Hello everyone,
Since I started exploring the topic of house construction two months ago, I have now registered on this forum.
A brief introduction about me and my wife: We are both employed (civil engineer and real estate assistant) with a net income of 4xxx.
Equity capital: 50,000 euros.
One would actually assume that with this equity and net income, buying a property should be easy. However, since I do not want to repay a loan over 30-35 years but rather a maximum of 25 years, and I don’t want to fully stretch the limit, the monthly installment and therefore the total amount quickly become restricted. A total of 250,000 net plus additional construction costs equivalent to the equity capital would be the limit here. In Berlin and its surrounding area? Practically unthinkable.
I am a civil engineer (although specializing in concrete repair and thus not an expert in single-family houses, etc.) and can therefore assess construction prices, combined with my wife’s interest in the real estate sector, allowing us to understand the high general prices for land.
With 250,000 net plus additional construction costs, there is generally not much you can do nationwide for new builds — this is my initial assessment.
There has already been a lot of discussion here in other threads about construction costs, potential capital, and what is needed. When I see bargain houses on TV, I also facepalm. My assumption is that such homes don’t bring much joy. Heating systems, plumbing, electrical installations, thermal insulation — these are often overestimated.
Currently, I am researching prefabricated houses with self-finishing options. However, I do have some concerns, even though I assume that nowadays the materials at least meet certain standards.
So, what are the options?
Being bound for 30 years and pushing the loan to the limit?
House auctions?
Hoping for a bargain plot including an affordable prefab house as a self-build (lots of work and potentially many worries)
Since I plan to start building within the next 24-36 months, my initial findings are sobering.
At least the construction company I work for could provide the foundation slab plus groundwork like drainage, etc., at a low cost. I also know structural engineers and others involved. Maybe the project can be realized with a “small” budget thanks to these circumstances.
Has anyone managed to do this before?
Since I started exploring the topic of house construction two months ago, I have now registered on this forum.
A brief introduction about me and my wife: We are both employed (civil engineer and real estate assistant) with a net income of 4xxx.
Equity capital: 50,000 euros.
One would actually assume that with this equity and net income, buying a property should be easy. However, since I do not want to repay a loan over 30-35 years but rather a maximum of 25 years, and I don’t want to fully stretch the limit, the monthly installment and therefore the total amount quickly become restricted. A total of 250,000 net plus additional construction costs equivalent to the equity capital would be the limit here. In Berlin and its surrounding area? Practically unthinkable.
I am a civil engineer (although specializing in concrete repair and thus not an expert in single-family houses, etc.) and can therefore assess construction prices, combined with my wife’s interest in the real estate sector, allowing us to understand the high general prices for land.
With 250,000 net plus additional construction costs, there is generally not much you can do nationwide for new builds — this is my initial assessment.
There has already been a lot of discussion here in other threads about construction costs, potential capital, and what is needed. When I see bargain houses on TV, I also facepalm. My assumption is that such homes don’t bring much joy. Heating systems, plumbing, electrical installations, thermal insulation — these are often overestimated.
Currently, I am researching prefabricated houses with self-finishing options. However, I do have some concerns, even though I assume that nowadays the materials at least meet certain standards.
So, what are the options?
Being bound for 30 years and pushing the loan to the limit?
House auctions?
Hoping for a bargain plot including an affordable prefab house as a self-build (lots of work and potentially many worries)
Since I plan to start building within the next 24-36 months, my initial findings are sobering.
At least the construction company I work for could provide the foundation slab plus groundwork like drainage, etc., at a low cost. I also know structural engineers and others involved. Maybe the project can be realized with a “small” budget thanks to these circumstances.
Has anyone managed to do this before?
N
nordanney16 Jun 2019 20:46Bardamu schrieb:
That is money I don't have to pay as a tenant over these 30 years. For me, it’s a clear reason not to take on huge costs for housing. Sorry, but the calculation is incorrect.
1. Tenant = 1,300 x 12 x 30 = €468,000 (approx. $550,000 with rent increases)
You pay this money to the landlord over 30 years and at the end of 30 years you have €0 and have only lived there.
2. Homeowner = 1,800 x 12 x 30 = €650,000 + new heating system and windows = €680,000
You pay this amount to the bank and after 30 years you still have a property worth about €400,000 (just an estimate, considering additional equity) and have lived there.
