feet of the spacious airy decks with multiple covered porches. This custom built lodge was built by the developer of Dogwood Farms for his own personal get-away- which means the attention to detail and quality will not disappoint. The unique and extremely rare pecky cypress tongue-and-groove gives this cabin the a rustic feel that provides Smoky Mountain living at its best! Gently rolling and level lot for a house seat, gives you room to romp with over 8 acres of your very own National Park-esque setting and is 100 percent private accompanied by an outdoor custom fire pit. The lot’s extra acreage offers actual build-able lots for additional cabins that would enjoy this same fantastic view.
Lastly, the cabin has recently received some updates, including a new roof, new stain, re-surfaced driveway, recently upgraded HVAC with 3 separate units (one for each floor), on demand gas hot water heaters, new main level carpet and porcelain tile, and updated bath plumbing, and lighting fixtures. This custom built lodge is move in-ready or just a few steps away from becoming a cash flowing second home!
To learn more about this property, click here.

If you’d like to schedule a visit to see the custom built lodge, please call me at 865-765-6157 or my support line at 865-654-2111.

Sherwood Forest resort investment cabin offers amazing opportunity

Our featured “Cabin of the Month” is this amazing investment cabin located in Sherwood Forest resort!

Sherwood Forest resort in Pigeon Forge is one of the top rental vacation investment cabinresorts in the Great Smoky Mountains! This 4 bedroom investment cabin comes with its own indoor pool and full theater setup, providing your guests with the very best of amenities needed to make an outstanding rental experience. Indoor pools in rental cabins generally pay for themselves, and cabins that have them can produce significantly more than those that don’t because they continue to attract guests in the cold winter months at the beginning of the year.
This fantastic investment property is only 5 years old and has a low HOA fee.
To learn more about this investment cabin, click here.

To schedule a showing at this investment cabin, call our office at 865-429-2121 or my support line at 865-654-2111.

Solving the appraisal challenge in an increasing market

When buying a home or vacation cabin, one of the most crucial steps in the process if you’re working with a lender is the appraisal. Appraising the value of a property can be one of the most challenging, and probably the most stressful, aspects of the process for buyers. This can be especially true in a market where appraisal values don’t reflect where the market is at in terms of purchase value. As I discussed in last month’s article, this is mostly because lender appraisers are looking at the value of the property in a different way than everyone else, and with a different purpose. The purpose of a lender appraisal is to determine how much the lender can sell the property for in the event of a foreclosure. So even though the buyer is paying for the appraisal, the appraiser making the determination is actually working for the lender.

In our market, as we continue to work with a low number of properties for sale, the sales price of cabins has continued to rapidly increase over the last 12 months. We’ve seen a slower pace on our local residential market, but home values are also increasing. If you as a buyer have an appraisal that comes in under the offer price, that doesn’t mean you won’t be able to buy the home. You and your agent have a few different options to help you work out a solution with the seller.

Ways to address the appraisal

The first thing I tell my buyers when the appraisal comes in lower than the purchase price is, “Don’t panic.” We look over the appraisal report and re-evaluate our own comparable group of sold listings to see if we’ve missed something about the property. An appraiser can go back as far as 12 months, and is required to first use anything that’s sold within the same subdivision or resort community. The appraiser is limited on what he or she can do to review those sold properties. They rely heavily on MLS and tax records, so when those documents aren’t completely up to date, it can skew the data in a way that might hurt your appraisal.

Once we are certain our offer was appropriate for the market, if we’re comfortable with it we will ask the seller to agree to reduce the price to match the appraisal value. Remember, the lender won’t borrow on more than what the home is determined by the appraiser to be worth, so if the seller won’t lower the price then the next choice will be to see if we can split the difference with the seller or simply agree to pay more out of pocket. So for example, if the purchase price is $200,000 but the appraiser determines the value of the property to be $190,000, then you would have to either get the seller to agree to reduce the price by up to $10,000 or work out how to pay that amount out of your own pocket.

As a last resort, we can try to work with the lender to resolve it, but the truth is it is very hard to get an appraisal value overturned once it has been determined. We absolutely cannot pressure appraisers to price the appraisal value of the property at the amount a buyer offers a seller.

Next month, I’ll share some ways I help sellers to price their property correctly so that the appraisal value meets the expectations correctly. In the meantime, if you have questions about appraisals or anything else regarding the local real estate market, I and my staff are always available!

Finding a Profitable Cabin

Are you looking to own a profitable cabin in the Smokies? Then this article is for you.

When buyers contact me about buying a vacation rental cabin that is at least partially for investment purposes, profitable cabinthe hottest question on their mind is how well a property will do as a rental! They are looking for a profitable cabin, and their focus is right where it needs to be. Finding a property that will perform well on rentals is essential! Sometimes the next thing I hear from them is, “I only want to look at cabins that have a great rental history.”

I love their spirit!  However, as I share at this point in the conversation with them, just because a cabin isn’t currently earning a high dollar amount, doesn’t mean it won’t. As a matter of fact, I usually am most interested in finding them a cabin that someone is making a mistake on because my staff and I are able to analyze the mistake and correct it.

