More Things Go Right Than Go Wrong

“More things go right than go wrong”! It’s the truth- just look at your life. If you’re reading this you woke up this morning. Here in the Smokies, there is a beautiful blue sky and a bright sun shining down. The mountains are snow capped and spectacular. Life is worth living. So, let’s all lighten up, appreciate the joys life has to offer and create our lives in a way that feels good to us.

We live in a vibrational universe. The Law of Attraction, “That which is like unto itself is drawn” is always operating and it is our choice what we think about, how we feel in every moment and consequently what experience we attract to ourselves.

So, if you feel sad, lonely, angry, afraid… find a thought, any thought that makes you feel a little better. Then move to another thought that makes you feel a little better still. It works and you’ll find as you feel better you attract more things to your liking into your immediate experience.

If these ideas strike a chord within you, go to www.abraham-hicks.com and get more from the source. And if owning your own Smoky Mountain retreat is a thought that raises your vibration, go to www.willquinn.com and check it out.

Happy Day!

Mortgage Update for Cabin Buyers

While lenders have tightened their qualifications for Second Home mortgages, such loans are still available at attractive rates and terms. Even if your primary reason for buying a cabin in the Smokies is as an investment, as long as you do not already own a similar type of property, your first such purchase is considered a Second Home by most lenders.

One of the most important criteria is your credit score. An average credit score (of the three primary credit scorers) of 680 can qualify you. An average score of 720 puts you in a premium position for an 80%, 30 year fixed mortgage with current rates hovering around 5%. With an average score of 740, 90% Second Home loans are also available through Wells Fargo at a similar rate to their 80% loans. The only catch to 90% loans is that you have to pay for Personal Mortgage Insurance until the loan balance equals 80% of the appraised value of the property. This can be accomplished through both paying down the balance and increased property value through appreciation. Prior to the problems experienced by the mortgage industry, P.M.I. averaged around 5.5% of the payment amount. The average P.M.I. is now around 13% so that must be taken into account when deciding the best mortgage for you.

With excellent opportunities available in this market and attractive mortgage rates for qualified buyers, now is an excellent time to pursue your Second Home dream in the Smoky Mountains.

The Legacy Mountain Story Part 2

As well as having among the best designed and built cabins, a truly beautiful amenities complex and the premium view of the Smokies, Legacy Mountain Resort also has a dedicated management company that is a division of the highest producing management group in the area.

When Legacy started renting cabins on the Legacy Mountain Resort program they used a concept that was a new wrinkle in the local management market. Rather than marketing individual cabins, legacy chose to market the resort booking cabins by their style rather than as individual entities. If it had worked it would have been a brilliant idea. By being able to “jigsaw” the bookings on each style of cabin among their inventory, they would have been able to book more nights per cabin because they would have had fewer dead nights that could have been rented if potential rentals had not overlapped. More nights means more money so each cabin could have grossed more with their original program.

Reinventing the wheel is always tricky and rarely successful and here is a case in point. The average cabin renter wants to see pictures of the specific cabin they are renting and want the cabin to have an evocative name rather than an impersonal designation such as Greenbriar #32. Cabin renters want to have in their mind a specific mountain getaway, not, in effect, a “motel room” that will be determined by what’s available when they get there. In the 4th quarter of 2009 Legacy Mountain Resort changed their program to reflect reality and offers specific cabins like all the other management companies in the Smokies. This has shown immediate positive impact on their rentals with that artificial handicap removed. Since their program only represents properties at Legacy It is now, probably the best choice for an owner at Legacy Mountain.

The Legacy Mountain Resort Story Part 1

I rate Legacy Mountain Resort in Pigeon Forge, TN as among the best current cabin investment opportunity in the Smokies. Legacy is the prime example of a development that is offering significantly reduced prices due to difficulties experienced by the developer not related to the quality of the cabins or the development, its location, amenities, views or popularity with the rental market.

In 2005, a Realtor came to the Legacy developer with a 20+ cabin sale. These buyers came through a mortgage broker and were supposedly pre-approved for the purchase. On that basis, the developer brought in several crews and constructed those cabins. Since he had the crews on site and only had about 20 more sites, he went ahead and completed them. The deal fell through and he wound up in 2006 with 40+ completed but unsold cabins.

Through 2006 and early 2007 there were sales in Legacy but at a decreasing rate and when the bubble burst in early 2008, he wound up with a lot of high price unsold inventory. Since he had most of these locally financed, he was able to have short sales preapproved by these local banks. Since they were complete and being rented, he has been able to avoid foreclosure on these properties but still needs to liquidate this inventory. These cabins are available, on average, at 45% off their original prices. You couldn’t buy sites in a similar location with comparable views, build and furnish similar cabins at these prices. The icing on the cake is that Legacy Mountain Resort has the finest amenities complex in the Smokies.

