Smokey Mountain Financing

[Stephen Herbert]

Hi BP friends - 

I'm working with a client that is looking to purchase several rental investment cabins in Seiverville, TN at the foot of the Smokey Mountains. The properties average around a $160,000 purchase price and have strong potential bookings for AirBnB and VRBO, but the financing component is a bit tricky given these are rural properties. 

Has anyone has luck financing properties for rentals in this area, or other rural lenders they can refer me over to?

[Parker Borofsky]

@Stephen Herbert I am a prominent lender here in the Smokies and closed $20M in cabins alone in 2018. I am happy to help you and answer any questions, but would need a little more clarification about the challenges your client is having with financing. All of my cabin lending was accomplished with Conventional loans and when needed I was even able to use projected short term rental income to offset DTI.

I wouldn't necessarily classify this particular area as "rural" since it facilitates housing over 11 million visitors each year. While a "rural" specific lender should not be necessary for cabin financing, it definitely helps to use a local lender because we understand financing these properties. Additionally, a Loan Officer with a good understanding of STR's is important. The company I originate loans for is the largest residential lender in the state of TN - including cities like Nashville and Memphis. I would not classify us as rural, but we are definitely local and have not had any issues lending on these properties.

I do have to agree with @Luke Carl - the going price for a 1bdrm now is about $200k and up and most of my clients are purchasing in the $250k - $450k range.  @Avery Carl is an excellent resource for more info on cabin pricing as well.

If you have any specific questions I can help you with, please feel free to reach out. I also own several cabins and am happy to share STR info too.