Thinking about buying a cabin - several questions

[frazwood]

We looked into this a year or so ago... so a couple of comments that haven't come up yet.

1. Post-housing bubble, the mortgage rules have changed (assuming that they haven't changed back), such that you can no longer get a conventional mortgage on a 3-season cabin. You'll have to find a "local bank" that offers terms that are much less attractive (and likely adjustable.... once interest rates go up again in a few years... assuming that they can't stay this low forever). When we were looking, for example, conventional mortgages were about 5% and the ARM-local bank mortgages were 6.75%. This knife cuts both ways, though, so someone selling a 3-season cabin is going to have a difficult time SELLING because of this issue, so look for a MUCH better price compared to a 4-season dwelling.

2. Property taxes are MUCH HIGHER in Wisconsin than in MN. My in-laws are currently looking at a place (for a home, not a second home) of around $300,000 and it has property taxes of $5000 per year ($400+ per month for just taxes). I also think that taxes can vary substantially from county to county within Minnesota, so watch that too. Do the math and figure out how much per month that the taxes will cost... and you'll see that it can make a big difference on what is affordable and what is not.

3. This one has been said previously (sort of), but look at the ENTIRE AREA before buying. Some areas are more remote than others. While remote might seem nice now, it really stinks to drive 30 miles (one-way) to pick up a couple of plumbing supplies, etc... or to go to the movies when it is raining and you're bored.

4. There are a lot of properties that seem really high compared to the market... don't be fooled by these and think that asking price is related to selling price. A lot of people who own cabins have them perpetually on the market (the guy down the street from us... has had his on the market for 3+ years, not budging on price) because they can afford them and enjoy them while they are on the market. When doing comparisons, focus strictly on selling prices.

5. Do your research ahead of time and be ready to act if the right property appears. I still watch properties just for posterity... and you'll see some awesome properties show up at great prices. When they show up, you'll have to act fast. We put in offers on 5 places and got outbid each time. I've see a couple of others show up (and disappear) recently. There are a couple of great websites. Also, some people will put their property on the market at too high of a price and then get frustrated/desperate and drop the price too low... these are harder to find (because they don't show up as new listings), but a good opportunity also.

6. Get a good home inspection, especially if you aren't very handy. With the place that we bought, 60% of the plumbing was incorrect and there is more than a few things that are dangerous about the electrical work too. Folks who renovate cabins seem less concerned about doing it right than they would be in their actual home, it seems. Seriously, get referrals for a home inspector... don't just get any random, unlicensed inspector... get a GOOD one.

In the end, I'm glad that we got the place that we got. It's fun but I enjoy home improvement work. We completely renovated a bathroom last year, which meant that I spent less time on the water than when I didn't have a place. Also, it is expensive and you could definitely get a couple of weeks a year at a nice resort for the same price. It's really about you and what you enjoy.

[UKCM]

Another option is to buy into an association. Somebody else does the yard work, puts the dock in etc. There is still cabin upkeep. Many of the associations are old mom and pop resorts. Cabins are cabins, not lake homes, but that means the projects are much smaller as the place is smaller. It is not for everyone as shared living has pluses and minuses. My daughter loves it as it came with built in friends. I like having others to give me advice and help with winterizing the cabin etc. Not to mention I now have new fishing buddies. Though there are shared group decisions on some things so if you really like to do everything 'your way' this is not a perfect situation. Just another one of the options out there.

I would say in this market you likely could find a place to rent to see if you like the area and lake.

We are now to the point where once we stock the cabin we have to bring next to nothing. We stop in a nearby small town, buy the meat for the weekend from the butcher shop and we are good to go.

Good Luck!

[delcecchi]

We looked into this a year or so ago... so a couple of comments that haven't come up yet.

...

3. This one has been said previously (sort of), but look at the ENTIRE AREA before buying. Some areas are more remote than others. While remote might seem nice now, it really stinks to drive 30 miles (one-way) to pick up a couple of plumbing supplies, etc... or to go to the movies when it is raining and you're bored.

....

In the end, I'm glad that we got the place that we got. It's fun but I enjoy home improvement work. We completely renovated a bathroom last year, which meant that I spent less time on the water than when I didn't have a place. Also, it is expensive and you could definitely get a couple of weeks a year at a nice resort for the same price. It's really about you and what you enjoy.

