Cabin rentals. Anyone have experience in this?

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Cabin rentals. Anyone have experience in this?

Jack Abbott
Rental Property Investor · Cleveland, OH · Member since 2018 · 23 posts · 12 votes

Interested in hearing from anyone that has bought or developed cabin rentals on wooded lots. Hoping someone on BP has some insight into this area of rentals. Ohio West Virginia Tennessee

Thanks in advance to you all!

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John UnderwoodPro Member
Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
7y

I think you would do much better to find existing properties that are under market that need a little TLC than building new.

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  • Avery CarlBusiness Member
    Real Estate Agent · USA · Member since 2016 · 909 posts · 1k+ votes
    7y

    Hey Jack! I’ve got 5 vacation rental cabins, and they do really well, but they are in an area with heavy tourist traffic. Are you asking for advice on finding an area with high tourist traffic to do this? Or do you already have land you’re looking to put cabins on somewhere? There are a lot of people on this forum who have cabin rentals, but without some context it’s hard to give a relevant answer.

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  • Julie McCoy
    Real Estate Agent · Sevierville, TN · Member since 2015 · 1k+ posts · 1k+ votes
    7y

    @Jack Abbott I've got three cabins on wooded lots in the Smokies in Tennessee - like @Avery Carl's, they're located in a place with tons of tourist traffic, and they do really well.  I bought them, haven't done any developing.

    2Reply
  • Jack Abbott
    OP
    Rental Property Investor · Cleveland, OH · Member since 2018 · 23 posts · 12 votes
    7y

    @Avery Carl

    I do not currently have a location. Looking into the smoky mountain TN region. Initially just trying to get any background on buying existing as apposed to building them out. I have zero experience in vacation rentals but ideally I would like to build one to live in and then eventually others to rent. If you put single rent cabins on a single piece of property is that considered commercial?

    Thanks for your response !

    1Reply
  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    7y

    I think you would do much better to find existing properties that are under market that need a little TLC than building new.

    4Reply
  • Avery CarlBusiness Member
    Real Estate Agent · USA · Member since 2016 · 909 posts · 1k+ votes
    7y

    @Jack Abbott we see multiple cabins on a single parcel on a decently regular basis out here.  As long as they have some privacy, it shouldn't affect their rentability, but it could present some complications when you go to sell it.  So that's not a terrible strategy if you're aware of those complications.

    As for buying existing, not sure what size you are interested in, but as a general rule, you can expect a 20% cash on cash return when using a conventional 20% down loan.  

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  • Ken Latchers
    Hatfield, PA · Member since 2012 · 1k+ posts · 629 votes
    7y

    Make sure you understand/follow all zoning, code enforcement, fire safety, and short term rental regulations totally, especially if building new. 

    STR isn't about getting a property. It is about understanding the philosophy well, choosing a property well and location, Etc. It is not something you rush into, regardless of some of the simple sayers on this form. At least you were considering owning it yourself.

    In addition, for such a major investment, are you really just going to ask some people you don't know and then run out and buy something?

    I would stop trying to rush, and sit down and read all the posts in this short term rental thread for the last couple of years. Finding a property manager who will suck 30% or so of your revenue versus remotely managing, using the online travel agency / listing sites along with their benefits and drawbacks, taxes, etcetera

    Don't just jump into a place cuz it seems hot. Some of those hot places in 3 years may be saturated driving down rent. And if you decide to be somewhere, you may want to get future properties there instead of spreading across the country.

    2Reply
  • Michael BaumPro Member
    Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
    7y

    @Jack Abbott you should talk to @Avery Carl. She is the queen of STR in the Smokies! Her and her husband Lucas are full of knowledge and experience.

    I am just starting to search for places in the area as well.

    3Reply
  • Tanner Marsey
    Rental Property Investor · San Diego, CA · Member since 2017 · 439 posts · 578 votes
    7y

    Want to jump into one of these also. A huge reservation for me is that if the economy tanks you can pretty much lose your shirt on this investment. Still considering though. If I can find something with the right numbers.

    0Reply
  • Jack Abbott
    OP
    Rental Property Investor · Cleveland, OH · Member since 2018 · 23 posts · 12 votes
    7y

    @Ken Latchers

    Thanks Ken.

    By no means am I looking to rush into anything. I am a disciplined investor. This is just a jumping off point for information.

    Thank you for your reply!

    It is a lot to consider and I realize there will be different issues from owning SFR. My goal is long term and only if I choose to relocate to the area to self manage.

    0Reply
  • Patrick HancockBusiness Member
    Real Estate Broker · Orlando, FL · Member since 2018 · 101 posts · 108 votes
    7y

    @Avery Carl just sent you a request to connect. I’ve been looking for a cabin for quite some time now and would love to get some feedback from you.

