ᐅ Should you proceed or better stay away?

Hello everyone.

I’m not quite sure whether I should just use an existing similar thread or if that would be disruptive and I should start my own. If starting a new thread is not appropriate, please let me know or move it. Thanks.

The situation: We (married, both 31 years old, currently living in Munich) have been looking for a change of living environment for some time. Everything affordable around the greater Munich area is, to put it mildly, not really our thing. Either it’s completely run-down, too small, or located too far “out in the suburbs,” and so on.

So, over the last few weeks, I have gone through numerous “building for dummies” guides and browsed land listings and house builders’ websites.

Now the question arises: Should we build our own house, or are our budget expectations completely unrealistic and we should forget about it? This is exactly where I hope to receive helpful advice from you.

Current situation:

* Him: Net income approx. 3700 €
* Her: Net income approx. 1400 €
* Loans or similar: none
* Equity (haven’t really started “saving” yet): approx. 30,000 €
* Additional income: From 2012 to 2015, an annual payment of 10,000 € (we are confident this will come from the sale of a property back home)

Desired situation:

* Purchase of a plot (around 400-500 m² (4300-5400 sq ft)) somewhat outside the city for about 100,000 € (plus additional costs). A suitable plot would be fully serviced and have a valid development plan (basement + ground floor + 1st floor + attic, with either a gable or hip roof).
* (Turnkey) house construction (around 120-150 m² (1300-1600 sq ft) living area + attached garage, ready to move in but no “luxury” requirements) from a provider with a fixed price guarantee / corresponding developer, for 180,000 - 200,000 € (plus additional costs). I have found offers, for example, from Weberhaus or Schwörerhaus.

Questions:

What do you think? I intend to keep the additional income of 10,000 € per year plus the 30,000 € equity as a “reserve,” especially for extra costs such as double rent, notary fees, etc. According to the calculations above, I expect about 300,000 € for land and house (excluding additional costs) and another 50,000 € for “other expenses.” Is that estimate for other expenses too low? Or is it unrealistic to expect that kind of house for that price?

I would appreciate any input or advice!
Best regards,
Andi

Hello Andi,

The income looks quite good for the described case and the mentioned construction volume. However, when banks assess risk, they consider employment situations (civil servant, permanent/temporary employee, self-employed, etc.), which also affects the interest rate.

An optimal basis for financing is always a high equity ratio. A good equity range is at least one-third of the total investment. A low equity ratio results in a higher interest rate and also limits the possibility of a high repayment rate.

High repayment is key in financing, as it leads to rapid debt reduction and shortens the loan term. With a high repayment rate, it is possible, in a favorable scenario, to complete the financing within less than 20 years. A loan term of 25 to 35 years is not recommended and carries greater risks.

Best regards

Thanks for the information.

Setting aside the financing for now (I know what I need to work on before I can seriously "get started"), is it even possible to build a house with about 120-150 m² (1,290-1,615 sq ft) of living space, including a basement and garage, mostly "move-in ready" for around 200,000 plus approximately 50,000 in additional costs (all costs included), or is that completely unrealistic?

Brisch schrieb:
Thanks for the information.

Setting aside the financing for a moment (I know what I need to work on before I can seriously "get started"), is it at all possible to build a roughly 120-150 m² (1300-1600 sq ft) house including a basement and garage, mostly "move-in ready," for around 200,000 plus approximately 50,000 additional costs (all related expenses included), or is that completely unrealistic?

I think that is too low. However, if you can accept the often offered "standard finish," such as cheapest DIY store tiles, basic wooden staircases, manual roller shutters, laminate flooring at about 10 EUR/m² (10 USD/ft²), etc., it might be possible.

You should calculate about 1,600–1,800 EUR per m² (150–170 USD per sq ft) of living space for a good to high-end finish. I assume that with your income, you have certain expectations and would not want to live worse in your own home than in a rental. 1,800 x 150 m² = 270,000 EUR.

Allocating 50,000 EUR for additional construction costs (building permit/planning permission fees, connections, inspections, etc.) is actually on the high side. Many forum members recommend budgeting 20,000–35,000 EUR.

Hello again Andi,

that pretty much matches my knowledge of the Bavarian language as well 🙂

Brisch schrieb:
* Land purchase (around 400-500m² (4300-5400 sq ft)) a bit outside the city for about €100,000 (+ additional costs), corresponding plot in view, fully serviced with development plan (basement + ground floor + 1st floor + attic and gable or hip roof)

Does the plot have a slope? What exactly is meant by “folded roof”?

Kind regards

Brisch schrieb:
Thanks for the information.

I just try to inform myself properly in advance and protect against potential risks, which is why, for example, I included a “high” estimate for additional costs ... I don’t want to end up having to cover extra expenses later on, and I’m also factoring in things like a kitchen or a second small car for my partner (cheap, of course :-) ).

We also want to build, and I feel the same way. I want to plan everything ahead and know exactly what to expect. Unfortunately, I’ve already come across some surprise reactions. My architect, on the other hand, appreciates this approach.

Brisch schrieb:

A fast construction process is very important for us, as the double financing of the apartment and mortgage repayments from the start of the loan until moving in can become significant.

Are there general estimates like “For the desired size and standard specifications, it takes x weeks”—depending on the construction type? Or is that more the realm of Nostradamus and the like?

Most general contractors offer a construction time guarantee. For me, it’s 7 months with a basement, 6 months without. If the construction period is exceeded, the contractor must pay a contractual penalty. Exemptions apply for Christmas holidays, periods when construction is impossible (weather), etc.

Brisch schrieb:

From what I’ve also read here, “all-inclusive packages” are mostly discouraged due to dependence on a single provider, and so on. Are there really no reliable, reputable companies for such projects? I don’t think we stand a chance with other solutions given our limited experience 😉

There are many reputable companies. I have also encountered many unreliable ones, but you can identify those quickly. Something funny was that there was even one who had their construction disputes posted on 123recht. That was probably the most unprofessional thing I’ve seen so far. As a company, you should be able to afford a lawyer 😉

Brisch schrieb:

One more thing ... if I am now based on 270k as suggested, is government support of any kind possible considering the family income, or is that rather unlikely or impossible?

There are offers from KfW and many regional programs as well. It’s best to ask your local municipality or your bank. There are programs for young families, but both the applicant and the construction project have to meet certain criteria. This varies from state to state.