Questions
Frequently asked questions
Ownership, fund investing, rental income, fees, taxes, risks and timelines, answered plainly. If something is not here, ask us directly.
Side by side
Buying a cabin versus the fund
Topic
Buy a cabin
Invest in the fund
- What you hold
- Buy a cabinThe deed to a specific cabin, in your name or your entity's name.
- Invest in the fundA membership interest in the fund. The fund holds the properties.
- Who decides
- Buy a cabinYou choose the property, the price and when to sell.
- Invest in the fundOur team sources, builds, remodels and sells within the fund's operating agreement.
- Day to day
- Buy a cabinOur operations team can run the rental for you under a separate agreement.
- Invest in the fundNothing for you to run. Guests, cleaners, pricing and calendars sit with our team.
- Personal use
- Buy a cabinYes. You can block off dates for your own family.
- Invest in the fundNo. Fund investors cannot reserve nights in fund properties.
- Capital required
- Buy a cabinA down payment plus closing, furnishing and reserve costs on one property.
- Invest in the fundA subscription amount set in the offering documents, spread across several properties.
- Getting out
- Buy a cabinList and sell the cabin whenever you choose, subject to the market.
- Invest in the fundAt the end of the hold, when properties are sold or refinanced.
- Who can participate
- Buy a cabinAny qualified buyer.
- Invest in the fundVerified accredited investors only.
01
Choosing a path
- What is the real difference between buying a cabin and investing in the fund?
- Buying a cabin means you hold the deed to one property and every decision about it. Investing in the fund means you hold a membership interest in a pooled vehicle that owns several properties, and our team makes the operating decisions. The first gives you control and personal use. The second gives you exposure without anything to run.
- Which one is right for me?
- The Ownership Assessment is five questions and about a minute, and it points you toward personal use, direct investment, passive investment through the fund, or simply staying on our newsletter until the timing is better.
- Can I do both?
- Yes. Some people buy a cabin through our brokerage, Local Realty Group, and separately hold an interest in the fund. They are entirely separate transactions with separate paperwork.
- Do I have to live in Tennessee?
- No. Most of the people we work with live elsewhere, which is part of why our operations team exists.
02
Buying and owning a cabin
- How does the buying process work?
- Local Realty Group represents you on the purchase. We look at what the property should earn as a short-term rental before we look at what it costs, then handle the offer, inspections and closing. If we developed the cabin, you also get the build and furnishing detail behind it.
- Who manages the rental after closing?
- You can bring in any manager you like, or our operations team can run it under a separate management agreement. Either way, you keep the deed and the decisions.
- What ongoing costs should I plan for?
- Debt service, property taxes, insurance, utilities, internet, cleaning and linens, supplies, booking platform fees, management fees, routine maintenance, and a reserve for larger repairs and furniture replacement. We walk through a realistic expense picture for the specific property before you commit.
- How much does furnishing cost?
- It varies with the size and standard of the cabin. Our design and FF&E team quotes it property by property rather than using a rule of thumb, because furnishing quality has a direct effect on booking performance.
- Can I use the cabin myself?
- Yes. Owners regularly block off dates. Every night you use is a night that is not earning, so we plan personal use into the projection rather than ignoring it.
03
Short-term rental income
- How is short-term rental income generated?
- Guests book nightly. Gross booking revenue comes in, platform and processing fees come off, then operating costs, management fees and debt service. What is left is the cash flow to the owner or, in the fund, to the fund.
- Is the income seasonal?
- Yes. Smoky Mountain demand moves with holidays, summer, leaf season and events, and it varies by cabin, view, amenities and location. Anyone comparing one strong month to a full year is not giving you a useful number.
- Do you publish expected returns?
- No. We do not publish projected returns or yields on this site. We build projections for a specific property or offering and review them with you directly, including the assumptions behind them.
- How do you decide what a property should earn?
- We track performance, pricing and supply across the market and underwrite against comparable cabins rather than against averages. That underwriting is also what tells us when to pass on a deal.
04
Investing through the fund
- Who can invest in the fund?
- Verified accredited investors only. Accreditation is confirmed during onboarding, before any offering documents are shared.
- What is the minimum investment?
