Pioneer Vacation Rentals

Things to consider when buying your first cabin

Posted by on August 03, 2017

Now that you’ve set your budget, decided on what type of cabin you’re looking for and made the decision whether you’ll use a real estate agent or buyer’s agent, the next thing to do is buy your cabin.

When looking at prospective cabins, keep in mind exactly what you’re going to use the cabin for, whether it is a vacation cabin for you and your family, an investment or a future retirement home. These facts will color your decision.

Have you been preapproved for your mortgage? This is a very good idea. That way, you’ll know exactly how much you’ll be able to spend, what sort of down payment you’ll need and the interest rates and possibly payment amount.

Smoky Moujntain Cabin ViewHave you researched mortgage rates? Are the rates higher for buying a vacation rental cabin? More than likely they are. Have you decided where to get your mortgage? Online, local bank, Tennessee bank? Is your cabin near where you actually live? Or are you states away and prefer your local banking institution? You don’t have to use a Tennessee bank. You can use a banking institution where you live, providing they will approve a loan on a rental cabin in another state.


One consideration is the insurance on the rental cabin, which you’re banking institution will require for the loan. Not all insurance companies will insure a vacation rental cabin so it is best to contact an insurance company that is familiar with vacation rentals. Most will require a high liability clause, more than likely one million dollars, and the policy can cost a couple of thousand dollars a year depending on the size of the cabin. Not only will your banking institution require you to carry this insurance, your property management company, should you choose to use one, will also require it. If you’re buying a vacation rental cabin in the Great Smoky Mountains, it’s wise to use an insurance company in the Smokies since they are accustomed to the vacation rental market and the policies required for a rental cabin. They can be contacted after your purchase but you may want to keep in mind this aspect of the deal of buying a rental cabin.


Once you have chosen the cabin, the negotiations begin. You’ll want your representative to find out a few things before you make that first offer. Does the cabin have a rental history? How much income did it generate? Was it rented by owner or through a rental management company? What inspections do you want to have done? Is there a home warranty? Is there an HOA? Who is responsible for the taxes, HOA fees, etc. at the time of purchase? There’s so much to think about it does help to have someone representing your interests. Especially if you are buying a cabin in Tennessee and you don’t live there.


After you’ve discussed the purchase price and offer you want to make with your representative, whether it is a real estate agent or buyer’s agent, it’s time to make the first offer. There will be a ‘back and forth’ but your agent will handle all of the details after discussing with you what you’re willing to do. Can you do all of this over the phone or via email? Of course you can. Don’t be discouraged. Even signing contracts can be done over the internet.


One of the things that you can negotiate on is the price, of course. Are you willing to pay the asking price or just under? Your agent will guide you toward the right bid, whether it is thousands of dollars less, or only hundreds. The agent is familiar with the market, the neighborhood or resort area, and the latest selling prices of comparable cabins. Knowing these things will help tremendously in the bargaining process. Try to make the best deal you can but yet, don’t low-ball the offer because it may offend the seller if your offer is too low.


When making the offer, also consider what the home inspection has revealed. You, the buyer, will pay for the home inspection and depending on what it reveals, you can use this information to make negotiations with the seller. Does the cabin need a new roof, or perhaps needs the outside re-stained? Are there other problems such as pest infestations or the need for a new HVAC system? Have your agent negotiate with the seller on who pays for these things to be taken care of. Possibly the seller pays for some and you, the buyer, pay for others. Or even you pay for certain things and the seller pays for portions of the closing costs.


Is the cabin you’re interested in up to code? There are certain codes and standards for vacation rental cabins in the Smoky Mountains and some of these have changed since the wildfires of 2016. It is good to have the inspection include whether these matters have been seen to accordingly that way you, the buyer, will know if you need to bring the cabin up to the most recent codes for a vacation rental as part of your purchasing expenses. If you are going to use the cabin as a vacation rental, you will more than likely have to do this but if you are going to use it as a second, or vacation, home just for your family, it would be good to know if you can opt out of these codes since you won’t be renting it out to the public. It has been stated by some that if you are going to use your cabin as a vacation rental and you are within the city limits, you may need to install a sprinkler system in your cabin. This is an added expense if you are going to be renting the cabin out and you definitely want to know exactly what codes you’ll need to update the cabin to and that’s where your agent will come in to help you in determining exactly what needs done. Things like whether your deck railing is the right height or you have enough parking for the number of bedrooms, etc. will also be on the list of updates you may be required to take care of.


Have you had an inspection done for mold or pests? Two major issues you’ll want to address whether you’re using the cabin for a rental or for a residence are these two things. If mold or pests have been found, it would be good to work the remedies for these situations into the negotiations. It can be very expensive to remove mold from a home. It can also be expensive to take care of any pests that may be found. Carpenter bees are a problem for any log home and there are many ways to handle this situation.


If you are buying a log cabin, does the exterior need stripped and re-stained? Is it a necessary update or one that is just to satisfy your choice in color? If it’s necessary to preserve the cabin, negotiate it. If it’s your preference for color that may not be something you want to negotiate into the deal since the sellers may not want to change the color just to suit you.


What about the furnishings? Are you buying the cabin with all the furnishings included or only some of them? Or possibly you’re buying it completely empty and you’ll have the fun and excitement, not to mention expense, of furnishing it yourself? Normally, buying a cabin that has previously been on a rental program will include the furnishings currently in the cabin unless the seller asks for provisions to keep certain items. It will be up to you to negotiate if there are items the seller wants to keep. Your agent will help you negotiate for the furnishings since this is something your bank will more than likely not finance. The bank will have no interest in furnishings since it’s out of their range of service. And take note, when buying the furnishings, you’ll also want to insure them when you get your insurance policy.


There are many things to discuss with your real estate agent or your buyer’s agent before you sign the final deal and it’s good not to rush. Think about what you want to include or exclude in the deal for the cabin and what you’ll eventually end up using the cabin for before you come to a final decision on what you’ll end up paying in the long run. Owning a vacation rental cabin can be an exciting, new part of your life and the Great Smoky Mountains is such a wonderful vacation spot you’ll be sure to use the cabin yourself many, many times over the years. Don’t let the fact you’re from out of state stop you from buying that great cabin you’ve set your heart on having. It can be done and once all the paperwork and negotiations have been done, you’ll have the chance to enjoy your little piece of heaven in the Great Smoky Mountains of Tennessee.


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