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At the end of January, the Finnish media wrote about a 100-year-old house near Kotka, which was put up for auction for just €500. The building with an area of 155 sq. m eventually left the auction for €10,000. The house was designed for wood-burning heating, but now water and electricity are connected to the plot. According to experts, the building can be used only after a thorough repair. The second option is to fully demolish it and build something modern instead.
If you look at other examples of super-cheap Finnish real estate, you almost always find features that make it impossible to operate without additional investment. And in this case, the real price may be twice or three times higher than indicated in the ad.
Eric Rosenfeld, Habita: "In terms of population, the whole of Finland is like neighbouring St. Petersburg with the Leningrad region, even smaller, and in terms of area it's like Germany, but with 15 times less people. Huge territories are not inhabited at all. More than half of the population lives in Southern Finland, where the capital is located. The rest of the land is our famous forests and lakes, but there are few people who want to live there. And any price is determined by the classical principle of the ratio of supply and demand. If there is no demand, the price also falls."
Both individual houses and apartments in a multi-storey building can be very cheap. The situation with them is fundamentally different.
The buyer of the apartment focuses primarily on the place of work or study. Therefore, the price falls as you move away from the city center: it is long and inconvenient for people to get from there.
But there is another significant point. Most apartments in Finland are located in housing cooperatives. They are arranged so that each apartment owner becomes the owner of a certain number of shares of the housing association and shares responsibility for the condition of the building. This means that repairs and other maintenance costs are entirely the responsibility of the owners. It is possible that a large and expensive renovation is planned in the cooperative in the coming years: for a house with 30-40 apartments it can cost hundreds of thousands of euros. Therefore, in your mind you need to add to the price of the property future contributions for repairs. Fortunately, you can find out about it before purchasing.
Olga Pulkkinen, In and Out Oy: "Read the documents from the management company and the list of repairs in the house for the next five years. If you plan to repair pipes, paint the facade and other large works, then an apartment in such a house can be cheaper, since the costs of these repairs are distributed among all the owners."
However, if you calculated the real cost of the apartment taking into account the repair, and it turned out to be at the market level, such a scheme can carry a certain benefit.
Pauli Hiekkavirta, Vipcon LKV: "The purchase of such an apartment can be considered as a way to save money. The most expensive work is the replacement of pipes and sewers. It is made once every 50 years. However, the management company does not require the entire amount from the homeowners at once. As a rule, the payment is posted for a significant period of time, which can take decades. Depending on this period and the initial amount, monthly payments are calculated, which are added to the rent. For the buyer, this means that the full cost of the apartment they will pay perhaps in 20 years. So instead of going to the bank, proving your solvency and asking for a loan, you can immediately receive a ready-made installment plan."
When buying a separate house, the situation is different. Homes are bought more for recreation and living away from the hustle and bustle of the city, so proximity to civilization is not so important; at the same time, the availability of infrastructure plays a crucial role. Old houses with no running water or electricity can be given away for a song. If this house is located outside the village, the laying of communications will cost you more than the purchase. Or you will have to drag water from the well during brutal Finnish winters.
Real estate for ridiculous money can attract attention, but the prospects for its use are often unclear. If you are not going to live there or regularly relax, it will not be easy to rent out such an object. After all, the main thing for the employer is the right place, and cheap objects often have an unsuccessful location. The second thing that the future tenant looks at is the condition of the house. So again there is the question of investing a certain amount in repairs.
Eric Rosenfeld: "There is practically no demand for such properties from foreigners. People who come to Finland from abroad, want to work or study here, respectively, the location of the housing they intend to buy is important for them. This is not Spain or Bulgaria, and the buyers are not too rent-oriented. Among the transactions in Finland, 96% are made by local residents and only 4% are made by foreigners. People buy real estate for themselves."
The second use case is the purchase of real estate for demolition. But here it is necessary to proceed from how much you like the location of the site on which you will then build a new house.
Olga Pulkkinen: "A house for demolition in Imatra can be bought at the price of a plot for €20,000. Then we think and make an estimate: what to do with it, how to repair it, and how much to invest in it? Or just buy a plot for €10-20 thousand and build it. Everything should be calculated based on your needs and taking into account the fact that you are in a country that speaks a different language, and in many cases you will have to pay an intermediary to resolve your issues."
Eric Rosenfeld: "In my practice, there was an example of a house for demolition for sale. A family bought a house in 2012, but they did not live there, they left and abandoned the house. It has fallen into disrepair, and is now being sold as a plot of land with a building for demolition. This does not mean that it will actually be demolished. The new owner can hire repairmen and put the building in order. The trick is that if the house is sold for demolition, the seller is not responsible for hidden defects for several more years. And in the case of the sale of residential premises they are. You can profit more from the sale of a residential building, but you will have to spend money on technical inspection and possible repairs. Sometimes it's not profitable."
Over the past year, many wealthy Europeans have become disillusioned with life in the metropolis and turned to houses in nature. It would seem that for inexpensive houses in the wilderness, the finest hour has come, but not really.
Indeed, the Finns have become much more interested in country houses. But for themselves, they choose comfortable cottages with good communications, including fast Internet connection.
Olga Pulkkinen: "The situation with covid, of course, affected our region. Many transactions have been cunducted remotely, by proxy, as the border is now difficult to cross even to sign a contract of sale, not to mention to check your property. This summer, deals with countryhouses were going well: about three times more cottages were sold than a year ago, while the average cost of a cottage was small, up to €100,000."
Eric Rosenfeld: "Recently, the demand for cottages from the Finns has really increased. But a working Finn wouldn't buy a cheap house in the middle of nowhere. It is uncomfortable to live there, as even the minimum requirements for the cpountryhouse are not met: there is no water, no sewerage, no bathroom. This is what in Finnish is called mummonmökki – "grandmother's hut". In addition, everyone understands how much they will have to spend on repairs and sewerage. However, we need to look at specific properties, sometimes the costs are justified."
It is difficult to pass by a house that costs like a car. But you need to understand that if you do not plan to live there yourself, then it will not wworth. Instead you can simply through money out of the window. And in addition you will have to pay taxes and utilities for housing.
Eric Rosenfeld: "Finland is an expensive country. A square of urban housing costs €3,000-5,000 on average. If an apartment or house is sold for the price of two square meters, you need to understand that something is wrong with this. The price is always a consequence of the market. And if you see such prices, do not think that you have hit a gold mine, now buy three apartments and start earning. It won't work. There are no fools here, and no one does charity work."
