To buy a lodge, or not

A snowHead

sorry know nothing about renting but a couple of points that jump out for me:
260 euro does not seem enough to get a 50+Sqm 3 bed but I know nothing about the 3V.
Why do you need a repayment mortgage, it is not like you need it to live in come retirement.
Your 750 seems about right, remember the co op fees

A snowHead

Well, the person's real but it's just a made up name, see?

Like what @pam w, says, it's about the net cost - If it's purely about money.
But it never is unless you're a Swiss pension firm in which case it ALWAYS is.

There's something about owning your own place, be it a 24m2 bolt-hole or a 240m2 chalet, which transcends the pure financial side of things.

I've often dabbled with the idea of getting a boat (36'-40', nothing fancy), and the issues are the same.
I look at my usage, how much revenue I could get from a charter firm, but they would want the weeks I want, and the mooring fees are more if its in a desirable location ( co-pro fees TdS / TH for French property ), I'm still at the point where I charter instead. Also, I know people who have done this, and they don't make any money.

The key difference is that with a ski property it is has potentially increasing asset value, whereas a boat is just a money pit.

You need to Login to know who's really who.

If we did it, I think we'd go french mortgage, because you're tying the property to an internal market.

The idea of separate markets is great when you belong to what has been a stronger market/economy, EU Exit creates a variation that hasn't been there before. We might do better or worse but the chances of worse are much bigger than before and the gap in inflation (or crash) between the two countries could be vast. At least if linked to the economy in which the debt sits that's the only variable, you increase or decrease rent and payments inline with the local situation.

Repayment mortgage ,because I guess my theory is why not, at least in 20 odd years, if not before its yours and if we want to ski all winter or stay all summer we can with little cost. I know the interest only would be say 120e PCM but that 200e eventually gives you something. Especially relevant as it seems people are saying that you're likely to see little increased value of the asset itself.

Anyway, snowHeads is much more fun if you do.

@WindOfChange, living where I do, I know so many people with boats, some of whom find them a burden and other people without them, who hanker after their own, but know too much..... I have one good friend who did a boat share last season - disastrous. He's a perfectionist, and the boat was too often far from perfect. This year he is sharing a boat (one he used to own, as it happens) with another friend, whose new wife isn't interested, and is thinking of selling it. The friend who is sharing costs for this season is thinking of buying it - but knows all the pros and cons. He is also someone who really enjoys spending days "messing about" and maintaining and tarting up the boat. But he also likes to take wider family - grandkids etc - and they are not up to squishing into the sort of little boat which can be sailed single handed, and is a great size for two or three (i.e 28'). He would really like to have a bigger boat and keep it in France (which he's done before, and knows all about, and where marina costs are a lot less) but Brexit has greatly complicated that.

There are many parallels with the "shall we buy a ski apartment" dilemma.

40' is a big boat. The one I crew on is just under 36 and comfortable for 3 of us - with two loos! Marina charges are horrendous, especially for all tide access (which ours doesn't have) and after the Covid boom there is a waiting list for berths, unlike the pre-Covid situation.

If you are a perfectionist, and want everything "just so", you will get a lot of pleasure out of your own place/boat. But you won't want to rent it out to others who won't look after it your way, will nick the best knives, wear their ski boots indoors and have fenders in all the wrong places when they smack into a pontoon.

You'll need to Register first of course.

Loving reading all of this. We happily owned a chalet for nearly 20 years, never intending to let of course, but we successfully did for weeks like half term and NY when we didn’t really want to be there. We had five bedrooms so one was a lock up room for our stuff as well as a ski locker in the ‘garage’. The last few years of ownership we were able to spend much longer there and then we felt it had run its course.
We are now enjoying visiting others places, and as I type my OH is down at the marina fiddling about on our little motor boat, which I bought after we sold the chalet. We probably couldn’t have justified owning the boat (and huge marina fees) while we had the chalet, as we wouldn’t have had the time to use it.

Then you can post your own questions or snow reports...

After all it is free

@Comptp, you can do all the sums, but if you consider it purely financially is is unlikely to work, really it is an investment in lifestyle and fun. Don't do it if you will have problems if the predicted rental income doesn't arrive.

