A Winter House Story - Page 1
March 27, 2008 @ 2:13 PM
Words by Anders Hagman
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.
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.
