Closing next week. What to do?

Question

I'm closing on my first vacation rental property next week. What all do I need to do such as getting the HOA and electricity changed over to my name?

Avery Carl · Answer

Your agent should have been able to get this information for you, but it's pretty basic:

1. Call the electric company and ask what the process is for changing it to your name

2. Decide on your cable/internet company, (have your agent ask if the seller can transfer the current service if it's one you like), if they won't transfer, call your favorite provider and ask if they service that address and set it up

3. The title company should be able to track down the HOA contact and get you hooked up with them, or the agent for the seller should be able to get it from the seller as well

4. If you are in Pigeon Forge or Gatlinburg, which I suspect you are, you're probably on a well and a septic system so no company to call there to switch service, although I do recommend getting the septic pumped immediately upon closing

5. If, as I suspect, you are in Pigeon Forge or Gatlinburg, get it off the local PM immediately :)  You'll cash flow a SIGNIFICANTLY higher amount without them

Nate Morris · Answer

You may want to take a close look at your insurance on the home as well as your legal entity holding title (LLC, etc.) If you are 95% booked that's awesome. Are you also booking well for next 6 months? You may want to look at your pricing, policies, etc.

As for VR, its all about amazing pictures and great reviews. Does your PM drive good reviews and experiences for your guests? We are looking at amenity packages as well as add-on features such as "Fill the Frig" and "Book an adventure" concierge-light type activities.

Make sure your tax person is leveraging every advantage for you in terms of depreciation schedules on furniture, maximizing your involvement as an "active RE investor", etc, etc.

Finally, as you build your team of PM, cleaner, handyman, etc. make sure you retain a fair amount of control. Are the booking reviews in your name or the property managers. Is the cleaning person taking care of replacement items well. Do you know your clients and what their likes/dislikes of the place are.

Last but not least, book a vacation exchange with another owner for your next adventure.

Good luck!

Chuck Kramer · Answer

@Glenn Bates I am also assuming the property is in Sevier County?

Will you be closing remotely or in person? Is the property in an LLC or your name? Here are some tips I have picked up as I close on yet another property this week:

CABLE/INTERNET: In this area, none are outstanding but the most commonly available is Spectrum. ATT and Comast have limited footprints in the area and can be worth checking into IF you are in their service area. Satellite is popular but you end up paying a lot more for Internet and phone if you unbundle the TV, making satellite not as good an option as it should be. If you are in the area, go into the local cable office in-person. The service is radically different as they are significantly more accommodating, and some areas here have a discount level that you can only get in the office/in-person. If you need a service visit to get going, they can usually do it the same day. They also understand the rental business here and will help to just transition the existing service so your renters in-place are not affected. The folks on the 800 numbers don't understand that side of the business and will very likely mess it up.

Sevier County Electric can be really easy, or really hard. If the property is in your name, they should do it easily after completing 2 forms and the deposit will likely be small. If you close with an LLC (as you should always do on investment properties) it is much more difficult and will require a higher deposit. Be prepared with copies of your Articles of Organization, Operating Agreement, and SS-4 letter from the IRS with your EIN assignment.

Water depends on exactly where your home is. Some are in HOA or PUDS that provide water service included in your fees. If you are in City of Gatlinburg, you need to contact them by phone and mention your closing information. They will be sure the water is not shut off when seller notifies them of change. If in the city, you will likely need to go into the Finance Office (1st floor) and get the rental permit transferred over to your name. Similar steps may be needed if you are in the Sevierville or Pigeon Forge city limits. If you are NOT inside any city limits, then it gets easier.

You will also need a Sevier County Business license and, if inside city limits, one form the city as well. They are $15 each. You will need to register at REVENUE.TN.GOV for a TN business license and tax payment accounts. Remember you have TN Sales Tax, local sales tax, and lodging tax that are passed to your renters. The Gross sales tax and state gross tax and excise tax does not get passed to renters. Taxes are filed monthly by 20th of the following month (example: May is due by June 20). State gross sales tax is annual and due by Aprl 15. Note that TN State Gross Tax and Excise tax is only if you are operating as an LLC.

Not sure if your home has a propane tank. If so, determine which company owns and leases the tank. It is possible, also, that it predates leasing and the tank is owned by the homeowner. If leased, you need to contact that company and setup an account. They may charge you and credit the seller for any propane in the tank. If you will OWN the tank, you are in much better position and can get your propane from anybody you want.

Avery is right that your local agent should be giving you specific contact info for all of these, including HOA, water, trash details, etc.

Be SURE to get the contract and details your seller has with the existing PM. Many here are written in a way that YOU do not own the rentals. If you let them know you are going to handle it yourself, they could relocate those rentals to other cabins they have and leave you  with nothing. If you go the route of self-manage, do it ahead of time and YOU synch the rental company calendar with your calendar. Consider telling them you want to block a few months for personal use and renovations. Then when their rentals are done and passed (or at least as many that make sense to you), and you are up and running with your choice, notify them you are taking it off their program.

Self managing is okay and should give you a decent net $$. I don't know where Lucas got his EVOLVE experience but they have been rocking it for me. One cabin is on pace for $120K this year. Previous owner self-managed and had 5 cabins and never topped 90K. Your mileage may vary of course. If you are unsure, go ahead and do the self-manage route. You may find it to be just fine, there are few, if any, "sunk costs" in going that route, and there is always an easy option to change to some other means.

Travis Rasmussen · Answer

95% booked for the next 2 1/2 months? Kudos--have you considered charging more?

Travis Rasmussen

Real Estate Agent and Airbnb Superhost

Glenn Bates · Answer

I guess I failed to give enough information. It' fully furnished and is booked 95% for the next 2 1/2 months. I haven't even need able to see it and won't the day of closing because of it being booked. It has a management company that takes care of everything. So, I can break in slowly.

Good advice. I just want to make sure I have everything covered. Not like buying a home. I won't be there to know if, i.e. the water is turned off. Or maybe worse, the WiFi.

Thanks for the info.

Julia Bykhovskaia · Answer

1. Are you renovating first? If yes, line up contractors to interview ASAP. It's a process and few would be able to start right away.

2. If not renovating - start looking for furniture. Depending on the size of the house - some say buy stuff on Craigslist, but my houses are large (6-7 bedrooms) so that was not an option, I would spend weeks looking. If  using IKEA - have to go to a store, place an order in person (their website sucks) and schedule delivery. In my area, it's usually 3 weeks. Then you'll have to find someone to assemble all the furniture. I came to hate IKEA because of horrible, terrible customer service. They would always deliver wrong things, or fail to deliver the right ones. 50 min minimum to get someone on the phone and they are mostly incompetent.

Some say IKEA is cheaper - I guess so if you assembling yourself. If you are not - it's not cheaper, it's a HUGE brain damage, + assembly will take time (days, sometimes a week) so you'll be loosing money because the property is not on the market.

I personally switched to Raymour and Flanigan - better quality, 3 day delivery, assembly included in price. SO much easier.

3. Start looking for cleaning staff

4. Start looking for a handyman

5. Don't forget WiFi, everyone wants it

Good luck!!

Closing next week. What to do?

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