The ability of a cabin to be profitable is based on a variety of criteria. Perhaps the current owners prefer to use the cabin more often than a new owner will. Maybe the cabin doesn’t have the right decor to attract guests. Sometimes it’s not being marketed as competitively as it could be. Once we identify the exact causes of a low rental income report, we can determine whether or not it’s something that can be corrected before we decide if this is the right cabin for you. If you purchase a profitable cabin that is already performing at the top of its potential, you are most likely going to pay the highest price possible. This is not usually how I like my buyers to spend their money. I love to find a cabin that we can purchase, say, for $300,000, then make about $10,000 worth of changes to make it a profitable cabin worth $350,000. And where it was doing a gross rental revenue each year of $40,000 before, now with our changes it is going to reach $60,000. That is the win we are looking for to make it a profitable cabin!

Over the years, I have put together a list of resorts based on discussions with past clients, with rental companies we maintain great relationships with, and from reviewing listings based on how they tend to perform on the rental market. From those discussions and reviews, I am able to keep track of how the rental cabin market is doing overall and which ones are producing the highest levels of income overall for their clients. When it comes to resorts, the ones that generally perform the best on the rental market are located in places that are easily accessible, have great mountain views or pristine Smoky Mountain forest views, are close to shopping and/or tourist attractions, or some combination of the above. While this is not always true for every single cabin, it is a great rule of thumb for our area.  One to two bedroom cabins on rental with the strongest performing resorts will be routinely earning up to $45,000 in gross rental income, while 3 to 4 bedroom cabins in the same locations will be performing around $60,000 on up. Larger cabins will produce $100,000 and above with the right combination of amenities, marketing, and views of the mountains!

Average rental incomes in profitable cabins

The “medium range” resorts tend to do a little more than half what the top-end resorts collect in rental income based on cabin size, number of rooms, and amenities. Meanwhile, 1 to 2 bedroom cabins at the lower end of gross rental amounts will bring in between $18,000 and $30,000 and 3 to 4 bedroom cabins will generally produce between $25,000 and $38,000, on average. With that being said, I do tell prospective buyers not to discount a cabin based on rental history – even if it’s in a lower producing area – until we’ve had a chance to look at why that might be happening. For example, if the cabin is on a high point in the resort and has a great view into the Smokies, it could produce a great deal more than the average for that particular area. Or maybe it’s being used primarily as a vacation destination for the owner during peak season. In that case, the next owner looking at it strictly for investment purposes will do far better with rental income than the current owner has. So it’s an art and not a science, but the performance of cabins can be predicted.

Know the amenities of a profitable cabin

The search for the “perfect” profitable cabin will be an analysis of a group of important characteristics. By the way, we do have a report that just targets those characteristics. It is called “What Makes a Profitable Cabin?” 

Buying property in a sellers’ market

We – like many communities around the country – are in a sellers’ market.
If you’ve discovered that finding the perfect vacation cabin or second home in the Smokies hasn’t been the dream you imagined this year, don’t fret – you aren’t alone.

We have had a shortage of properties for sale this year. Even now, there are only about 1,000 active market listings for sale in our local Great Smoky Mountains MLS association. At the same time, we have seen our number of buyers increase, but with less properties to consider, it’s definitely driven the demand, and the sales prices, up.

Winning the bid for the cabin in a seller's market isn't easy.However, if you’ve found a property your heart is set on, there’s hope. There are things you can do and ways you can approach the seller with an offer that will make them choose yours over everyone else’s. Here are few ways you can make the successful bid.

Be prepared to go above the asking price. This is just the reality in a sellers’ market. When supply isn’t keeping up with demand, the market value – what someone is willing to pay – inevitably goes up. We’ve seen a number of properties on the market sell for an amount above asking price, particularly when the property is in what agents will call a “multiple offer” situation. This is where the seller has received more than one offer, and instructed the agent to give all of the people making offers the chance to submit the very best offer they can within a set amount of time (usually a day or two). So if you had offered a little less than asking but someone else offered asking price or even just a couple of thousand dollars more, it’s more likely they will take that bid over yours.

Do anything you can to make your offer the most appealing. Going above asking price, particularly in a multiple offer situation, isn’t a guarantee you will win the bid. What matters the most is which offer looks to have the strongest chance of making it to closing. Can you buy the property with cash? If you can, that is usually the offer that will win. If not, then you will need to consider some other ways to make the offer more appealing. Get prequalified with a lender who will provide a letter. These days, lenders can get prequalification within five minutes, and most have an app where you can do it from the ease of your cell phone. Have a larger down payment or offer a higher escrow. Agree to take the property “as-is.” “As-is” is a real thing that happens frequently these days, but it doesn’t mean you’re stuck with the property if there’s something seriously wrong. You can still order a home inspection and go through the normal procedures, and if your inspector finds a problem that the two parties can’t resolve a way to fix, you can still will walk away from the purchase. Most sellers and their agents understand that if it is a serious issue with the property, it will have to be addressed if you decide not to buy the property after all. So that tends to make the seller a little more open to negotiating the repairs for those types of issues. And lastly…

Don’t wait to make the offer if it’s the one you really want. This is the hardest part of the home search for many buyers. Buying a home or cabin is a big decision and most people, understandably, want to take some time to think on the decision before they make an offer. Impulsive buying really goes against human nature, and rightly so. Unfortunately though, time is of the essence these days. While you’re sleeping on it, someone else is making an offer that could be accepted by the seller. It’s not uncommon for a buyer to miss out on the cabin or home they really want because they didn’t want to make an offer immediately.

