So I got a house in the mountains about 3 years ago. Not just renting this time, actually bought one. Turns out it added a whole new dimension to my snowboarding life – both personally and financially. To give you, or your parents, a hint of doing the same thing, let me tell you my winter house story.
Words by Anders Hagman
It was Midsummer’s Day in Sweden and a heatwave was on. It was indeed a strange time to gaze at a tiny advertisement my girl had found in the local paper in the area we were visiting: “Great investment opportunity! 4 small cabins on large lot near lifts…” It was accompanied by a stamp-sized black and white picture of a small log cabin.
It was just before my mother’s birthday lunch as well, so it wasn’t until we were all fed and happy that me and my brother-in-law were able to hook up to the internet and read the rest of the ad. It contained a number of poorly taken images and very little useful info.
At the time it was just a hunch, and it wasn’t until very recently – after scouring hundreds of more ads looking for bargains – that I realised that this is the kind of ad you want to look for. At least if you want to find a decent place located near a decent resort. As soon as the usual recovery/hangover period of midsummer was over I called up the real estate agent. Surely the cabins would still up for sale and we could take a look if we wanted.
So a day later me and my brother-in-law drove up the hill to have a look. Sitting in the shotgun seat of the car I booted up my laptop and created a spreadsheet with all of the expenses relating to a potential purchase: mortgage payments, insurance, utilities, taxes…
These are unfamiliar terms for someone who had never owned a property before, but we had each bought a regular house just recently, so we were getting into it. Once I was done, there was half a screen of them in front of me and we were still probably missed some. This was a little discouraging but at the least we’d have a nice drive on a sunny day we reasoned.
The outlook didn’t improve once we arrived. Right in front of our parked car was a shed with a door half off its hinges. Behind the shed was a large pile consisting of miscellaneous garbage and furniture. This pile appeared to have been covered by snow a few times over the last couple of seasons. The place had obviously been mismanaged, and we hadn’t even gotten out of the car to look at it yet.
Yet, since the location was indeed good – I had spent the better half of my upbringing hiking and riding in the area, so I knew – we decided to have a browse. After all, both we and the real estate agent had interrupted our vacations for this visit.
The agent appeared honest and when touring the place he pointed out more things that needed a handyman. My brother-in-law, however, kept shooting photos of everything, something which later turned out handy.
Once in the car again and on our way back we summed up what needed fixing and added estimates for this to the spreadsheet. Turned out the price still was in the ballpark we could afford.
So I opened up a new spreadsheet on my laptop and created an assumed Income Statement. Suppose we bought this place, fixed it up, then rented it out all the time – what would happen to the place and to our personal finances? That was my idea.
After a few fair guesses regarding how many weeks per season we would have guests and the percentage a rental agency would charge for managing the visits, it suddenly looked like a great opportunity. We would actually make money by buying this! Could this be true?
Even when being fairly pessimistic in our calculations, it still looked like we would be in the positive spectrum financially – even considering bad snowfalls and excluding the likely growth in market value over time.
So we now started to consider a bid. All we needed to do was make up our minds if we would like to spend the better part of the rest of the summer fixing it up. Due to steep taxes on pretty much everything in Sweden, this is a common activity for summer vacations. For example, a lawyer or surgeon has to work about 10 hours to be able to pay a mechanic for 2 hours of work on his car. This implies that if he can do it in less than 10 hours himself he is better off doing so. So to us Swedes, it did not seem like a strange thing to sacrifice the rest of the summer for a cause like this. (But I can understand if it does to you!) Convincing our dearests to do the same took a little longer, but a few days later we made an offer on the place. It was a little lower than the asking price – with references to everything that needed immediate fixing – but within a week of seeing the place for the first time we got a call from the agent to say it was ours if we completed the paperwork and transferred the money.
We weren’t exactly sure if this was a good thing or not, but we knew it was time to pack up the toolbox and cancel kitesurfing!
So let’s stop for some advice here. Considering the pile of money involved in something like this, you want to get a sure grip on the financial dimensions before investing. There’s really not a whole lot more to it than above but if you want to get into details on the property business there are tons of literature on it, both online and on paper. So unless you’re trained in it, spend a little time understanding income, expense, assets, liabilities and so forth. It’s not difficult, but very valuable. Or, if you are as young as most readers of Onboard, convince and involve your parents in doing this.
The one thing to remember is, as this real-life story shows, that owning a house can actually be achieved without costing you any money at all. The rent brings in more money than interests and instalments. So financially my winter housing story is one that is making money for us – but perhaps just as important, it provides us with a free winter home when we need one.
So let’s get to the personal dimension now – and it’s not one you put on a spreadsheet. This means the answer may not be as clear as a positive or negative number, although it is probably just as important if not more so.
Just as with the financial one, we weren’t sure where we would end up personally when throwing the dice, but we were pretty sure it would be on a positive turn. Having our own place in the snow is an obviously good idea since all involved love various activities on frozen water. Fixing one up may not seem like as much fun, but in my case I was willing to spend some time to learn how to do it, and my brother-in-law is a handyman by trade with his own shop. So at least there was one of us who knew what we were getting into in this area.
The latter turned out to be a blessing. So if you have a snowboarding friend like my brother-in-law, hook him up on any ideas you have in the cabin area immediately.
Even though discovering a number of large unknown issues later with the place, fixing them has made us grow as individuals. The same goes for just owning a place. You naturally take on a whole new level of responsibility for it. More and more advantages have shown themselves over time. It’s a great feeling knowing you are going to get X number of days on snow each year. You get a lot of new mates, because people do need a place to crash quite often.
Last summer we pretty much completed the place, adding a hut with a state-of-the-art wood-fired sauna. Those of you who know a Scandinavian know that this is a necessity, valued more dearly than any other room in any house.
One theory for the popularity of spending time in the saunas is that it’s one thing which the government can’t put taxes on. Another is that it’s a damn good excuse to down a few cold ones. My own personal theory is that we just need a place to defrost once in a while since the average temperature over the year seldom climbs above zero degrees in some areas.Anders Hagman is a Swedish financially literate former pro rider who would like to see more snowboarders making more money while making more runs.