While sales are still slow, prices bottomed in early 2009 and as these cabins are sold, there are no replacements at these prices. Once they are gone, this opportunity will be gone forever! If you are in a position to do so, NOW is the time to get your PRIME piece of the Smoky Mountains.

My next blog will cover the Legacy Mountain Resort management program.

2009 Wrap Up

As 2009 draws to a close the prospects for cabin buyers in the Smokies in 2010 is as optimistic as I’ve seen since the late 1990’s. Over all, for quality cabins, rentals have rebounded from their 2008 slump. Prices, on the other hand, bottomed in mid 2009 and are stagnant as we move to 2010.

While, according to several local appraisers, average market values have dropped 10% to 20% from their 2007 high, prices appear to have stabilized. Because of the continuing popularity of the Tennessee Smoky Mountains as a vacation destination, most owners of successful rental cabins have not needed to put them on the market and the marginal cabins that are on the market are drawing little attention.

However, there is one market segment that offers incredible opportunities and that is developers and individuals that have been forced to short sales and foreclosures due to market conditions or personal reasons, not the quality of the actual properties. Legacy Mountain Resort is the prime example with selected cabins being offered 35% below their original prices and in my next blog I’ll relate to you the Legacy Mountain story.

Suffice it to say if a cabin purchase in the Smokies is on your wish list, now is the best time in the last 10+ years to proceed.

Criteria I Use On Financial Estimates For Investment Cabins

When presenting information to a potential cabin buyer, I provide estimated income / expense statements as well as estimated averaged annual return on investment estimates. With an increased interest in investment cabin purchases due to the advent of short sales and foreclosure sales the following is the cover attachment I send with my estimates. It explains the criteria I use for those financial figures I have to estimate.

With the apparent bottoming of cabin sales at the end of 2008, short sales have become a factor (though a small factor) in the Smokies. Since the beginning of 2009, I have been analyzing short sales / foreclosure sales as they appear on the market. While on paper the prices are very attractive, when these properties are analyzed for their investment potential, one thing becomes painfully clear; most of them were bad investment decisions when they were purchased and remain poor options even at their reduced prices. That having been said, I have found several choices that are extremely attractive options.

In preparing the Cash Flow and Averaged Annual Return on Investment estimates for these properties I have attempted to be conservative as far as any necessary economic assumptions. The income estimates for the next 7 years were obtained from the best management company for each property assuming that rental rates and occupancy would maintain the 2007 / 2008 levels which are relatively lower than the previous 5 years. This obviously assumes no rapid or dramatic recovery of general economy and each management company feels confident in their estimates.

With regard to the estimated average annual appreciation rates, 3% to 5% is a conservative estimate for these rates over the last 30 to 40 years in Sevier County according to appraisers I have consulted. Frequently, after a significant downturn in a real estate market, appreciation rates exceed their traditional averages for a time. While that could well be the case in these circumstances, I have not taken that possibility into account in my calculations.

For the vast majority of buyers I deal with, purchasing a cabin in the Smokies is a major economic and emotional decision. For my part, I am providing you with conservatively realistic scenarios so that should you decide to make such a purchase, at least in part based upon information provided by me, that your actual experience will be satisfactory and could reasonably exceed my estimates.

That’s how I do business. If you are curious about owning a cabin in the Smokies for investment and personal vacation use, visit my website www.willquinn.com and contact me.

Foreclosures and Short Sales- It’s All Come Out in the Wash

When short sales and foreclosures first became a factor in real estate transfers in the Smokies at the end of 2008, NOBODY was prepared for it. Real estate agents, buyers and sellers didn’t fully understand them and the lenders did not have protocols and procedures established. Consequently, many potential buyers spent a lot of time and experienced pain and suffering for nothing. Most lenders now have systems in place for short sales and foreclosure sales so they have become more routine with faster lender response time and faster closings.

That being the case, I’ve become a fan. Short sales and foreclosures are not the answer to every buyer’s prayers, but with careful analysis, incredible opportunities are waiting.

Choosing wisely is the key to success in dealing with short sales and foreclosures. What you should be looking for is not a distressed property but a quality property with a distressed owner. When you go to the “Featured Properties” page on my website, www.willquinn.com that is what you will find. I’ve chosen cabins that are not a short sale, foreclosure or an incredible deal because they are in a poor location, have no view or have major structural problems but because the owner is financially distressed.

In many cases (especially foreclosures), you will need to be prepared to completely refurnish the cabin or at least do some upgrading of the furnishings. A complete refurnish can cost $10,000 to $25,000 on a typical 1 to 3 bedroom cabin but there are properties (mostly short sales) that will only need $3,000 to $7,000 in upgrades to insure optimum income.

