I realize there are many answers to real estate questions, and I value everyone's opinion. I'm sure many of those answers come from valuable research and facts. I try very hard to include that information, too.
But I want you to understand something. The best answers I can give you won't always come from statistics, although I'll share those with you as well.
You see, I'm not just answering these questions. I've lived a lot of them. I've watched them play out over more than 30 years in real estate.
And although I may change the names, my stories are real. The people who lived them with me are real, too.
My hope is that when you read my answers, you're not just getting facts and figures. You're getting something a little different. You're getting a living, breathing answer from someone who was actually there.
What Happens to Bookings Already on the Calendar When I Buy a Rental Cabin in Gatlinburg, Pigeon Forge, or Sevierville?
Well, this question is a bit of a doozy. Lol.
I've sold hundreds of properties in the Smoky Mountains over my real estate career, and something I've run into more times than I can count is buyers assuming that when they purchase a rental cabin, all those wonderful reservations already on the calendar automatically become theirs.
Not necessarily. And that's something you need to understand before you buy.
You might be purchasing a beautiful cabin in Gatlinburg, Pigeon Forge, Sevierville, or Wears Valley that's booked solid for the next six months.
Looks pretty good, doesn't it?
Especially when you're sitting there figuring up all that rental income. Lol.
But here's what I want you to understand. You're buying the cabin. You're not necessarily buying the rental company's customers, its contracts, or its future reservations.
And there's a big difference.
Think like a cabin rental company for a minute
Let's say you're selling your cabin, and it's currently managed by a local cabin rental company.
That company has spent money advertising your property, answering telephones, handling reservations, cleaning the cabin, dealing with guests, and building relationships with people who come back to the Smokies year after year.
Those customers booked through that company's business.
Now, I'm not saying the rental company owns your cabin. It certainly doesn't. And its rights to those reservations depend on the agreements involved.
But it has a business to protect, too.
If you sell the property and the new owner decides to take it to another rental company, the original company may need to relocate those guests into other cabins it manages, assuming its contracts and the guests' agreements allow it.
And if a guest really wants that particular cabin? Well, there may be a way to work that out, too.
But it takes some conversations.
The rental company has policies. The guests have agreements. There may be deposits and payments involved, and the buyer and seller have their own responsibilities.
Some changes may create cancellation fees or refund obligations.
So, no, those bookings don't just magically transfer with the deed when you close on the property.
I wish everything in real estate were that simple. Lol.
Before you change rental companies, think about what you're giving up
Here's something I always encourage my buyers to do.
Before you decide you're going to move that cabin to another rental company, call the one that's already managing it.
Find out what kind of business they're doing.
Ask to see the rental history, the upcoming reservations, and what the cabin actually produces after expenses.
And don't stop there.
Go look at the cabin.
How clean is it? How well has it been maintained? What's the condition of the furniture? How are the guests being treated? What kind of reviews is it getting?
Those things tell you an awful lot about how the property is being managed.
Now, another cabin rental company may come along and promise you more reservations and more income.
And they might be absolutely right.
I'm not calling anybody dishonest. There are some wonderful cabin rental companies here in the Smokies.
But let's remember something.
They've got skin in the game, too.
They want your business. They're hoping you'll move your cabin over to their program.
So here's a little advice that somebody gave us a long time ago.
A bird in the hand is worth two in the bush.
If the cabin is already making good money, it's clean, it's well-managed, and the calendar is full of legitimate reservations, I'd think mighty hard before throwing that away.
That doesn't mean you shouldn't change companies.
It means you ought to know what you're giving up before you decide what you're getting.
What if I want to manage the cabin myself on Airbnb or Vrbo?
Now, this is where things get a little more interesting.
I know folks who do very well managing their own cabins through Airbnb, Vrbo, and other vacation rental websites.
And some local cabin rental companies work with owners who want different levels of involvement, too.
But you need to understand how those platforms handle a change in ownership.
According to Airbnb's published policy, reservations cannot simply be transferred from one host's account to a new owner's account.
That means the seller and buyer need to make arrangements for the existing bookings. Depending on the circumstances, that might involve the seller continuing to manage certain stays under an agreed transition arrangement, or guests voluntarily making new reservations with the buyer.
Any arrangement needs to comply with Airbnb's rules, and cancellations can have consequences.
Vrbo handles things a little differently.
Vrbo has a property sale and host transition policy that allows existing reservations to be transferred to a new listing with assistance from Vrbo Support, provided the parties cooperate and the guests choose to keep their reservations.
The new host generally needs a new listing and must honor the existing reservation terms or provide better ones.
And here's something worth remembering. When money has already been collected for future stays, somebody needs to account for that money.
Who has the deposits? Who receives the remaining balance? Who pays for the cleaning? Who is responsible if a guest cancels?
Those aren't things I'd leave to a handshake and a promise.
I'd get them worked out before closing.
And now I'm going to tell you about one of my experiences, because this is exactly where things can get sideways.
Billy Bob, LOL, the cabin rental company, and a disappearing telephone
Let's call my buyer Billy Bob.
Billy Bob was buying a cabin here in the Smokies. He already owned a few other rental properties and had a cabin rental company that was doing a great job managing them.
Naturally, he wanted his new cabin managed by the same company.
Nothing wrong with that.
It's his money, his investment, and his decision.
