Throughout 2019, our theme has been “building is making a comeback.” And it has. We’ve seen so many new cabin construction projects over the last year, including a few resorts we helped developers and builders to implement. Hibernation Station was one of our team’s most exciting projects! We absolutely love some of the new products! In particular “log” cabins that are being constructed from a special concrete that is not only indistinguishable from a traditional log cabin, but also higher quality and lower maintenance. Carpenter bees aren’t going to bore into concrete!
Part of what has made building so popular is the fact that we have a shortage of available cabins for sale. As early as last spring, we began to see prices climb on vacation rental cabins due to the high demand among buyers, and if it was an awesome cabin, the demand was even greater. This past year, it was not uncommon to see a cabin receive multiple offers within days, sometimes hours, of coming on the market. And the later it was in the year, the more those offers were. Our team has had several cabins listed that were under contract within a day or 2. The demand has just pushed the prices higher and higher, until we will very soon reach a point where the cost to buy a cabin matches the cost to build one.
So going into 2020, the most important thing to keep in mind when building a cabin is that you need to build with the current trends in mind. You want to stay on the front of the changing designs. You will want your new investment cabin to reflect what people are looking for now and tomorrow. Before you all go away screaming and pulling your hair out, here are a few tips to keep in mind that will make the project easier to manage.
Choose the floor plan that best fits the most popular desires. Some of the concepts that are out of date now are elements like tiny kitchens where the refrigerator is positioned up against the stove, whirlpools in the bedroom, no game room, no special media-theater amenity and non-existent outdoor areas because the cabin is sitting at the edge of a wooded cliff overlook. Instead, the next generation of cabins will have larger kitchen spaces, a defined dining area, a private bathroom for every bedroom, and space for outdoor living, kitchen, fire pit area. Indoor pools and swim spas are also popular if you have the space in your floor plan to include them. All of these amenities will add to the gross rental income and should pay for themselves. Elements that have never gone out of style; walls of glass, rustic elements, the cabin look and feel, drama and openness to the floor plan, lofts.
Be patient with the construction process. As building becomes more popular, the wait time for a cabin to be built can increase. Even after you pick out the lot that can accommodate the design you have selected, you may find that you need to wait a little while due to other steps before building can begin. You will need to secure permits and HOA approvals, conduct surveys and appraisals- all before you break ground. So while you’re waiting, you’re obviously not making money on your investment. You need to make sure you can manage the long game until your cabin is finished. As a good rule of thumb, plan on about a sixteen months from start to finish.
Be willing to sell an existing cabin to finance your new build. If you have a rental cabin already, don’t remodel it – sell it. It’s less expensive to build something correctly than it is to remodel. Additionally, new cabins are at the top of the rental market because of the adjustments in the amenities. So it will cost as much or more to remodel something existing to make it match what’s being built new (where it’s even possible), but probably won’t increase the value to match that of a new cabin. The value of a new cabin is between 20 to 25 percent more than an existing cabin of similar size. In fact, many of our top investors making their living on vacation cabins are selling their existing cabin to build a new one. Roughly 90 percent of our Hibernation Station clients were people who owned in another popular resort, Sherwood Forest.
In the coming months, we will be sharing details on new resort projects that are developing and what is happening with the existing cabin market. I expect the trend of multiple offer situations on existing cabins to continue, so if you prefer to buy than to build you will need to prepare yourself to win the bid. I will share more on how to do that in my next blog article.