The bottom line is, it’s a sellers’ market and will continue to be so for the foreseeable future.

Going into the home search with that understanding in mind will make the process of finding a home in a sellers’ market much less stressful for you and give you the edge in making the best, most attractive offer you can in order to win the bid for the home or cabin you really want.

Gatlinburg investment property is fantastic opportunity!

Our featured “Cabin of the Month” for June is a great investment property in Gatlinburg!

Measuring nearly 3,000 square feet in all, this investment property’s 4 bedrooms, 4 bathrooms and 2 half baths offer plenty of space for vacationing guests! Located right next to the National Park in Gatlinburg Falls Resort, this cabin is performing extremely well on the vacation rental program!Gatlinburg investment property
It’s open concept floor-plan is perfect for entertaining all of your guests. Equipped with multiple fireplaces, a home theater, and a game room offering a billiards table, air hockey, flat screen and arcade games, the guests at your investment property will never be bored! What’s more, all four bedrooms are set up as their own master suites with fireplaces and a television!
Outside, the cabin offers plenty of space for guests to relax and enjoy the outdoors on any of the three covered porches, either from the comfort of the hot tub on private back porch or while sitting by the fire pit in the back yard.
This investment property is nestled in a prime location with less than a 5 minute drive from Gatlinburg to Pigeon Forge and Dollywood!
If you have questions about or would like to visit this cabin, call me at 865-765-6157 or my support line at 865-654-2111.

You can learn more about this investment property here.

Enjoy the ‘Blue Smoke’ views of the Great Smoky Mountains

I am so excited! It’s that time of year when the Smoky Mountains show off that famous “Blue Smoke.”

Many of you are of Cherokee descent like me and it just seems right! The Cherokee called it “Land of the Blue Smoke.” Shaconage was their word for it.  You pronounce it “Sha-Kon-O-Heyblue smoke”!  Sounds so good, right?

When thinking about the best real estate investment ever, think about purchasing a cabin with a view of the Blue Smoke. The fact that it changes all day with the weather is superb.  Sometimes it disappears and then an hour later, mountains upon mountains appear like from nowhere.  It’s part of the joy that visitors have when they come. It is equivalent to buying beachfront property.  Of course, you may have to “wait” for the property to come along and sometimes there is a compromise on the fact the drive is a little “crazy”— but weigh it out. The drive can’t be too crazy. Maybe you should load up your grandmother and your two year old and see if any one throws up breakfast.  If so, no matter how amazing the view you need to pass. But if you can put it on your list of top wants in a property that would be good.

blue smoke

Just as a side note, where does all that blue smoke come from? Volatile organic compounds, or VOC, is fog from vegetation. The plants take in carbon dioxide and give off oxygen. The VOC’s refract light that results in gorgeous bluish tint.  They have a high vapor pressure, which means they can form vapors at room temperature. Millions of trees, bushes, and other plants create a concert of VOC’s and we have Shaconage. This is also shared with the Blue Ridge Mountain range. As I was born on the Blue Ridge Parkway in Galax, Virginia, perhaps it is in my blood. Some of you might know that Galax is an awesome mountain bush but also home of the Fiddler Festival known nationwide for great Bluegrass.

But back to great investments.  So what is a view worth in dollars and cents? An appraiser will often not give value for a “view,” but in reality a lot without a mountain view might be worth $40,000.  The same size lot on the top of that resort will be sold for $90,000.  And rental revenue from a cabin with no view will be $70,000 a year on a typical well outfitted 3-bedroom with a view. Add another $15,000 or more of gross revenue a year. It makes me love Shaconage even more!

However, do not despair if you cannot find the mountain top view of Blue Smoke. I have several alternatives for you that will get you very close to if not on the mountain top itself. I can help you find a cabin on a water amenity, such as a creek or waterfall, or perhaps a place on a small mountain with a lake of its own! Find a cabin with a pristine private view where your guests feel like they are Adam in Eve in the garden of Eden before they had kids! When you find the private setting, place a fire pit or a garden to meditate in, or a walking path to go exploring.  And last of all stack your cabin with fantastic amenities such as giant screens with a  home theater, crazy arcade games, driving games, shooting games, putt- putt courses, sauna’s, and gourmet kitchens to make our local chefs envious.

If you want to learn more about the science behind Blue Smoke, check out this article on the subject here.