The seller had some future reservations already booked through the existing cabin rental company. There were guests who wanted to come stay at that particular property, and we needed to figure out how to handle those reservations.
Well, somehow the existing rental company found out that Billy Bob wasn't going to stay with them after closing.
And all of a sudden, something strange happened.
My telephone apparently quit working.
At least when I called them. Lol.
They wouldn't return my calls. They wouldn't talk to me about the transition. I couldn't get the answers I needed to help everybody work through the sale.
Now, I understood they were disappointed.
They were losing a cabin from their rental program, and nobody likes losing business.
But taking it personally wasn't helping the seller, the buyer, or the families who had already made reservations.
And I certainly didn't think ignoring everybody was good business.
So you know what I did?
I got in my car and went over there.
Sometimes a friendly handshake does more than another telephone call
I walked in and tried to approach the whole thing a little differently.
I wasn't there to argue with anybody.
I wasn't there to tell them how to run their business.
I just wanted to talk.
I said something along these lines.
"Listen, we're very sorry this didn't work out the way you wanted. I understand you're losing a cabin, and I know you've got reservations to deal with. But I don't want you left with guests who have nowhere to go, and I don't want our buyer or seller having problems either.
"Why don't we sit down and figure out something that works for everybody? If you've got cabins available and need to move some reservations, let's talk about it. If there are guests who really want to stay in this cabin, let's see whether we can work that out, too.
"There's no reason we can't all work together and make this a good transaction."
Well, I won't tell you they threw their arms around me and invited me to Thanksgiving dinner. Lol.
They were still a little aggravated.
But eventually we started talking, and we were able to work things out.
The sale moved forward, and we found a solution to the rental situation.
And that's really the point I want you to take from this story.
Sometimes people get hurt. They take things personally. They feel like somebody has done them wrong.
But this is business.
And sometimes a little understanding, a friendly handshake, and a willingness to listen can accomplish a whole lot more than getting mad.
Besides, you never know when that buyer might want to come back and do business with that rental company someday.
Don't burn a bridge you may need to cross again.
What I would check before buying a cabin with future reservations
Now, if you're buying a cabin that's already producing rental income, here's how I'd approach it.
First, I'd want to know who is managing the property and get a copy of the management agreement, with the seller's permission.
Then I'd want to see the actual reservation calendar, not just somebody telling me it's booked solid.
I'd look at the dates, the nightly rates, the gross rental income, the management fees, and the money the owner actually receives.
I'd also want to know how much of that calendar represents confirmed, paid reservations rather than owner blocks or tentative bookings.
And there's something else I'd ask.
What happens to every reservation scheduled after the closing date?
Are those guests staying in the cabin? Is the rental company relocating them? Is the seller continuing to manage anything temporarily? Does the buyer need to sign a new management agreement?
And what happens to money already collected?
Those questions should be answered before closing, and the arrangements should be documented in the purchase agreement or an appropriate written addendum.
One thing I wouldn't do is count future reservations as guaranteed income until I knew they were actually going to be honored and who would receive the money.
A full calendar can look mighty impressive.
But you can't take a calendar down to the bank and deposit it. Lol.
There's another reason I wouldn't rush to change rental companies
When a cabin has been on a successful rental program for several years, there's something valuable about the relationships that have been built.
The cleaning people know the property.
The maintenance people know which hot tub has been giving everybody fits.
The rental company knows the busy seasons, the slow seasons, and the families who like to come back every year.
You don't necessarily see those things when you look at a spreadsheet.
Now, maybe another company can do a better job. Maybe you can do better managing the cabin yourself.
Absolutely possible.
But before you start over, give some thought to what was already working.
And if you do decide to make a change, try to do it in a way that respects the seller, the old rental company, the new rental company, and most importantly, the people who have already paid for their vacations.
Those guests are coming to the Smokies to make memories with their families.
They don't care about our real estate transaction.
They just want the cabin they booked and a wonderful vacation.
And I don't blame them one bit.
The bottom line
So, what happens to the bookings already on the calendar when you buy a rental cabin?
It depends on the agreements, the rental company, the booking platform, and what the buyer and seller work out before closing.
Some reservations can be preserved. Some may need to be moved. Others may need to be canceled or rebooked under the applicable policies.
But don't assume they're yours simply because you bought the cabin.
Here's another thing I want you to know.
As a real estate agent in Sevier County, I don't believe it's my place to tell you which cabin rental company you have to use.
I can introduce you to people I've worked with, give you some names worth talking to, and help you ask the right questions.
But ultimately, it's your life, your money, and your investment.
It might be one of the largest investments you'll ever make.
My job is to help you understand what you're getting into and hopefully keep you from making mistakes that can cost you a lot of money.
After more than 30 years in real estate, I've learned that not every problem gets solved with a contract, a telephone call, or a calculator.
Sometimes you've got to get in your car, drive across town, sit down with somebody who's aggravated with you, and find a way to make things right.
And you know something?
That's not necessarily bad real estate advice. It's pretty good advice for life, too.
A cabin may change hands in one afternoon, but the promises made to the families coming to stay there deserve a little more attention than that.
"If it be possible, as much as lieth in you, live peaceably with all men." (Romans 12:18)
Hope that helps. God bless.
Will Cupp
Sevierville Realtor and Real Estate Broker
Realty Executives Associates, (865) 983-0011
865-654-9807
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