Hello everyone 🙂
In recent days, I have been thinking more about the idea of building a house. It’s basically decided that my girlfriend and I definitely want to own our own home in the future. The question of whether to buy an existing house or to build one keeps coming up. We regularly check the usual property websites to get an overview of the homes currently available in the nearby area (Mülheim an der Ruhr). Since the market situation has been, to put it mildly, "more challenging" for some time now, this raises my question. While browsing these property sites, I often find at least 2-3 issues with the houses listed that, in my opinion, would be deal-breakers 😀
Therefore, to what extent should preparatory work or efforts be made before starting a building project?
I hope my question doesn’t sound too “stupid”! 😱
In recent days, I have been thinking more about the idea of building a house. It’s basically decided that my girlfriend and I definitely want to own our own home in the future. The question of whether to buy an existing house or to build one keeps coming up. We regularly check the usual property websites to get an overview of the homes currently available in the nearby area (Mülheim an der Ruhr). Since the market situation has been, to put it mildly, "more challenging" for some time now, this raises my question. While browsing these property sites, I often find at least 2-3 issues with the houses listed that, in my opinion, would be deal-breakers 😀
Therefore, to what extent should preparatory work or efforts be made before starting a building project?
I hope my question doesn’t sound too “stupid”! 😱
apokolok schrieb:
If you want to build in the future, you need to increase your income and save up equity.
With the current figures, building at the planned scale is not feasible.What would be feasible then?
criberg schrieb:
What would be possible then?Well, you mentioned around €200/m² (about $215/ft²) for the land. You would need at least 400, so €80,000 (about $86,000) plus additional purchase costs, totaling roughly €86,000 (about $92,000).
That leaves €314,000 (about $335,000) for construction.
Let's assume additional construction-related costs at a low flat rate of €40,000 (about $43,000).
That leaves €274,000 (about $293,000) for the house itself. At €2,000/m² (about $215/ft²) of living area, that results in about 137m² (about 1,475ft²).
However, floor coverings, painting, kitchen, furniture, and lighting still need to be covered.
N
nordanney7 Jan 2021 13:54criberg schrieb:
What would be feasible then? With a net income of €4,200, a flat rate living expense allowance of €1,900 is deducted (do you still have to pay any health insurance, leasing, loans, or similar?).
That leaves approximately €2,300 remaining. With an interest/principal repayment rate of about 5%, this would allow financing roughly €550,000. Perhaps a bank would accept lower interest/principal payments, which would increase this amount (at 4%, it would be around €690,000). Whether you want to do that is another question.
apokolok schrieb:
Well, you mentioned about €200 per m² for the land. There is no building land available in Mülheim for that price. At least €300 per m² (approximately $14 per ft²), more likely €350–400. That is already the extended catchment area of Düsseldorf or a good macro-location in the Ruhr region.
nordanney schrieb:
With a net income of €4,200, a standard living expense allowance of €1,900 is deducted (do you still have to pay for any health insurance, leasing, loans, or similar?).
That leaves about €2,300 remaining. With an interest/principal repayment rate of 5%, you could finance approximately €550,000. A bank might accept a lower interest/principal repayment rate, which would increase the loan amount (at 4% it would be around €690,000). Whether you want that is another question.
However, there is no building land available in Mülheim. Prices start at around €300 per square meter (about $30 per square foot), probably more like €350–400. This is already considered the extended commuting area for Düsseldorf or a good macro-location in the Ruhr area. I would roughly estimate living expenses at around €1,700–1,800—not 1,900 as a maximum. This is only an estimate, but we definitely shouldn’t reach €1,900. Currently, I set aside about 21–23% of my net income and then save whatever is left at the end of the month. Sometimes that’s as little as €50, but usually it’s more than €200.
If you are in these regions, perhaps renovating an existing property would be more cost-effective?
The goal is ideally to have everything paid off before retirement starts, or possibly very shortly after.
I won’t lie, it’s all a bit discouraging at the moment.
N
nordanney7 Jan 2021 14:10criberg schrieb:
If you’re naturally in these regions, renovation might be more cost-effective again, perhaps? Only if you do a lot of the work yourself – this also applies to new construction. Alternatively, you can build a slightly smaller house, choose a townhouse/semi-detached house from a developer, buy a resale property (which you don’t renovate to new-build standards), get a great condominium, or build elsewhere.
With that income, it is possible to finance a property itself.