ᐅ Stay here (and build) or move away (and build/buy elsewhere)
Created on: 21 Mar 2022 01:47
H
Hitokiri-1978
Hello everyone,
I don’t even know where to begin. There is an older thread, but since links are considered taboo, you’ll have to search for it yourselves if you’re interested. In short, since 2018!!! we have been aware of two new residential development areas in our town, with plots allocated based on a scoring system. And as it stands, we are currently ranked 52-55 (four others have the same score and would then be drawn by lot on the allocation day) out of a maximum of 59. I don’t want to blame the municipality here for leaving four years to pass without reason, ignoring two official land value assessments amid an exploding price level, and so on. Then came Corona, now “Crazy Ivan,” no more KfW funding, skyrocketing construction costs for prefab houses, rising interest rates, and generally increasing prices. In short… it’s totally insane to build now! But... who says it won’t be even worse in three years?
Additionally, we simply want to move to a bigger place (second child), and rental apartments in the Munich suburbs are outrageously expensive. For retirement, we want to have a certain amount of value as assets.
In general, about €30,000 (approximately $32,000) would come as a gift from our families, about €60,000 (around $64,000) as an interest-free loan from various wealthy Swiss relatives, and €10,000 (around $10,700) from us as equity. We already have a financial advisor who calculated everything, and a mortgage would be possible with a monthly payment of €1,770 (around $1,880). Everything would be tight, though: gym membership canceled, no spontaneous dining out, no spontaneous activities... best if I cook lunch at home.
So… soon (unless someone files another lawsuit) the plots will be allocated. By then, we need to decide if we want to stay here in the familiar neighborhood (with all its advantages, like close proximity to the in-laws) and manage the estimated €750,000 to €850,000 (about $800,000 to $900,000)—€350,000 ($375,000) for the land and the rest for the house—without getting overwhelmed. (Net income is about €4,400 ($4,670), with €2,700 ($2,865) fixed expenses and living costs.) Alternatively, we have considered moving away from Bavaria. The Upper Franconian provinces near the Czech border are significantly cheaper for used properties, ranging roughly from €200,000 to €500,000 ($215,000 to $530,000), and we would have a lot more room and money for living there.
We have already crossed out the plots that are definitely not an option for us. Oh, and half of them are for sale, the others are assigned as leases with all their possibilities but also many problems!
It’s a painful, nagging question whether it’s better to stay here and hope for an increase in value (plus living close to the parents), make use of leasehold rights and slowly lose value, or move somewhere else entirely where prices are reportedly much lower according to Immo24. Also, my wife is assuming the current situation will continue, while I am hoping to finally get a better paying job within the next one to two years.
Clearly, we don’t want to leave, but the price level is just so insane that we have to ask ourselves if it’s really worth it anymore. This whole situation just causes headaches, with the feeling that we have to choose between bad and worse.
I don’t even know where to begin. There is an older thread, but since links are considered taboo, you’ll have to search for it yourselves if you’re interested. In short, since 2018!!! we have been aware of two new residential development areas in our town, with plots allocated based on a scoring system. And as it stands, we are currently ranked 52-55 (four others have the same score and would then be drawn by lot on the allocation day) out of a maximum of 59. I don’t want to blame the municipality here for leaving four years to pass without reason, ignoring two official land value assessments amid an exploding price level, and so on. Then came Corona, now “Crazy Ivan,” no more KfW funding, skyrocketing construction costs for prefab houses, rising interest rates, and generally increasing prices. In short… it’s totally insane to build now! But... who says it won’t be even worse in three years?
Additionally, we simply want to move to a bigger place (second child), and rental apartments in the Munich suburbs are outrageously expensive. For retirement, we want to have a certain amount of value as assets.
In general, about €30,000 (approximately $32,000) would come as a gift from our families, about €60,000 (around $64,000) as an interest-free loan from various wealthy Swiss relatives, and €10,000 (around $10,700) from us as equity. We already have a financial advisor who calculated everything, and a mortgage would be possible with a monthly payment of €1,770 (around $1,880). Everything would be tight, though: gym membership canceled, no spontaneous dining out, no spontaneous activities... best if I cook lunch at home.
So… soon (unless someone files another lawsuit) the plots will be allocated. By then, we need to decide if we want to stay here in the familiar neighborhood (with all its advantages, like close proximity to the in-laws) and manage the estimated €750,000 to €850,000 (about $800,000 to $900,000)—€350,000 ($375,000) for the land and the rest for the house—without getting overwhelmed. (Net income is about €4,400 ($4,670), with €2,700 ($2,865) fixed expenses and living costs.) Alternatively, we have considered moving away from Bavaria. The Upper Franconian provinces near the Czech border are significantly cheaper for used properties, ranging roughly from €200,000 to €500,000 ($215,000 to $530,000), and we would have a lot more room and money for living there.
We have already crossed out the plots that are definitely not an option for us. Oh, and half of them are for sale, the others are assigned as leases with all their possibilities but also many problems!
It’s a painful, nagging question whether it’s better to stay here and hope for an increase in value (plus living close to the parents), make use of leasehold rights and slowly lose value, or move somewhere else entirely where prices are reportedly much lower according to Immo24. Also, my wife is assuming the current situation will continue, while I am hoping to finally get a better paying job within the next one to two years.
