ᐅ Land already owned – how to use it?

Hello everyone,

We have owned a plot of land for one year. It is not very large (389 m² (4185 ft²)), but the zoning plan allows quite a lot of development.

We have decided against building a single-family house ourselves.

Friends encouraged us to consider whether we might build a multi-family house on the property as an investment. Especially now that the KFW provides higher repayment subsidies.

Several ideas have emerged.

1. Build a multi-family house maximizing the living area, with all apartments rented out.
2. Build a three-family house, with one apartment per floor. We would live in the ground-floor apartment and rent out the upper and attic floors to two of my siblings.
3. Build a duplex with one of my siblings, where each of us would have and live in an independent condominium unit.

Would you consider doing something like this, or is there anyone here who has already done something similar?

What is the best way to proceed? Should we request offers for all three options and then choose the best one?

Yaso2.0 schrieb:

What is the best approach here? Should I get quotes for all three options and then choose the best one?

First, check what is legally allowed from a building regulation standpoint. Then roughly assess the finances and costs.

Yaso2.0 schrieb:

1. Building a multi-family house with the maximum possible living space, and all apartments being rented out.

Build a simple energy-efficient house with as few extras as possible.

Yaso2.0 schrieb:

2. We build a three-family house where each floor contains only one apartment. We would live in the ground floor unit, and I would rent out the upper floor and attic apartments to two of my siblings.

Oh no! The whole family under one roof and you’re the landlord. I would never do that; it’s guaranteed to cause stress. Your siblings would also have certain expectations for their apartments, which would increase costs but wouldn’t result in proportionally higher rent.

Yaso2.0 schrieb:

3. We build a two-family house with one of my siblings, where each of us gets a separate apartment and lives in it.

That’s similar to option 2. Also, two-family house apartments are not very popular when it comes to resale. It’s better to rent to external tenants and charge them a proper rent. If you do build with family, do it jointly so that everyone can contribute their wishes and pay accordingly.
P.S. If you build the property and then sell it, there may be tax implications.

Personally, I would only consider option 1 from your variants. Alternatively, just sell the land as is and take the money—no stress with construction and renting. Possibly with a building permit (planning permission) for a three-family house as a completed project.

nordanney schrieb:

Building a simple energy-efficient house with as few extras as possible.

If renting out to "strangers," that would be the plan.

nordanney schrieb:

Oh dear! The whole gang under one roof and you end up being the bad landlord. I would never put myself through that; it’s sure to cause stress. Also, your siblings would have certain expectations for their apartments, which would lead to higher costs but not correspondingly higher rent.

Yes, I agree with you. I’ve always gotten along very well with these two siblings and we see each other almost every day, but I realize it will definitely be different when everyone lives under one roof.

nordanney schrieb:

That leans towards option 2. Even when selling, apartments in a two-family house are rather unpopular. Better to rent to external tenants and charge them a proper price.
And if you’re going to build with family, then build together so everyone can contribute their wishes and also cover their own expenses.
P.S. If you build and then sell, it can trigger a tax liability.

Personally, I would only consider option 1 from your alternatives. Alternatively, just sell the plot and take the money — no stress with construction and renting. Possibly even with a building permit / planning permission for a three-family house as a finished project.

If I build with one of my siblings, the costs will be shared accordingly, and everyone will contribute their wishes for their own apartment and pay for those accordingly.

I don’t want to sell the plot — speculation tax would also be an issue.

Thank you for your assessment.

Whatever is done, I would keep the family out of the project. I would avoid mixing business with family if possible...

Always let the family move out and never move into your own rental property.

Well, I’ll argue against that: I think family is great, and if semi-detached houses are possible, that wouldn’t be a bad option: split the plot, put the semi-detached house in the middle, and have a fence in between—everything nicely separated. If there are still conflicts, the relative can just move out again, and you can rent out the other half or move out yourself again.
But it’s quite expensive.

I don’t see any of these options as an investment—at least not in your lifetime. Maybe the next generation.