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 Rental Records Should I Gather Before Listing My Cabin in Gatlinburg, Pigeon Forge, or Sevierville?
Well, I'm going to give you an answer that might be a little different from what some other real estate agents would tell you.
Gather your actual rental history, income statements, expenses, and existing reservations. But make sure those records show what your cabin really did, not what somebody thinks it might do next year.
And here's another piece of advice I believe in very strongly.
Let the buyer do their own research, too.
You see, there's a difference between telling somebody what your cabin actually earned last year and telling them what they can expect it to earn next year.
One is history.
The other is a prediction.
And I've watched those two things get mixed up more times than I care to remember.
Let me tell you about a conversation I had with an agent named Lucy.
Lucy, the buyers, and a $70,000 misunderstanding
I've been a principal broker in this area, and at one point I had around 150 agents under my supervision.
Now, if you've ever managed that many real estate agents, you know you've got yourself a full-time job just answering questions.
Lol.
But I always tried to teach my agents something I believed was mighty important.
Don't give somebody information you can't support, especially when they're about to make one of the biggest financial decisions of their life.
And one day, Lucy came to me with a problem.
We'll call her Lucy.
She was working with some buyers who were interested in purchasing a rental cabin.
And somehow those buyers had gotten the impression that the cabin was going to produce a certain amount of rental income.
Lucy came to me concerned about what they believed.
I looked at her and said something along these lines.
"Well, Lucy, let's retrace the story. Where did those numbers come from?"
She explained that she'd received some information from the seller, or passed along from the seller, about what the cabin might produce.
Something in the neighborhood of $50,000, $60,000, maybe even $70,000 a year.
The cabin was supposedly on pace to do that kind of business.
And Lucy had passed the information along.
Now, I asked her a question.
"Did you actually see the rental statements?"
Well, no.
"Did you have documentation showing what the property earned?"
Not really.
"Then what did you tell your buyers?"
She explained that she'd told them what the seller had said, and that she hadn't personally verified the numbers.
And that's when I told Lucy something I've never forgotten.
"Lucy, what do you think your buyers actually heard?"
Think about that for a minute.
They were talking to their real estate agent.
A professional they trusted.
Somebody they believed was helping them make a good investment.
And she told them that the cabin might produce $50,000, $60,000, or $70,000 a year.
Now, Lucy may have explained that those figures came from somebody else.
She may have told them she hadn't verified anything.
But what do you think those buyers remembered?
They remembered their real estate agent telling them what the cabin was going to make.
And that's where the trouble starts.
What you say and what people hear aren't always the same thing
Here's something I've learned over more than 30 years in real estate.
You can explain something five different ways.
You can say, "I don't know."
You can say, "That's what the seller told me."
You can even say, "These are only projections."
But sometimes the only thing somebody remembers is the number.
Especially when it's a number they really want to believe.
Good gracious, I've seen some rental projections that would make you think everybody who owns a cabin in the Smokies ought to be driving a Rolls-Royce.
Lol.
But here's the problem.
Let's say somebody buys a cabin believing it's going to make $70,000 a year.
A couple of years later, it only brings in $45,000.
Now they're struggling to pay the mortgage, and they're wondering what happened to all that money they were expecting.
Who do you think they're going to call?
Probably the person who helped them buy the cabin.
And that's why I told Lucy she needed to go back and have another conversation with those buyers.
Make sure they understood where the information came from.
Make sure they understood it wasn't verified income.
And encourage them to get actual records and independent rental estimates before making their decision.
Fortunately, those buyers didn't end up purchasing that particular property.
But it was a good lesson.
Not just for Lucy.
For everybody involved.
Why I was so concerned as her principal broker
Now, you might wonder why I was making such a big deal about this.
Well, here's why.
I was Lucy's principal broker.
And when you're responsible for a real estate office, you're not just thinking about one transaction.
You're thinking about your agents, your clients, your customers, and the responsibility that comes with giving people professional advice.
If an agent passes along inaccurate information, that can create problems for the buyer, the seller, the agent, and the brokerage.
And it's not always because somebody intended to mislead anyone.
Sometimes information gets passed from one person to another, and somewhere along the way, an estimate starts sounding like a fact.