One thing, is that if there is broadband internet in the area, Amazon Prime can go a long ways towards easing the pain of being in a remote area. I can get a lot of things in Cook, but if I can't Amazon is a good alternative to a 30 mile drive to Virginia.

[traveler]

We looked into this a year or so ago... so a couple of comments that haven't come up yet.

1. Post-housing bubble, the mortgage rules have changed (assuming that they haven't changed back), such that you can no longer get a conventional mortgage on a 3-season cabin. You'll have to find a "local bank" that offers terms that are much less attractive (and likely adjustable.... once interest rates go up again in a few years... assuming that they can't stay this low forever). When we were looking, for example, conventional mortgages were about 5% and the ARM-local bank mortgages were 6.75%. This knife cuts both ways, though, so someone selling a 3-season cabin is going to have a difficult time SELLING because of this issue, so look for a MUCH better price compared to a 4-season dwelling.

One way around this, the route we took: Refinance your home (obviously the rates have to be right, they were last year for us) and pay cash for the cabin. Our mortgage interest is still 100% deductable, and we got a great, fixed rate. Worked out well for us.

[solbes]

One way around this, the route we took: Refinance your home (obviously the rates have to be right, they were last year for us) and pay cash for the cabin. Our mortgage interest is still 100% deductable, and we got a great, fixed rate. Worked out well for us.

We did the same thing 6 years ago to purchase our lake property. Cash out refinance where we took equity out of the home and were written a check which was used to purchase the land. Of course you need to have enough equity in your home to do this, and it will require a re-appraisal. I was semi shocked to find out how low our home value had dropped last summer when we re-financed again to a sub 4% interest rate. Kinda put our cabin building dreams on hold for a little longer

[pegleg]

[anchor man]

We bought a park model trailer in a very nice park in Crosslake. The upkeep is virtually zero. They do all the yard work, and we just clean the trailer, winterize it, just the basic stuff. It's great just showing up at the cabin, unpacking the car, and then play time. No mowning, raking weeds off the beach, worrying about the septic..it's all taken care of with our assoc. dues.

If you find a place with plenty of lakes in the area, you can still do your camping trips and own a cabin at the same time. It doesn't mean you can ONLY go to your cabin..you can still do all the other stuff you want

[Raider4ever]

Personally, I hate doing yardwork and am not that handy with home maintenance. Thus, I would take my $1200 (or more) a month "Mortgage" and stay at $14,400 worth of resorts every year. Heck, throw in your "taxes" and upgrade another 1-3 grand. Also, I don't agree with Pegleg's accountant. What's the difference if you re-fi and buy a cabin or blow it all on hookers and Hold 'em in Vegas. It is still a mortgage on your primary home and any interest you pay on that re-fi mortgage should be tax deductable.

[traveler]

Raider; my accountant agrees...

[WyoChris]

Queens

I am in a similair situation...... I'm stationed in North Carolina with the army, but have been looking to buy a cabin as I plan to move back in MN in the next few years. I've been trying to take advantage of the weak housing market/foreclosures and I almost put an offer in on a cabin on Yellow Lake a few weeks ago, but backed out at the last minute.

You mentioned you liked a smaller older cabins and prefer the rustic feel. While older cabins can sometimes be very simple, certain older cabins can become money pits as well. I visited a cabin that looked descent from the outside. However, I took a tour with the real estate when it was raining an saw rain leaking through the roof.... something I wouldn't have seen if I went on a sunny day. In addition, the point well was very old, the A/C was old, the cabin needed a new paint job, etc. Make sure to do a good inspection of the cabin.... because it may turn into a money pit.

Also look at the taxes.... I was surprised at how much the taxes change in WI vrs MN.

[jerkbait]

One way around this, the route we took: Refinance your home (obviously the rates have to be right, they were last year for us) and pay cash for the cabin. Our mortgage interest is still 100% deductable, and we got a great, fixed rate. Worked out well for us.

[varmithtr]

Mortgage interest on your primary residence, whether a refinanced loan, took equity out, whatever, is absolutely deductable. Definately time to get a different accountant.

A mortgage on a second property is also tax deductable. You can only have one additional, however.