- The minimum is $25,000. Final terms, including any exceptions, are set in the fund's offering documents, which we share after accredited status is confirmed.
- What does the fund actually own?
- Smoky Mountain short-term rental properties only: new cabins built on land our team sources, and existing cabins bought and remodeled because they are worth more than they currently earn.
- What do I own as an investor?
- A membership interest in the fund, not a deed to a cabin. The fund owns the properties, and your economics follow your share of the fund under the operating agreement.
- How often are investors paid?
- Distributions are made quarterly from operating cash flow, processed according to the operating agreement. Distributions are not guaranteed and depend on how the properties perform.
- What is the $1,000 reservation?
- Rounds fill in the order investors join the list, so a refundable $1,000 reservation moves you up the queue for priority access once we have confirmed you are accredited. It buys position in line and nothing more. It is not an investment, it does not guarantee an allocation, it is fully refundable on request until you sign subscription documents, and it is applied to your subscription if you go ahead. No payment is taken on this site.
05
Fees and how we are paid
- How does LOCAL get paid on a cabin purchase?
- Brokerage commission on the transaction, in the way any licensed brokerage is paid, and it is disclosed in writing on the specific deal. If you also use our management or design services, those are separate agreements with their own fees.
- How does LOCAL get paid in the fund?
- Through the fees and the split set out in the fund's operating agreement. Those terms are in the offering documents you review before subscribing, and we will walk through every line of them with you.
- Are there fees to talk to you or to take the assessment?
- No. The assessment, the discovery call and the walk through of a property or the fund structure are all free.
06
Tax treatment
- What are the tax considerations when I own a cabin directly?
- Owners typically report rental income and deduct operating expenses, mortgage interest, property taxes and depreciation, and short-term rental activity has its own rules on material participation and personal use. How any of it applies depends entirely on your circumstances, so work it through with your own CPA.
- How is the fund reported to me?
- Fund investors receive a K-1 for their share, so items such as depreciation and gain are allocated to you according to your interest rather than appearing as your own property's numbers.
- Do you give tax advice?
- No. Nothing on this site is tax, legal or investment advice. We will give your CPA or attorney whatever detail they need.
07
Risks
- What are the main risks?
- Real estate and short-term rental investments can lose money. Nightly rates and occupancy move with the economy and with new supply, regulations on short-term rentals can change, construction can run long or over budget, interest rates affect both financing and resale, storms and damage happen, and property values can fall. None of that is unique to us, and we would rather say it plainly.
- What happens if a property underperforms?
- We report it. Our approach to performance is to show revenue, expenses, debt service and distributions against what we projected, including what went wrong and what we changed. Investors can ask us to walk through any property.
- Is the fund liquid?
- No. There is no public market for the interests and you should not count on selling early. Plan on the full hold period.
- Are returns or distributions guaranteed?
- No. Neither rental income, distributions, appreciation nor return of capital is guaranteed, and past project results do not predict future performance.
08
Timelines
- How long does a cabin purchase take?
- A typical resale purchase runs a few weeks from offer to closing, depending on financing and inspections. Furnishing and getting live on the booking platforms usually adds a few more weeks after that.
- How long does a new development take?
- Ground up cabins generally run several months to about a year from permit to first guest, depending on the site, the weather and the trades. We give you a schedule for your specific project rather than a generic one.
- How long is fund capital tied up?
- Plan on roughly eight to ten years. At the end of the hold, properties are sold or refinanced and proceeds are distributed under the operating agreement.
- How quickly can I get started?
- The assessment takes about a minute and a discovery call is usually within a few days. For the fund, accreditation and onboarding come before any offering documents are shared.
Still deciding
Not sure which path fits you
Five questions, about a minute, and it will point you toward owning a cabin, investing through the fund, or simply staying on our list until the timing is right.
Important
These answers are general information about how we work and are not an offer to sell or a solicitation of an offer to buy any security. Any investment in the LOCAL Partner Fund is made only through the fund's offering documents and operating agreement, is limited to verified accredited investors, and involves risk, including the possible loss of capital. Past project results do not predict future performance. Nothing here is tax, legal or investment advice. Please consult your own advisors.