So set your budget as money you already have (in our case my mother had recently died and we had some inheritance) and can afford the outgoings including any mortgage. Our annual costs are around 2% of what we paid for management/energy/taxes. While online prices are a useful guide, particularly to compare locations, you may find yourself wanting to stretch further to get what you are thinking of once you see the actual apartments.

And you will find yourself wanting to use the place for more than a week in the summer, that is a really great time to be in the mountains particularly with the whole school holidays at your disposal.

*Ski* the Net with snowHeads

[quote="Comptp"]This has all been amazing, what a group of people

We put down €180k and borrow €80k over 25 years on a repayment

Just a question, but have you spoken with any French lenders or brokers. Since Brexit a number of them have really tightened up lending criteria to British nationals, some will only lend a minimum of €100/€150k…and was one of the reasons we ended up buying a 84sq m 3 bed apartment in the Maurienne valley for just over £85k in cash, in a town not a ski resort so all year use by cyclists/walkers in the summer and obviously skiers in the winter and a short hop through the Frejus tunnel in to Italy.

We don’t need to let it out as the annual costs aren’t that expensive but if we do have found someone local who will meet and greet and do the cleaning/laundry etc at a reasonable price.

You need to do lots of research.

snowHeads are a friendly bunch.

snow reports

Can't imagine you'll find a decent 3 bed apartment in 3V for €260k, at least not in a location to make a decent rent over enough weeks to make it a worthwhile purchase. Sure, sometimes being outside resort is what people want, but not enough people want to rent a place that far from the acitivity they're coming on their 1 weeks holiday to do.

We looked at 3V (where we saw a teeny apartment for €300+, and decided against it) before settling on Tignes VC, our 41m2 1 bed +bunks in the hallway was €245k in 2019, a quick chat with the estate agent about an unrelated issue and she was trying to get us to sell, turns out our place is worth €330k+ now... it rents every week over the winter we're not there, we will never go to it during the peak weeks and it just about keeps itself in terms of money. If we wanted to use it over the peak weeks we'd be looking at a loss.

One thing I have mentioned to friends thinking of buying is: if you are in for the long haul, then remember climate change. Buy with access to height, and somewhere where climbing (arolla, chamonix), DH and other cycling (alps d’huez), or kayaking (bourg st Maurice) is a happening thing.

Our shack on the hill has easy access to a lot of resorts, has DH in the summer, and great walking - some climbing. Ours is never rented out and we are working hard on how the Grom can keep it on when he inherits. We are here for up to eight weeks a year, and have loved every minute.

You know it makes sense.

Otherwise you'll just go on seeing the one name:

@Comptp, check mortgage rates. CH is 1% for a 10 yr fix. A 1m chf loan costs you 10k per year. Your cost is just the deposit and ongoing interest payment, not the total cost. Why pay back the loan with low interest rates? And your capital appreciation is likely to be much higher in a quality property in a sought after location rather than somewhere cheap that’s hard to get to.

A snowHead

A snowHead

Can I just check what you mean by CH and 1%? Sounds super viable, would you be able to expand please.

Well, the person's real but it's just a made up name, see?

@AL9000, Premier.

You need to Login to know who's really who.

@Comptp, CH is Switzerland country code.

If you tag @BobinCH in a reply he may* get an email alert so he knows you’ve asked him a question Very Happy

(*if he’s set things up accordingly)

Anyway, snowHeads is much more fun if you do.

You'll need to Register first of course.

@Inboard, if he's set his profile to receive alerts..

Then you can post your own questions or snow reports...

There's nothing wrong with putting a utility value into your property cost/benefit equation. If you do that, then you can see what the utility value is and decide if it's reasonable.

That said, our 2003 apartment purchase in Switzerland is so far returning an 8% net profit, once all the costs, taxes, rentals and expenses are taken into account. Which isn't bad but not as good as the same amount of money invested in 2003 might return. The key thing here is might - there's a danger of using the best historical investment for comparison of future choices: investments are diverse enough that you might not choose the optimal alternative to a holiday property at this moment in time, and so be both worse off and have missed the utility value of the place.

One thing that you certainly should get used to is making comparisons on the basis of £/m² as a starting point. So, for example, we have a place in a satellite of Verbier. The average for an average apartment in Verbier is around £10,250/m² according to a recent UBS survey of actual sale transactions, whereas our satellite resort (linked by lifts and pistes but obviously, not as big or centralised) is around half that. Within these averages, the range is probably from -20% to x3 or more depending on build, nearness to facilities, and so on. So the £/m² is a useful evaluator as otherwise, you can find yourself comparing apples to oranges, even within the same resort, let alone between them.

