ᐅ Multi-family Building with 6 Residential Units – Current Status and Next Steps

nevermore schrieb:

- Is it worth it? From when does it become worthwhile, or what key figures would have to be met? We think it is, but it also depends on several factors, such as square meters/costs and basement/ground level.
- With which square meters/costs can we roughly expect with standard equipment?
- Is the concept of basement-level rooms, which requires a basement (waterproof concrete shell), profitable, or would it be better to build only at ground level? The utility room would then be on the ground floor, and instead of storage rooms in the basement, there would be a storage room plus technical room within the apartments. This would reduce rentable living space somewhat but would save considerably on construction costs.

This can only be answered if you roughly know the costs and at the same time know what kind of income you can generate. Otherwise, no statement can be made.

In typical cities, the rent must be at least €10 + x for it to be profitable. That is why there is hardly any new construction in the Ruhr area (on the one hand, many vacant apartments in poor condition, on the other hand, a high demand for decent housing—but only low rents are feasible).

I find your concept or approach somewhat unusual: You have no idea about the costs, yet you already know it will be worthwhile or has to be, otherwise you wouldn’t build it. You are planning very precisely (for example, how many housing units there will be, which KfW efficiency class), but you have no idea how to actually implement it.

nevermore schrieb:

We (family) are planning to build a multi-family house with 6 residential units in Hamburg, in a very good location. The plot with an old single-family house is already owned and is to be replaced with a new building. All three of us work full-time and have neither much experience nor much time to manage everything. After speaking with some general contractors and architects, we are still unsure about the best way to proceed.

Then you talked to the wrong people. How can anyone without expertise already decide that it should be 6 units? The professional should determine how many units make sense. Look at how @Muc1985 handles it; that’s the right approach: you definitely need an architect with experience. A multi-family house is not a project for architects specialized in single-family homes. Those ones usually fumble conceptually and come up with symmetrical duplex designs with uniform standards, which can almost be seen as a sign of incompetence. You should never replace an architect with a general contractor, but you should always allow the architect to consider general contractors during the bidding process.

nevermore schrieb:

The project is being run by my mother, sister, and me (son). All three of us are registered with equal shares in the land registry. My mother’s share will later be transferred to the two of us.
The multi-family house is not intended for owner occupation but solely for rental. We were thinking about forming a GbR (partnership). Is this disadvantageous?

If the ownership already consists of this setup—“Person 1 and their potential joint heirs 1A and 1B”—it would be unwise not to also bring these shares into a property company with the same shareholders. However, a GbR is a partnership, so you should also seek advice on inheritance tax matters.

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https://www.instagram.com/11antgmxde/
https://www.linkedin.com/company/bauen-jetzt/

nevermore schrieb:

Thanks first of all for the answers

The project is being managed by my mother, sister, and me (son). All three of us are registered in the land registry with equal shares. My mother’s share will later be transferred to the two of us.

The multi-family house is not for personal use but only to be rented out. We were considering forming a partnership (GbR). Is this disadvantageous?

A few more questions, since @HilfeHilfe brought up the topic of profitability:
- Is it worthwhile? When does such a project become profitable, or what key figures should be considered? We believe it is, but it depends on several factors, such as square meters/costs and basement/ground-level design.
- With which square meters/costs can we roughly expect for standard finishes?
- Is the concept of basement-level rooms, which requires a basement (waterproof concrete structure), profitable, or would it be better to build only on ground level? The heating/technical room would then be on the ground floor, and instead of storage rooms in the basement, there would be one storage room plus a technical room within the apartments. This would reduce rentable living space somewhat but would save considerable construction costs.

Well, you’re funny — you come into the forum, take arguments, and expect us to plan the whole project for you.

I would have liked to hear from you whether you think it’s worthwhile.

Otherwise, there are specialists for this who charge for their services.

Hello everyone,

Thanks first of all for the many responses. I’ll try to clarify a few things...

@nordanney, @11ant, @Pinky0301, @HilfeHilfe
- We have already had consultation appointments with the building authority, and since we are building in a street where previously only single-family houses stood but is now gradually developing into multi-family houses with 5-6 residential units, we were assured that 6 units is the absolute limit. This brings me to the second point...
- We have a buildable area of about 210m² (2,260 sq ft) and are allowed to build 2.5 storeys with no floor area ratio restriction. According to the architect, this results in approximately 144m² (1,550 sq ft) of rentable living space each on the ground floor and first floor, plus another 110m² (1,184 sq ft) on the second floor, totaling 450m² (4,844 sq ft) including creditable area. In the basement, it would be possible to realize an additional 65-75m² (700-807 sq ft), bringing the total to 520m² (5,597 sq ft) (excluding creditable areas such as terrace, balcony).
- Previous offers for KfW 55 standard construction have ranged between about €2,400-2,600 per m² (€223-241 per sq ft) without a basement, and with a basement built as a waterproof concrete shell and a basement living area, closer to €3,100-3,400 per m² (€288-316 per sq ft).
- From similar plots/objects in the neighborhood, we know that rental costs of at least €14 per m² (€1.30 per sq ft) are achievable.
- We will receive support from a tax advisor soon.

Profitability:
- The calculated total capital return is about 3% without a basement, and the return on equity is about 8%. With a basement, the total capital return is slightly lower and the return on equity slightly higher (without including value appreciation).
At what value would you say it is worth it here?

nevermore schrieb:

Previous offers for KfW 55 standard were roughly between €2,400 and €2,600 per m² (without a basement), and with a basement constructed as a waterproof concrete shell and a basement-level living area, more around €3,100 to €3,400 per m².

Including additional construction costs, architect fees, etc.?

nevermore schrieb:

The calculated return on total capital is about 3% without a basement, and the return on equity is roughly 8%. With a basement, the return on total capital is slightly lower, and the return on equity slightly higher (without considering any appreciation in value).

How was this calculated? (An 8% return on equity seems low for a project like this.)

Please keep in mind that there will be favorable terms for external financing. The mortgage lending value will only be around €1.4 million (for the variant with a basement).