Building a cabin lets you choose the bedroom count, the view and the amenities that drive nightly rates. It also puts more decisions in front of you than buying one. Most of the expensive mistakes happen before construction starts.
Before you buy the lot
- Can it rent? Confirm that the zoning and the subdivision covenants allow nightly rental. See our guide to short-term rental permits in Sevier County.
- What will the septic support? Away from city sewer, the septic permit states how many bedrooms the system is approved for. Have the soil evaluated first.
- How steep is it? Slope drives the cost of the foundation, the driveway and retaining walls. Get a site-work bid, not a guess.
- How do you get to it? Check who maintains the road, and what it costs to bring power and water to the site.
Decide the occupancy early
Cabins that sleep 13 or more face stricter fire code and often need sprinklers. That can be worth it for a large group cabin, but it has to be designed and budgeted from the start.
How the construction loan is sized
Two limits apply. The loan is measured against the cost of the lot and the build, and against the value of the finished cabin.
- Up to 70% of the lot cost
- Normally up to 85% of total cost, and up to 90% for experienced builders in major markets
- Smaller markets and less active builders are usually limited to 80% of cost
- Never more than 70 to 75% of the finished value
The construction budget is paid out in draws as each stage is completed, and payments during the build are interest only.
First-time builders
You do not need a track record to qualify. We have first-time builder programs, and leverage rises as you complete projects. A licensed general contractor with recent cabin builds strengthens the file.
When the cabin is finished
A new cabin has no rental history, so the long-term loan is underwritten on AirDNA projections, counted at about 70 to 80%. A DSCR rental loan then pays off the construction loan. If the finished cabin appraises well above what it cost, a cash-out refinance at up to 80% loan-to-value can return part of your cash.
Terms and an example are on the construction loans page.