    [email protected]407-808-0899
    Pat Hancock at Thomas Lynne 527 Reviews
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    2Reply
  • Julie McCoy
    Real Estate Agent · Sevierville, TN · Member since 2015 · 1k+ posts · 1k+ votes
    7y
    Originally posted by @Tanner Marsey:

    Want to jump into one of these also. A huge reservation for me is that if the economy tanks you can pretty much lose your shirt on this investment. Still considering though. If I can find something with the right numbers.

     As we all know, investments come with risks and no return is guaranteed.  However, not all vacation rental markets are created equal.  Some of the reasons I've invested in the Smokies are: A) it's withstood the test of time as a vacation destination, having been popular longer than I've been alive; B) it's a drive-to destination, not a fly-to one, making it more accessible to people from a variety of financial backgrounds; and C) it's an affordable destination, so it's less likely to feel a big squeeze during recession than a high priced market might.  And finally D) it's more affordable to buy in than many vacation rental markets, so any losses are minimized.

    Of course it's all about the numbers, but the numbers in the Smokies are tough to beat.

    3Reply
  • John MorganPro Member
    Rental Property Investor · Grand Prairie, TX · Member since 2018 · 2k+ posts · 2k+ votes
    7y

    My first real estate purchase was a nice two bedroom cabin in Branson, MO four years ago I paid 130k for. I pay a management company 30%!to deal with it since we live out of state. It does well 8 or 9 months out of the year. If you average all my expenses including management fees, it nets me around 15k/year. Not bad, not great. It's fun to visit for free any time we want which is nice too. Since then, I've bought 6 SFR in my local area that have a much higher ROI. But it's fun to have a nice clean cabin we can visit any time we want and have someone else take care of it.

    1Reply
  • Cheryl Vargas
    Rental Property Investor · Rohnert Park, CA · Member since 2014 · 307 posts · 160 votes
    7y

    @John Morgan

    It sounds like you are getting an amazing return on your Branson, MO STR!

    $15k net after paying 30% to the manager is very good!

    0Reply
  • Ken Latchers
    Hatfield, PA · Member since 2012 · 1k+ posts · 629 votes
    7y
    That is my mantra. I live a block from my two primary short-term rentals,  so I can take care of  illegal parties or regulatory  questions or small fixes or cleaning / handy person no shows  or checking in  people if I want. No 30% cost property manager I don't know when software can take care of other issues.

    I buy low cost properties in a tourist town with population centers nearby.  I do better then the numbers shown by those In the Smokies or Florida

    Originally posted by @John Morgan:

    Since then, I've bought 6 SFR in my local area that have a much higher ROI.

    0Reply
  • John MorganPro Member
    Rental Property Investor · Grand Prairie, TX · Member since 2018 · 2k+ posts · 2k+ votes
    7y

    @Cheryl Vargas

    Yes, 15k isn’t bad after paying 30% to a management company. It grossed 30k last year and 33k the year before. But I end up paying about half that amount to the management company , utilities, cable, internet, inspections, maintenance, taxes, insurance etc. So I calculate I walk away with about half the gross income when it’s all said and done. 

    And fortunately it has increased in value 75k in the last 4 years. I just did a cash out refi to buy a SFR for cash that will net me $500/ month more after this refi loan expenses.

    2Reply
  • Timothy Doenges
    Real Estate Agent · Mount Nebo, WV · Member since 2017 · 174 posts · 68 votes
    7y

    We have a four-unit cabin rental under contract, to close later this month. The beauty of our purchase is that we are buying for STR, but in the event that the economy ranks, we can still rent out as a four-plex and cash flow. Just make sure you run your numbers and have a few exit strategies and/or contingency plans in case economy goes sour.

    1Reply
  • Paul Sandhu
    Investor · The worst town to live in, KS · Member since 2016 · 4k+ posts · 4k+ votes
    7y

    There is a mobile home park with about 20 cabins, just outside of this town.  Their and my clientele is temporary workers in the area (refinery contractors).  I've heard the manger of those cabins lament how people stay in the cabins a week or two, and then move out and in to one of Paul's places.  

    If there is something in your market that is better than a cabin, and at the same cost; you might want to pursue that strategy.

    Oh, the previous owner of the cabins sold them 2 years ago.  He wasn't making money.

    0Reply
  • Julie McCoy
    Real Estate Agent · Sevierville, TN · Member since 2015 · 1k+ posts · 1k+ votes
    7y
    Originally posted by @John Morgan:

    My first real estate purchase was a nice two bedroom cabin in Branson, MO four years ago I paid 130k for. I pay a management company 30%!to deal with it since we live out of state. It does well 8 or 9 months out of the year. If you average all my expenses including management fees, it nets me around 15k/year. Not bad, not great. It's fun to visit for free any time we want which is nice too. Since then, I've bought 6 SFR in my local area that have a much higher ROI. But it's fun to have a nice clean cabin we can visit any time we want and have someone else take care of it.