For example, in almost every resort, the £/m² rises significantly as you get within walking distance of the main lift.

After all it is free

I bought 15 years ago, 30% down and a cheap fixed rate repayment mortgage (mrs worked for a big bank) , set up own website and did all my own marketing and selling. When the kids were little only used the place 1 or 2 weeks a season and rented typically 12-18 weeks a season. Used a local managing agent for cleaning, key holding and repairs. Was able to cover all costs including taxes, utilities mortgage through rental income and paid the mortgage off 2 years early.

Model the costs but IMV if you can get a low interest fixed rate repayment mortgage and are willing to do your own DIY and market/rent through Chalets Direct, AirBnb, Booking.com etc you should be able to make it work. Key is that it needs to be attractive enough to the rental market to sell in the low season weeks and have a high occupancy rate. Attractive means, views, aspect, quality of building, location, location, location..... Including my use in the early years I was getting 70-85% occupancy by value and usually only was empty opening and closing week of season plus the odd week here and there.

My running costs now without mortgage for a 2 bed in Mottaret is £6k annually and I recover that easily by just renting NY/XMas and the half term weeks and have personal use the rest of the season and summertime. Capital value has maybe doubled but I have no intention of selling.

Best thing I ever did...

@skimottaret, Good Job!!

*Ski* the Net with snowHeads

snowHeads are a friendly bunch.

@pam w, In the first 10 years when renting heavily we only used the occasional high season week and snuck the kids out of school. We now spend the festive holidays in the UK and I have zero interest in being in resort in Feb during the school holidays so renting the high season weeks works for us. But, given the OP has teachers in the party and is keen on high season week usage it may be a deal breaker as you point out.

snow reports

Investing in proprty in uk and then using profit to ski is possible…but we get roughly 7 weeks’ skiing for four plus two weeks’ or more DH and climbing per season. That’s way more than you can fund with profit from a rental after tax in England. ‘.. Oh you are restricted to one place…’ people say, well where we are we’re restricted to around 10 resorts within 45 mins. We had a ball today in Vercorin in knee-deep fresh…

One good thing about having your own is the lack of need to shift gear all the time …

You know it makes sense.

Otherwise you'll just go on seeing the one name:

Asking friends and family to clean will be your first mistake. We all have very different ideas of cleaning. Just ask them to cover the cost of the cleaning agent- no one ever minds that.

A snowHead

The strongest possible +1 re the above.

A snowHead

@Nadenoodlee, I agree wholeheartedly with that. I think most people would prefer that. When our grown up kids stayed with their friends but without us I used to ask them to collect enough to cover laundry and cleaning. If they stayed with us then I used to do the laundry as I is would if they stayed with us here.

Well, the person's real but it's just a made up name, see?

You need to Login to know who's really who.

@luigi, This argument works equally well for cars. Why buy (or contract lease) a car only to watch your assests rapidly evaporate. Instead use to money to but stocks and shares and rent a car whenever you need one - just you going somewhere, rent a small sports car; taking half a football team, rent a minibus; going to the tip, rent a van. I had an uncle once in insisted on owning a car in which he only did a 1000 miles a year. It would have been cheaper to just phone for a taxi whenever he wanted to go anywhere.

Anyway, snowHeads is much more fun if you do.

Yes - and if your family circumstances are such as to make it imperative that you are holidaying those weeks, the whole enterprise looks a lot less viable financially. I think that provided you can afford it without beggaring yourself or taking risks, the decision depends a lot on how much time you will spend in your place, and how much better it is, than renting somewhere else. We did not intend to buy a place, but looked over the site with the immo - we were just tyre-kicking really. But on the long drive home we were excited about it, it was such a glorious site and we'd discovered a resort where the snow was as good as anywhere in the 3 Valleys (in a sunny, snowless, January) and where the coffees and lunches were half the price. We asked ourselves whether we'd be happy to take our holidays there, for the foreseeable. And decided that yes, we would. And we did. We told ourselves we would be happy to keep skiing the same domaine, year after year, not seeking new pastures. And we did. We told ourselves it would be wonderful other times of the year. And it was. After the financial analysis is done - and I do think you need to do it to ensure it is financially sustainable and you are not kidding yourself about something which might become a burden - the decision in the end comes down to something other than money. There is no way buying a place in the Alps is the best investment decision and its important not to delude yourself. Buying an expensive new car is a crap investment decision, but nonetheless it's what makes some people happy. You need to know yourself.