Even before the mortgage world collapsed, you still needed to have a year round habitable home to get conventional, 30 your financing. Appraiser use to be much more liberal about a baseboard heater here and there. Typically, for seasonal, rates can be as low as the mid 3's right now, but only on up to a 7/1 adjustable rate.

Obviously, we are in a tough real estate market. I would go for the cabin vs. the other things mentioned. You can't leave resort weeks to your heirs. Also, a park model type situation is probably fun for a weekend or 2, but all you would be leaving your family is an old trailer and a big annual lot payment. You would never make any equity. Owning a cabin is a great investment, for as far away as it may be, everything cycles, and lakeshore will rise in value faster than most property.

[frazwood]

One thing, is that if there is broadband internet in the area, Amazon Prime can go a long ways towards easing the pain of being in a remote area. I can get a lot of things in Cook, but if I can't Amazon is a good alternative to a 30 mile drive to Virginia.

Kind of related to this is cell phone service. Last year, there was a bunch of nasty weather in the area of our cabin. And because of the way our cabin sits on the water, we have almost no view to the west so that we can see weather coming in.

Luckily, we have decent cell phone service, so we were able to use various apps on our smart phones to watch the weather. This was really helpful on the day when the tornado hit Wadena.

Just another thing to think about.

[Steve Foss]

You can't leave resort weeks to your heirs.

That's one aspect that pushed Dad toward cabin ownership rather than resort vacations. However, it's a very dicy deal leaving property to heirs (plural). Lots of potential conflict there through the generations. Our family cabin is set up so that one single person gets it, and that person has sole discretion on the lone person it's passed down to.

Can that spur some conflict? You bet, but it's not conflict that usually ends up in legal title battles and lawsuits, which happens many, many times when property is willed to more than one person.

Just saying.

Anyway, sorry for that short off-topic.

[harvey lee]

When I have looked at the costs of owning a cabin versus any other type of vacation on a lake, I have decided the cabin will always be out.

I see way to many people go to thier cabin and work most of the weekend getting things fixed and doing the lawn work while I fish. Then the concerne about breakins.

Then there is the upkeep costs, insurance and the spendy property taxes.

It may be for some but I like to travel about a bit more and not spend my weekend time working on a cabin on the lake.

[Sonicrunch]

When I have looked at the costs of owning a cabin versus any other type of vacation on a lake, I have decided the cabin will always be out.

I see way to many people go to thier cabin and work most of the weekend getting things fixed and doing the lawn work while I fish. Then the concerne about breakins.

Then there is the upkeep costs, insurance and the spendy property taxes.

It may be for some but I like to travel about a bit more and not spend my weekend time working on a cabin on the lake.

My thoughts exactly.

[Koepper08]

My family built a cabin 8 years ago. I love fishing my home lake and there are so many lakes in the area that I haven't even touched. It is an adventure every time I go up. It never gets old, just switch what species or lake you go to. I know I missed out on a ton of summer vacations b/c we built the cabin but it was definitely worth it. Our cabin is 4 hours away but I still make it up there every other weekend on average in the summer and spend my Winter Breaks from college up there as well. Just pick an area with access to other lakes close by.

[delcecchi]

harvey lee: When I have looked at the costs of owning a cabin versus any other type of vacation on a lake, I have decided the cabin will always be out.

I see way to many people go to thier cabin and work most of the weekend getting things fixed and doing the lawn work while I fish. Then the concerne about breakins.

Then there is the upkeep costs, insurance and the spendy property taxes.

It may be for some but I like to travel about a bit more and not spend my weekend time working on a cabin on the lake.

My thoughts exactly.

I would differ. I estimate the time I spend "fixing things" as a couple days a year, tops. Lawn mowing is an hour or so once a week.

Opening is a day, what with getting stuff out and closing likewise. If we didn't have deck furniture that my wife likes to put away neatly and clean it would probably be half a day.

Now if you have a 4 bedroom 3 bath "cabin" on 17 acres of lawn with flowers and a garden, then that is different.

As for the taxes and stuff, a couple weeks at a resort or maybe a week and half. Don't get much resort time for 3grand, at least on Vermilion. And normally there is a small amount of appreciation which will cover part of the expenses.

That is my experience. Of course if you bought in 2007 or 2006, story not so good.