I have found successful strategies for constructing offers on foreclosures and short sales. On a foreclosure, I recommend low-balling on the offered price. In a foreclosure, the seller is a bank and the subject property is just an item on their ledger that they want to remove. They know they are going to take a loss on the property and the amount of the loss they are willing to take can only be determined by pushing them. They may go a lot lower than common sense would dictate.

There is less play when making an offer on a short sale. Lender approval is required and since they are likely giving up the right to obtain a deficiency judgment against the seller for any loss, they are going to be less negotiable.

Finally, a pre-approval letter for your proposed mortgage or proof of available funds on a cash offer MUST be presented WITH your offer for it to be considered.

Buy the Whole Package

On my website, www.willquinn.com, I make the point that if you are buying a cabin in the Smokies that you intend to rent when you are not using it, “You are buying a small business, not just a second home.” With any business there are many factors necessary for success and that is especially true for your nightly rental cabin in the Smoky Mountains.

I discuss all the critical factors for profitable cabin ownership in my “Buyer’s Guide” (you can click on the link to my site to get one) so I don’t need to enumerate them here. My point here is that if part of the money you spend on a cabin purchase is compensation to a real estate professional, choose an agent who understands all the details that have to be in place and accounts for them.

Before I put a property on the “Featured Properties” page of my website, I analyze that property to determine its potential for successful operation. I work with top management companies to quantify the requirements for that specific cabin to be accepted on their program, develop cost estimates to accomplish the necessary upgrades and identify the best local sources for the required goods and services.

If you are going to be paying a professional to help guide you to a profitable and personally fulfilling cabin purchase in the Tennessee Smokies, buy the whole package. Working with me will cost no more than working with someone only interested in showing their listings, writing a contract and closing it but your experience will give you the confidence of understanding what you need to do and why in order to fulfill your dream of owning your own mountain retreat that improves your quality of life and helps improve your financial future.

Smoky Mountain Cabin Rentals as of May 2009

I checked 2009 cabin bookings with a couple of rental companies and their report was very encouraging. As of the end of May 2009, fulfilled and future bookings have recovered from the 3% to 5% slump experienced in 2008 and are tracking for 2007+ levels.

While encouraging, these results are not surprising. When the economy tightens, vacation time seems to become more important to people. Due to the convenience of our location, all of the attractions and activities available and the pure natural beauty of the Smokies, this area becomes the prime vacation destination for many tourists when travel dollars have to be more carefully allocated.

Obviously, the rapid recovery of cabin rentals in the Smoky Mountains supports the desirability of investing in one. Compared to the stock market, this rise is meteoric. Plus, a cabin investment in Pigeon Forge or Gatlinburg is an investment that can directly and significantly have a positive impact on your family’s quality of life.

Good News About Cabin Short and Foreclosure Sales

As I have reported in other blogs on my website, Short Sales and Foreclosures offer significantly reduced prices but have several major down sides which, after intense investigation, break down to these:

Typical response time once an offer is tendered is 90 to 120 days if the property is financed by a large national mortgage lender (which the majority are). On a normal transaction the response time is 72 hours or less. It appears that this is the case because these lenders were totally unprepared for the current economic conditions and to use East Tennessee jargon, “The head of the dog doesn’t know what the tail is doing.” Frequently, an offer on a short sale has to be submitted 5 or 6 times to various departments because there are no established systems for dealing with these situations. Then the offer may have to go before 1 or more committees to be approved.

Even if you get an acceptance of your offer, the lender reserves the right to terminate their acceptance until the transaction has closed and the buyer has no recourse for any closing costs they have expended.

Since mortgages do not include furnishings (although sales of existent cabins have traditionally come fully furnished at the sales price), short sales and foreclosure sales typically include no furnishings and the buyer has to pay an additional $20,000 to $30,000 (on a 1 to 3 bedroom cabin) before the cabin can be rented.

So where’s the good news? If you look hard enough you can usually find a silver lining to any dark cloud and I’ve found one! Developer owned short sales that are locally financed and approved are available and in this situation these short comings can be virtually eliminated! This leaves you with a more or less standard transaction only at a significantly reduced price. The same is true for cabins where the developer has allowed foreclosure and the lender has already approved the situation and has assigned an officer to handle the sale. Further, in these situations, the cabin transfers “As Is” (i.e. furnished) and thus saves the buyer the extra expense of refurnishing.

More good news… After weeks of digging I have found several PRIME 1, 2 and 3 bedroom cabins here in the Smokies that fall into this category and are superb investment options. These cabins are luxurious one to three bedrooms and are now discounted 25% to 47% from their original prices.