Long time no post- I know! Per usual, we’ve been crazy busy since the last house closed, but I have a big update to make. We are finally buying a (different) cabin tomorrow!
Just to recap, about a month and a half ago we sold our home in Roseville, MN and decided to buy another cabin property to live in for the summer and get ready to make another VRBO rental. Since we sold the prior house, we have been living in one of Eric’s rental units (he had tenants who wanted to get out of their one year lease early, so it worked out well for us to live here for a bit until we closed on the next property.)
Since then, we got an accepted offer on a cute aframe cabin right on the water in Brainerd, MN. The cabin was 3 season and we planned to do a conventional rehab loan to turn the property into a 4 season dwelling so we could take out a 30 year loan on the place. Some newly learned knowledge I gained from this predicament – 3 season dwellings are VERY difficult to finance.
Basically, the options to finance a 3 season property, from my understanding are:
- a home equity line of credit (generally a 15 yr loan)
- an ARM loan (not something I’m personally comfortable with, and also generally 15 yr loan)
- A balloon loan which is essentially a line of credit to fix the place and then it comes due after a year and you refinance into a regular loan
- A rehab loan where the buyer would need to plan to turn the property into a 4 season dwelling.
- CASH MONEY!
We chose the rehab loan, and then spent about a month of calling/harassing contractors to get us bids to add a furnace, replace windows, and add insulation. Not only did we need bids formatted a very particular way, but we also needed them to fill out a giant packet of information. This was a HUGE headache, and I wouldn’t wish it upon anyone. My overall opinion from attempting to do a rehab loan: do not do it unless you are not on a timeline, be mentally prepared for the giant headache to follow, and use a general contractor if you can rather than individual contractors.
Anyways, back to our story. Long story short, the appraisal on the Brainerd cabin came back low and the sellers weren’t willing to budge.
Essentially, they were asking us to stick to our offer price and would not let it go for the appraised value, or even meet us halfway. We even came up with a cash offer (due to the loan being such a pain) thanks to a temporary loan from an investor, but they refused. Not wanting to be under water on the place, and honestly just at our breaking point with the situation and loan, we regretfully walked away from this unique property. In the end, we felt the sellers were being unreasonable and just decided to let it go. I have mixed feelings on appraisals, especially for a very non-traditional property as it is nearly impossible to find comps, BUT my decision was made thinking about the trouble we may run into if we needed to sell someday. If the property can’t appraise, even if some could argue that the “cool factor” makes it worth more, and I tend to agree, you’ll have a hell of a time selling it for more than that number. I am very sad, but I will continue to track the property and still have hope we could buy it in the future if it doesn’t sell this spring. Cabins don’t sell as fast as regular city homes. So you’re saying there’s a chance? …I hope so!
Since that fell apart, we found and got an accepted offer on a different cabin in Comstock, WI – near Turtle Lake.
And, guess what, it’s on the SAME lake as our other VRBO rental, Little Bear Lodge! We are so excited, and we close TOMORROW! So cabin life begins, finally.
A bit about the property. It’s on the opposite side of the lake as LBL. 3 bedrooms, 1 bathroom. Big unfinished basement where we plan to make a sweet game room. Funky architecture with a big vaulted ceiling in the main living space. It needs some love and decorating and minor reno, but overall we love it. Screened porches for life, can’t wait to nap out on that bad boy. We also got a pontoon and paddleboat with the purchase, so I’m anxiously awaiting a celebration booze cruise tomorrow evening post move. More pics to come as we move in tomorrow!!
Liked this post? Follow this blog to get more.