ᐅ Home Construction: Sell or Rent Out a Condominium Unit?

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It somewhat depends on the area.
Most people here would probably recommend selling, because renting out a single apartment always involves concentrated risk and a lot of work for low returns.
However, if the housing market in the region of your condominium is very dynamic (and preferably expected to grow) and you are not too risk-averse and/or your loan term is still far from the first 10 years, then renting out could make sense.
That’s how I’m handling it, at least until my main investment reaches 10 years.
I’ve also already had several inquiries from people I know personally who want to rent the apartment, which somewhat reduces the risk of problematic tenants.

K1300S schrieb:


You should share a bit more about yourselves: Are you planning to have more children? Will you return to full-time work at some point? What are your living expenses like? What monthly payment are you currently making for your apartment? (Have you paid it off completely so far?) How large are the plots of land being offered approximately?

I didn’t want to make the post too long...

So:
Our family planning is definitely complete. At 38 years old, we are both past that stage. The girls, aged 5 and 9, are becoming quite easy to manage, and we enjoy a nearly carefree family life.

Regarding finances, we can save at least €2000 (about $2150) per month. We managed to save up €90,000 (about $97,000) in roughly six years, even though I was on parental leave for 1.5 years during that time. I prefer not to increase my working hours to full-time, but it’s not impossible in about ten years (for example, if our daughter chooses to study in a different city).

Currently, we pay €1100 (about $1180) per month toward the mortgage, plus additional utilities around €250 (about $270). We bought the apartment from a developer nine years ago for €250,000 (about $270,000). Last month, our neighbors sold their apartment through an agent (same floor plan on the upper floor) for €380,000 (about $410,000). It was sold within two weeks. Our apartment is better equipped, with a private garden, high-quality glass-fronted kitchen, Bisazza mosaic tiles in the bathroom, and a huge terrace. I believe we could ask for at least the same price as our neighbors.

The building plots in the new development range between 500 and 700m² (about 5,400 to 7,500 sq ft), fully serviced. We would like to aim for around 550 to 600m² (about 5,900 to 6,500 sq ft). So, we expect roughly €180,000 (about $195,000) plus additional costs bringing it up to around €200,000 (about $216,000). That means we would need to finance about €100,000 (about $108,000) flexibly (with €100,000 in equity).

The house should be about 160–180m² (1,720–1,940 sq ft), with no basement. We want to expand our living space. A young relative who is an architect will design the house (quote: “I’ll design your house for a good racing bike”).
Since we know many skilled tradespeople, we plan to handle many tasks ourselves, such as tiling, landscaping, garage, roof insulation, drywall, and floor and wall coverings.
I think around €400,000 (about $430,000) plus additional costs should be sufficient.

A monthly payment of about €1,600–1,800 (about $1,720–1,940) would be manageable for us.

Tolentino schrieb:

It depends a bit on the location.
Most people here would probably recommend selling, because renting out a single apartment always involves concentration risk and a lot of effort for low returns.
However, if the housing market in your flat’s region is very dynamic (and preferably expected to rise) and you are not too risk-averse and/or your loan term is still far from the first 10 years, then renting could make sense.
That’s what I’m doing, at least until my main loan reaches 10 years.
I also already have several inquiries from people I know personally interested in renting the apartment, which reduces the risk of problematic tenants.

The location of the flat is very good. The area is very popular, and apartments sell quickly or are allocated unofficially—both for sale and rent.

Assuming we want to rent it out, what amount can I depreciate annually? Is it 2% of the purchase price or the current value of the apartment?
The apartment is secured by a land charge of 170,000 euros (about 170k), of which approximately 60,000 euros (60k) has been repaid. The remaining amount could be paid off as a lump sum in one year. If we decide to rent, can we only deduct the interest on the outstanding loan amount, or can we take out an additional loan up to the full value of the land charge and deduct the interest on the entire 170,000 euros (170k)? After all, we have invested about 60,000 euros (60k) of equity in the apartment, which we would actually need for the new house now...

Hi Kati, depreciation is of course only applied to the purchase price, which is also adjusted for the value of the land. However, there are other deductible expenses, so you can work those out. If it makes sense, you could offer the free mortgage charge as additional security, and possibly even refinance it. With the current interest rates, I would never sell a good apartment, although from what I have read so far, this seems to be more of an exception opinion.

What contradicts me is that plots of land cost only 180,000 euros while apartments are 380,000 euros and more. Applying this to our area, the plots are at least 100,000 euros more expensive with similar apartment prices.

Hi Kati,
In our case, the old house is also being rented out,
good location, in demand, big city. Due to depreciation, consult your tax advisor beforehand.
Rental income and increase in value balance each other out.
Let people around you know that your apartment will be available for rent soon, although it may take up to 2 years before you move in.