All Forum Posts by: Kyle Smith

According to my calculations, at 10% down that cabin would cash flow around $3k/month if current revenues stay the same (which many of us have doubts they will). If your numbers get down in the 60k gross returns you would only be at break even.  In 2019, a 3 bedroom with a view would likely bring you around $60k.  I always run my numbers on recession year numbers. We may never see 2019 numbers again but if we do, you will only be at break even.  If you put 20% down vs 10% the numbers improve by about $500/month.   This is calculated with you managing the cabin yourself.  If it’s managed at 25% your break even is at $70k gross/year. 

Keep in mind these are estimates I use which are pretty conservative. Your mileage may vary. 

With all that being said, these cabins are still good investments in general, they’re just not the cash cows they were prior to 2021.

@jeff gold they are typically building them with approx 20x12 or 17x9 pools. 

Many investors and CEOs are getting into the STR game citing current trends among Gen Z'ers etc. Houses and condos are the vacation destination of the future and I'm sure the hotel chains feel the heat.
As far as Gat/PF is concerned, I'm a little hesitant to think cabin prices will remain this high after the COVID spike is over. It's very difficult to make the numbers work right now unless you are paying cash and even then ROI is questionable at these cabin prices. Run your numbers on 2019 gross incomes and add 10-15k to reflect past growth trends and inflation.
On another note, I think a lot of investors are going luxury pool cabins right now. This assures better cash flow and when the numbers drop they will be positioned to cash flow even during recession years.  I’m building a cabin in Gatlinburg as we speak and I’m making it as luxury as I can afford.  Existing 3 bedroom cabins with a view are pricing in the $1mm range now. My thoughts.  

I just found out something interesting from the bank. To restructure my loan to a two time close it may require me to go from 10% down to 20% down on the perm loan. This particular bank does not fund permanent jumbo loans so they have to go outside to close the jumbo perm loan. So, I think it may work better for me to go ahead and go conventional with the 10% down and get the Freddie Mac backed loan and one time closing at the lower interest rate. By the time I add 20% down at perm closing it’s a wash except now I’m in at a potentially higher interest rate. If I were able to pull off a 10% down Jumbo I’d definitely go for it. So many variables, pluses/minuses to both.

Im guessing at closing I should be able to cash out my equity and get that money back at near the same cost to me. I’m new at this so I’m probably talking out of my butt, but all in all I have a less stress loan with the one time close conventional. I guess I won’t know if I made the right decision until 10 months down the road. I’ll be locked out from making additional investments but to be honest I’m sorta worn out and could use a little break. The journey to get here has been a long one and doing this from Texas is tough. We should break ground in about 3-4 weeks so I’m looking forward to seeing some fruits from my labor. LOL

Thanks for the replies guys. I will definitely consider that.

Hello,

I'm unsure how to finance my new cabin construction loan.  I have two choices, a conventional 2nd home construction to perm loan through Fannie Freddie.  The max loan amount is $625,000 (I will need to bring $88,000 to close)  This will eat up nearly all my cash but I will get the better rate and a lock for 12 months, plus the peace of mind of a one time closing.  

2nd option is a Jumbo construction loan to perm.  The jumbo loan will not have a locked rate and I will be taking a chance the rate will be 1-2 points higher at closing next year.  I will also have two closings vs one.  With a jumbo loan I will be able to retain $80,000 for future investments and help with the down payment of my next cabin.

If I went the conventional loan route, would I be able to cash out refinance at closing or would I have to wait 6 months?  Is the additional cash out refinance cost going to be worth it?  The closing costs along could be 8-10k I think.

I think I know what Robert Kiyosaki would say..."save your cash and use other peoples money!".  However, there is some peace of mind in the conventional loan knowing I am locked into a rate.  We all know rates are going to have to go up next year.  Also, I would be financing less and I'll have better cash flow with the conventional. 

My dilemma is I want to scale quickly and without cash its going to be difficult.

Your thoughts?

Thanks in advance.

It won’t appraise. I’ve heard the appraisers are toning it back some in the area. There are some corporations in the area that are buying up everything. Also, Saudis who are paying whatever just for tax write offs. 

2019 thru mid 2020, a 2 bedroom cabin with a view was $250-325k, 3 bedroom roughly $300-425. Now 2 bedroom with view $650-850k, 3 bedroom $700-950k. I got stuck in paralysis by analysis and missed the ship. I was determined, so I’m building a 3 bedroom luxury pool cabin in Gatlinburg, but I’ll likely not build here again and buy an existing cabin on the emerald coast.

Hate to be the bearer of bad news but in my opinion It’s too expensive to enter this market now. Make sure the numbers work, but if you bring a lot of cash to the table the numbers work better.   Still possibly some deals to be had but it’s not easy.  After my build I’m taking my remaining cash elsewhere. 

@Joshua Strickland yep. I put an offer in on that property back about 5 months ago but someone else won the bid. Then it was back on the market at a much higher price. It’s a beautiful lot. The water well costs isn’t as bad as I had thought. Probably get away with paying around $15k. The water table is not too terribly deep there.