If you subtract the property value from your payments, you end up with €280,000 as the "net rent," which is significantly lower than the tenant’s total rent.
Do you see the difference? For me, this is a clear reason not to rent at current interest rates. As a tenant, you can only lose financially at the moment.
If you do the math, please do it correctly.
Well, if someone really saves up to have cash available and has a good rental income, waiting for a foreclosure opportunity is not a bad strategy. However, cash is king in these situations. There is hardly any time to arrange large loans. It has to happen quickly. Often, those who are interested are too hesitant to go through with it. At these auctions, you often find a rather rough crowd, such as carousel operators, flea market vendors, nightclub or bar owners, pimps, and similar characters.
Nordlys schrieb:
Well, if someone really manages to save up to have liquid funds and a good rental income, waiting for the chance of a foreclosure auction is not a bad strategy. The key is that cash rules here. There is hardly any time to first arrange large loans. It has to happen quickly. Often, those who actually want to do this are too hesitant to follow through. At these auctions, you typically find a rather rough crowd—carousel operators, flea market vendors, nightclub or bar owners, pimps and similar types, etc.I did not talk about foreclosures.
And I’ll pass on responding to the rest of your sharply worded “arguments.”
You can either wait 10–20 years for the original houses to become outdated or buy a house that was already outdated 10–20 years ago. There’s no real difference, except that you end up living in it 10–20 years longer.
Most of the major renovations and maintenance work are actually voluntary in the majority of cases. I see this with my parents. Their house was built in the 1970s, and nearly everything done to the house since then wasn’t necessary in the sense that the old systems no longer worked. The new windows are nicer, safer, and better insulated, yes. But the old ones were still functional. The roof is now asbestos-free, but as long as the asbestos was on the roof, it didn’t harm anyone. The bathroom was completely functional, just not as attractive. You could have waited longer to renovate, since everything eventually comes back around, and so on. The only thing that was probably mandatory was the heating system, but I’m not certain about that.
Of course, my aim is not to never renovate or modernize, but owning a mortgage-free house gives me the freedom to either delay or bring forward these updates. When renting, you are at the landlord’s mercy (and often still have to contribute to modernization costs). The house won’t collapse if you don’t modernize it, but the rent must be paid punctually every month for life.
Most of the major renovations and maintenance work are actually voluntary in the majority of cases. I see this with my parents. Their house was built in the 1970s, and nearly everything done to the house since then wasn’t necessary in the sense that the old systems no longer worked. The new windows are nicer, safer, and better insulated, yes. But the old ones were still functional. The roof is now asbestos-free, but as long as the asbestos was on the roof, it didn’t harm anyone. The bathroom was completely functional, just not as attractive. You could have waited longer to renovate, since everything eventually comes back around, and so on. The only thing that was probably mandatory was the heating system, but I’m not certain about that.
Of course, my aim is not to never renovate or modernize, but owning a mortgage-free house gives me the freedom to either delay or bring forward these updates. When renting, you are at the landlord’s mercy (and often still have to contribute to modernization costs). The house won’t collapse if you don’t modernize it, but the rent must be paid punctually every month for life.
Bardamu schrieb:
So, if I pay 1300 for a cold apartment anywhere, then a house there probably costs around 1 million.
And now I’ll do a rough calculation, just like I normally do.
The 500 euros you pay more than a renter, calculated over 30 years, amounts to 180,000 euros. Then add interest of around 100,000 euros, which is a reasonable estimate, and we’re already at 280,000 euros that I as a renter don’t have to pay. Maintenance and renovation costs on top of that bring us to over 300,000.
That’s money I as a renter don’t have to provide over those 30 years. For me, that’s a clear reason not to take on huge sums for housing.
I’d rather continue saving equity and look for affordable fixer-upper houses in 10 to 20 years—if we really want to own something someday.
It sounds harsh, but it’s reality. Many relationships simply don’t withstand the stress of building and financing. If I sell the house for the same price I bought it, after 30 years, but having spent the 300k you calculated, then I end up with 400k.
Even if I consistently save the 500 euros every month as a renter, I would only accumulate 180k.
So as a renter, I would have to invest in safe, well-yielding investments to reach the same amount, right?
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