That's what concerned me.
Tennessee real estate regulations prohibit false, misleading, or deceptive advertising, including unsubstantiated selling claims.
And those rules are there for a good reason.
So I wanted Lucy to understand something.
When you're the professional in the conversation, people may place more weight on your words than you realize.
Now, I don't want you to think real estate agents can't discuss rental income.
Of course we can.
We can provide actual records supplied by the owner, explain what those records represent, and help people understand the questions they ought to be asking.
But we need to be careful about presenting estimates as though they're guaranteed results.
And having the seller provide the information doesn't relieve us of our responsibility to communicate it accurately.
There's a difference between helping somebody understand an investment and promising them what it's going to make.
A mighty big difference.
So what records should a cabin seller actually gather?
Now, let's get to the practical part of your question.
If you're thinking about listing your rental cabin in Gatlinburg, Pigeon Forge, Sevierville, or Wears Valley, here's what I'd want you to have available.
First, your actual rental income history.
Preferably two or three years if you've owned the property that long.
And I don't mean a handwritten note saying, "Cabin should make $80,000 this year."
Lol.
I mean actual records.
If you use a cabin rental company, ask for your owner statements showing what the property brought in and what was deducted.
If you manage the cabin yourself through Airbnb or Vrbo, those platforms provide earnings and transaction reports.
I'd want to see what the cabin actually earned, not just what somebody projected.
Then I'd gather the operating expenses.
Your electric bills, water, insurance, property taxes, HOA fees, management charges, cleaning expenses, repairs, maintenance, and anything else that affects what the owner gets to keep.
I'd also want a record of major improvements.
Did you replace the roof?
Install a new heating and air conditioning system?
Put in a new hot tub?
Update the furniture?
Those things may matter to somebody considering the purchase.
And there's another thing I'd have available.
The current reservation calendar.
If you've already got guests booked for the next several months, a buyer is probably going to want to know.
But remember something I discussed in another article.
Just because a cabin has future reservations doesn't necessarily mean those bookings transfer automatically when the property sells.
The rental company, booking platform, and existing agreements may determine what happens to them.
So I'd want that information available, too.
The goal isn't to bury somebody under a mountain of paperwork.
It's to have good, honest records that answer questions instead of creating more of them.
Gross rental income and what the owner actually receives
Here's another area where I think sellers need to be careful.
Let's say your cabin brought in $75,000 in gross rental revenue last year.
That's a pretty good number.
But what does it mean?
Did that amount include cleaning charges paid by guests?
Were there taxes collected that had to be remitted?
What did the rental company deduct for management?
What was your actual owner payout?
And how much did you spend separately on insurance, utilities, repairs, and other expenses?
Those are different numbers.
You might have a cabin that produces $75,000 in gross revenue but leaves the owner with considerably less after expenses.
And that's perfectly normal.
The problem comes when somebody sees the $75,000 figure and starts thinking that's the money they're going to have available to pay their mortgage.
Well, good luck with that.
Lol.
I'd rather have a buyer understand exactly what the number represents before deciding whether it's a good investment.
Because a cabin can make good gross rental income and still have very little left over for the owner.
Here's where my advice may be a little different
Now, this is where I've always had a particular philosophy about selling rental cabins.
I want buyers to do their own research.
And I mean that.
I can give you documented rental history.
I can help you understand the area.
I can introduce you to reputable cabin rental companies.
But I don't want to be the person who tells you exactly what that cabin is going to make next year.
Because I don't know.
And neither does anybody else.
We can make educated estimates, but we can't guarantee the future.
So here's something I've advised buyers to do many times.
Call three or four reputable cabin rental companies that operate in the area you're considering.
Tell them about the property.
The location.
The number of bedrooms.
Whether it has a swimming pool, hot tub, game room, mountain view, or other amenities.
And ask each one what comparable cabins are actually producing.
Not just their best-performing cabin.
Ask about the low end.
Ask about a slower year.
Ask about management expenses.
And ask them what they believe makes one cabin perform better than another.
Then compare the answers.
Now, even those rental companies can't promise what your cabin will earn.
But at least you're gathering information directly from people who work in that business every day.
