Smith Lake Rentals and Sales

Vacation Rentals and Assisting Buyers

Jeff Thomas

Which side of the lake is best?

I get this question a lot from prospective property owners that are not familiar with the lake.  The easy answer is there is no best part of the lake.  There are hot areas of the lake, there are areas that are a closer/further drive, there are areas more/less convenient to groceries/marinas/restaurants, there are busier/calmer areas, etc.   Bottom line, the area of the lake should be determined by criteria OTHER THAN the area of the lake.  For instance, do you want to be close by water (or road) to your friends or family?   Do you want to be close to I65 or I22?   Do you want to be where the action is or do you want to be remote?  You get the idea.  If you are like most, you will end up where you find a house or lot that you like.

My first property was purchased because I wanted to be no more than 1 hr 15 mins from my home.  It is on the main channel of Ryan and really busy on summer weekends but that does not bother me one bit…I love it!   My second home was purchased because it was time for something bigger (my cabin is <500 sq ft) and we stumbled onto one of our rental homes an owner wanted to sell in Stoney Point (3 miles north of Duncan Bridge).   Completely different in that it is wider with long water views, shallower and on the main channel but not close to where the boats run.   I now am about to build a third home and it was picked because we found a piece of property that we fell in love with.  It is more central (close to the mouth of Rock) to the lake so it is better for me showing real estate by boat.   Three completely different houses, three completely different situations, all great properties.

So my recommendation is to go into your search with an open mind.  The perfect property is hard to find and will usually require compromise but the fewer the conditions the better your chances of finding the perfect property.

A fun part of my job as a buyer’s agent is the challenge of finding my clients the perfect property.  Let me know when you are ready.

JT

Tax Strategies when Purchasing a Lake Home

When purchasing a lake house, you have a couple of approaches: 1) purchase for personal use or 2) purchase as an investment that includes renting the house out, or 3) a combination of the two.   Lets discuss these options.
Personal use.  This is pretty straight forward.  It works just like your primary home with the mortgage interest being your one tax deduction.  This is your only real option if you are going to use the lake home a lot.
Investment.  This is trickier but can allow you the ability to purchase a lake house, provide you income, and a huge tax deduction.  The trick here is that you cannot use the lake house more than 2 weeks out of the year.   Here  is the trick there….if you are doing maintenance to the property, it does not count against your two weeks.  Keep good documentation of your visits that are not personal use.
So how does this work.   Lets say you bring in $20,000 in rental revenue.  You can reduce the taxable amount by the expenses you incur (mortgage interest, utilities, toys used by renters, yard maintenance, repairs, insurance, property taxes, etc.).   Now the big one:  depreciation!
You should not expect that the revenue will completely pay for the house but it will pay for the expenses of owning and put a little extra cash in your pocket.
Combination of personal use and investment. You can purchase the house knowing you are going to use it a lot AND you want to rent it while you are not using it.  In this case, you can still deduct expenses but they are limited to a percentage based on the personal use vs. rented nights.   All circumstances are different so check with your accountant on your situation.

Rule of thumb on the cost of a lot on Lewis Smith Lake

Finding a lot on Smith can be overwhelming.  On my MLS, there are 444 lots ranging from $14,000 to $1,500,000.   The 444 does not include the other MLSs that service the lake.  I am going to guess there are over 600 lots available on the lake.

I get a lot of calls about finding a lot to purchase on the lake.  It usually goes something like this:  client..”what is the best lot you know about?”, me…”depends on what is important to you, is it money, view, flat, deep water, privacy, etc.”  As you can imagine, not an easy answer.

Most people want many of the same things: deep water, <50 steps, view, on or close to the main channel.   This is considered a very nice lot and a good rule of thumb price for this lot is $1000/frontage foot.  Lots prices can have a higher price/frontage ft than this but they must have special features.  Anything higher than this is usually priced too high.  There are many lots available in the $750/frontage foot range but anything lower will require some sort of compromise (e.g. seasonal, steep, in slough).

Another thing about lots, waterfront is the primary driver.  A 5 acre lot with 100′ of waterfront is not worth a whole lot more than a 1 acre lot with 100′.   Unless you really want the 5 acres it has very little value.

When looking for a lot, think through what you want or do not want so that your realtor can quickly narrow the search.  Unless you are willing to pay top dollar, be ready to compromise, be open-minded and be ready to exercise your creativity muscle.

What is the cost of a Smith Lake house these days?

This is a tough question as there are a lot of variables:  house, lot, dock, convenience, water location, view, steps, etc.   In general, most clients start looking for a newer house, on gradual lot with less than 40 steps, with at least a 1 slip dock, on the side of the lake closest to their permanent home, close to friends/marina/grocery, with a long range view, and yearround water.

If you assume the above, a good rule of thumb is that you can generally find this property for about $125,000 a bedroom.   Be sure and read the “Do we all want the same thing?” article as it talks about the challenges of finding this property.   If you are interested in renting the property and making income then read the “Can rental income pay for a lake house?”