     That's a fantastic return what with the property manager taking such a big cut.  Long-distance self-managing isn't difficult if you ever decide you want to keep that other 30% yourself - just find yourself a really good local housekeeper and handyman.  That's how I manage all four of mine.

    1Reply
  • Jack Abbott
    OP
    Rental Property Investor · Cleveland, OH · Member since 2018 · 23 posts · 12 votes
    7y

    Thanks for all the input! 

    I am planning a trip down to the TN area to do some "boots on the ground" research.  If anyone has any other helpful info or leads on areas I should be looking, areas to avoid etc it would be greatly appreciated.  

    0Reply
  • Chuck Kramer
    Orlando, FL · Member since 2017 · 241 posts · 254 votes
    7y

    I try to steer remote owners away from building here in the Smokies (I am in Gatlinburg for the moment) as getting good and reliable construction teams is incredibly difficult And expensive. You really have to be here on too of them to get things done. Just went thru a major rehab and went through 6 “Reliable” contractors and took over a year. There has been a building boom here and big money is sucking up all the decent local tradespeople. Time to complete on new construction is running 12-24 months on average. Longer if within city limits.

    Even though market has appreciated astronomically, you can still get decent prices on homes that will provide a good ROI. Look at buying initially. Buying will mean paying from $160-220 a sq ft depending on the home. Building at this time is estimated to cost $180-220 sq ft.

    This is very much a wilderness area still and unless you are inside city limits, there are few permits and inspections needed when building; which makes it even more important to have a good contractor.

    As for economy tanking, their are already some food threads on BP discussing it and I posted quite a bit about performance here during the recession. Bottom line was that visitor count stayed steady at around 9.5-10 million people. Rentals did well overall here. Yes, there were lots of foreclosures but they were due to other reasons; especially how people financed their cabin purchases back then. In fact, they continued to do so well that many local banks here kept the homes setup and operating as rentals rather than sell them.

    Smokies is a good area to invest in STR, but not necessarily LTR.

    2Reply
  • Account Closed
    Investor · FL · Member since 2016 · 332 posts · 388 votes
    7y

    @Jack Abbott I had one construction complete last month, one final inspection is next week and another will complete in Oct/Nov and all from 7.5 hrs away. My long term strategy is to have only properties with magnificent views. I am willing to wait for the build time for it. My costs for build (not including lot price) is $125-$145 a sq ft. This does not include furniture, hot tub ($4k), decorations and startup supplies. Build times 9-14 months. Do not build your dream cabin to rent or else you will get frustrated over time when renters mess something up. I reccomend buying existing cabins for 99% of investors. My strategy is different and I have 4 more lots to build out and looking at acquiring 2 more lots this year.

    2Reply
  • Jack Abbott
    OP
    Rental Property Investor · Cleveland, OH · Member since 2018 · 23 posts · 12 votes
    7y

    Thanks Chris, 

    Yes I agree, I think the best route for me is to find a pre-existing cabin. seems clear that a good view and "privacy" would be big factors for success in this area of rentals.  I would like to talk to you more about this if you have time for it down the road.  planning an visit of the area in August to get a better understanding of the area. 

    Thanks again to all of you that have responded!  keep it coming!  

    This business really does rely on the positive connections you make and my intention is to give more than I take from the community!

    Jack 

    0Reply
  • Luke CarlPro Member
    Rental Property Investor · Tennessee Florida · Member since 2016 · 4k+ posts · 5k+ votes
    7y

    @Jack Abbott I’ve got 2 with no view at all and they’re jam packed year round. I’m currently sitting at 96% occupancy.

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    2Reply
  • Matthew Irish-JonesBusiness Member
    Real Estate Agent · Buffalo, NY · Member since 2017 · 2k+ posts · 2k+ votes
    7y
    Hey, we have developed over 40 condos in the Adirondack mountains. I’m not sure I would consider them cabins. They are 4 bedroom 2 bathroom condo’s.
    Irish Jones Realty4.947 Reviews
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  • Rhonda Blue
    Real Estate Broker · East TN Loudon/Lenoir City/Tellico Village · Member since 2014 · 363 posts · 222 votes
    7y

    The market for current inventory can be tough to get into. You need to be ready to pounce. Building is always a great option. New lots are being sold in developments ALL over Wears Valley and also Pigeon Forge and the price per sq ft for already built cabins is running around 250+.

    A client just bought an acre lot with an amazing Wear's Valley view and is building a 3/3 for 157 a sq ft. Definitely an option and sharing a well. Another client just bought a 3 acres spread on top of Cabot Mtn and is building a 3/2 also dug their own well and it was not the normally guestimated 30k but only 6k. 

    Thought I'd share. Hopefully BP investors get to read before my comments get deleted.... Don't know why it keeps happening. 

    2Reply
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