And you're hearing their explanations firsthand instead of depending entirely on something your real estate agent repeated from somebody else.
That doesn't replace reviewing the seller's actual records, and it doesn't relieve the professionals involved of their responsibilities.
But I believe it's a much better way for buyers to understand what they're getting into.
Don't let a projection become a promise
I've seen this happen over and over in our area.
Somebody owns a cabin.
They've had a good year.
Maybe they made $65,000 in rental income.
Then somebody says, "Well, if we add a swimming pool, update the furniture, and do a little better marketing, this cabin could probably make $100,000."
Now, maybe it could.
But there's a big difference between what it did and what somebody thinks it might do.
And if I were selling that property, I'd be very careful about how I presented those numbers.
I'd rather say:
"Here's what my cabin actually earned. Here are the statements from the rental company. Here's what I spent maintaining it."
Then let the buyer decide whether the property is worth the asking price.
That doesn't mean we can't discuss improvements or future possibilities.
But possibilities need to be presented as possibilities.
Not facts.
And certainly not guarantees.
Because if everything goes wrong, somebody's going to remember what they were told before they bought.
And I don't want that memory to be something I wish I'd said differently.
As a seller, don't be afraid of showing the real numbers
Now, I know some folks may be concerned about showing their actual rental income.
Maybe the cabin had a slow year.
Maybe the owner used it personally for several weeks.
Maybe there were repairs that kept it off the rental market.
Or maybe the cabin simply didn't produce as much as they'd hoped.
Well, that's all part of the story.
A buyer should understand those things.
If the cabin was unavailable for six weeks because you were replacing the deck, that's useful information.
If you blocked off the entire month of July for your family, that may help explain why the annual income was lower than a comparable property.
And if it was simply a slow year, I'd rather tell somebody that than try to make it look like something it wasn't.
You don't have to apologize for the truth.
Just explain it.
Sometimes a buyer may look at that information and decide there's an opportunity to improve the property.
Maybe they can market it differently.
Maybe they want to change rental companies.
Maybe they have ideas that could help it perform better.
That's their decision.
And if they want to take that chance, I think that's fine.
But let them make that decision knowing the difference between actual performance and what might happen in the future.
One more thing before you hand over your records
I would always make sure the seller reviews and approves the rental information being provided.
If the records came from a cabin rental company, I'd want to know what period they cover and what the numbers actually represent.
I wouldn't want an agent taking an owner's casual comment over the telephone and turning it into an advertised income figure without documentation.
And I wouldn't hand out private guest information, personal financial details, or anything unrelated to evaluating the property.
Those records should be handled carefully.
Now, I want to be clear about something.
A seller signing off on the information doesn't mean everybody else is automatically protected if the information is false or misleading.
Real estate agents still have professional responsibilities, and sellers need to be truthful about the information they provide.
But having good documentation, clearly identifying the source, and explaining what the numbers mean can help prevent misunderstandings.
That's what I'm after.
Not finding some clever way to avoid responsibility.
I'm trying to keep everybody informed.
Because that's good business.
And after being responsible for 150 agents, I learned that preventing a problem is usually a whole lot easier than trying to solve one after somebody gets mad.
Lol.
The bottom line
So, what rental records should you gather before listing your cabin in Sevier County?
I'd start with your actual rental statements, operating expenses, maintenance records, and current reservation calendar.
I'd want the information to be accurate, organized, and clearly explained.
And then I'd encourage the buyer to independently research the rental potential of the property.
Because there's something I've believed for a long time.
The seller should be able to show what the cabin did. The buyer needs to determine what the cabin might do for them.
Those are two different questions.
And confusing them can create a whole lot of problems.
That's what I was trying to teach Lucy that day.
It wasn't about whether a cabin could produce $50,000 or $70,000.
It was about understanding where the information came from, whether it was accurate, and what the buyers thought they were being told.
Because when you work in real estate, people trust you with an awful lot.
Their money.
Their homes.
Their investments.
And sometimes their futures.
I think that deserves a little more care than simply repeating a number somebody gave you over the telephone.
Don't you?
"The simple believeth every word: but the prudent man looketh well to his going." (Proverbs 14:15)
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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