You'll need to Register first of course.

And the school holiday thing only lasts as longs as your children are in school, anyway. It may seem like a long time, but actually, it isn't. The years race by and before long, school holidays are precisely when you and your family won't be using the place and are happy to rent it out to cover running costs. You could leave it 'till after they're through school, but with property price inflation, you may find you've missed the boat.

Yes, if you have surplus income, then it's important to consider whether you want to be a rentier (buy to let) or not. My understanding from the few people I know who are is that to be really cost-effective, you have to have a portfolio of properties. A colleague of mine has 13 rental flats. He says the margins are so thin that he needs to operate on this scale for it to be viable long-term (think 20+years). He can't see why people do it with 'just one or two' properties.

A holiday home has, as I said, an element of utility value as well as RoI. So if you want to be thorough, do research on by-to-let and then use it as a baseline against all the to other investment options like increasing untaxed pension contributions, paying off your home mortgage early, buying some gold, and so on. Then see how the holiday home compares and how it's utility value factors into the equation (or doesn't).

Then you can post your own questions or snow reports...

Consider sharing the costs of a large campervan, and running it into the ground over 20 years before you retire. You do not have to sell the campervan in the end. You are not fixed to one resort. You can use it for summer holidays as well. You can go skiing, then drive off to the south of France or Spain and soak up some sun.

Benefits vs costs, depends on your point of view.

After all it is free

From all the posts I've read here over the years, there seem to be three financial scenarios for owning a Alpine property:

The first is the 'Sunak' scenario, where you're affluent enough (or can combine with family) so as to afford it outright, without renting.

The second is the 'comfortable' one, where you have enough spare income of your own to fund a partial mortgage (say for <50% of the purchase price), and opt to rent out to cover running costs. You have enough capital handy outright to cover the other 50% or so of the purchase price.

The third is the 'tight' or buy-to-let model, where you have a 25+year repayment mortgage and need to maximise rentals to cover this plus running costs. You rarely get to use the place yourself as you need each and every rental week to pay the mortgage. In my view, leaseback and similar are just a variant of this 'tight' model: because if you can't get the rentals, then the model falls apart, just like if you can't get enough rentals to over the mortgage repayments.

From what I've seen, the majority of owners on Snowheads are in the 'comfortable' category: they rent out to cover costs but aren't forced to push hard to maximise rentals just to stay afloat, so to speak. And the usual feedback is that it's much harder than people think to make the 'tight' model work, as holiday home rentals aren't like the 52-weeks-a-year of a buy-to-let: you only get income from winter and summer seasons and even then, only the school holiday weeks are guaranteed. Again, it's subjective, but those of us in the 'comfortable' category probably combine as many personal use weeks as they want with commercial rentals, with about 8-10 weeks/year of rentals (mainly school holidays). A smaller minority operating the 'tight' model seem to have it as a much more serious business and really need more like 15-20 weeks a year for the model to work and cover the cost of the mortgage plus running costs and refurbishment.

"What's the worst that could happen?" is always a sound sanity check in these cases. In the Sunak scenario it's that you have to sell your property, perhaps at a loss, but in the grand scheme of things it's an irritant, not a catastrophe. In the 'comfortable' scenario it's that it becomes a bit of a White Elephant and while it's something you can afford to finance (although possibly only just), it turns out to be a poor investment compared to alternatives you could have funded, then takes 2-3 years to sell*. In the 'tight' model, you're always on tenterhooks in terms of absolutely maximising rental income just to keep afloat and if for some reason the market sinks, then you're stuck with a non-fungible black hole.

And by non-fungible I mean that *a holiday home is not readily exchangeable for cash: don't assume you can sell it quickly if you either need the money because of changed domestic circumstances, or decide to fold the investment. This is also true of primary residences, but much more so for holiday homes - I've seen attractive properties of all types in our village sit in the immobiliers' windows for a couple of years before (I assume) selling. The holiday home market can be slow.

*Ski* the Net with snowHeads

Help!!

To buy a lodge, or not

snowHeads Forum Index >>> The Piste