Clearly, we don’t want to leave, but the price level is just so insane that we have to ask ourselves if it’s really worth it anymore. This whole situation just causes headaches, with the feeling that we have to choose between bad and worse.
P
Pinkiponk23 Mar 2022 09:09Nemesis schrieb:
What kind of "argument" is that? Please be aware that people like the original poster (OP) seek confirmation here, rightly so (around 800,000 loan with 4,400 income!!!!!), and might be saved from a major mistake or misfortune by not receiving it. When someone like you randomly throws out such an unsupported statement, there is a risk that the OP will cling to it and ignore the other facts, which can be dangerous.
Your causal chain, "I don't want to call your plan impossible, because I find your wish too beautiful," is, sorry, insane.That’s why I referred to the wisdom of the other forum members ;-) and slightly softened the first paragraph with my last sentence. But you are certainly right as well.What I notice in this forum is that building or buying a home is mostly presented as if it happens “effortlessly,” easily and casually alongside fancy cars, demanding hobbies, nice vacations, restaurant visits, etc. Housebuilding is rarely perceived as what “our” parents or grandparents might still have enabled themselves: sacrificing other things, which in some cases can be easy or not even felt as sacrifice because living in your own house with a garden is “a dream.”
In my opinion, we in the forum cannot assess how strongly the “dream of owning a house with a garden” can inspire someone, how easily other members might give up the comforts mentioned above, whether someone might anyway want to take on a well-paid second job for fun, expect an inheritance in a few years, find additional sources of income, switch from part-time to full-time work, etc. I also believe that the rising rents are not to be underestimated, and for those who buy fruit and vegetables at the store (like me), it’s worth thinking sometimes whether growing some of that produce in your own garden does not offer savings while increasing enjoyment.
For me, for example, the rising rents and the scarce availability of living space are intimidating, and I have some influence over energy and utility costs in my own house, while in a rental property, I have little to no influence. At the same time, the OP earns too much to qualify for housing benefits or other entitlement certificates.
I assume the OP and their family will make the decision that is right for them, and I pointed out one of the risks.
Still, you are of course right, and perhaps we will yet hear how the OP decided.
N
Nice-Nofret23 Mar 2022 09:38‘Shell’ houses are frequently sold at forced auctions because the builders have taken on more than they can handle. Self-built construction sites or houses also regularly come onto the market, often because marriages haven’t survived the stress. Life is not a walk in the park.
Of course, there are people who manage to build under these conditions—the original poster (OP), however, does not seem to be one of them; those who do usually save diligently for their dream home early in life and have been helping others on their construction sites for years—both to gain experience themselves and to build ‘relationship points’ so they can expect support when contributing their own labor.
I doubt he will find a bank willing to consider financing a house for him... his dreams are too far from reality.
If I were in his position, I would look for a suitable rental apartment with some garden space, which is much more realistic. Most people successfully raise their children in rental homes.
Of course, there are people who manage to build under these conditions—the original poster (OP), however, does not seem to be one of them; those who do usually save diligently for their dream home early in life and have been helping others on their construction sites for years—both to gain experience themselves and to build ‘relationship points’ so they can expect support when contributing their own labor.
I doubt he will find a bank willing to consider financing a house for him... his dreams are too far from reality.
If I were in his position, I would look for a suitable rental apartment with some garden space, which is much more realistic. Most people successfully raise their children in rental homes.
Regardless of the budget, I feel compelled to make a case for staying.
We are in the opposite situation. We built a house in Lower Saxony in 2020 and live 550 km (340 miles) away from our family. We also have one child. During the pandemic, social contacts with friends were greatly limited because most people we know restricted their few contacts to family only (to protect, for example, grandparents). We were very alone here for a long time, and as our son got older, we increasingly felt how lonely we were and how much we wanted to see our family more often than just once or twice a year.
Despite building a new home and all the related challenges, we have now decided to sell and move back to be near family (for me, after more than 10 years) and build again there. I am very relieved that we are doing this and able to do it—I can even feel it physically. Despite the stress of selling and moving, I sleep much better at night again. Most importantly, I am able to fall asleep more easily.
Accordingly, I would definitely not advise you to move away from family with children. Or at least be aware of the consequences. My mother is over 70 years old. You never know how long people will live, and the thought that if I only see her once a year, I might be able to count on two hands how many more times we will meet was unbearable for me.
Edit: Since finances can’t be entirely ignored here: with an 800k loan and a net income of 4.4k, of course, I would not recommend this to you.
We are in the opposite situation. We built a house in Lower Saxony in 2020 and live 550 km (340 miles) away from our family. We also have one child. During the pandemic, social contacts with friends were greatly limited because most people we know restricted their few contacts to family only (to protect, for example, grandparents). We were very alone here for a long time, and as our son got older, we increasingly felt how lonely we were and how much we wanted to see our family more often than just once or twice a year.
Despite building a new home and all the related challenges, we have now decided to sell and move back to be near family (for me, after more than 10 years) and build again there. I am very relieved that we are doing this and able to do it—I can even feel it physically. Despite the stress of selling and moving, I sleep much better at night again. Most importantly, I am able to fall asleep more easily.
Accordingly, I would definitely not advise you to move away from family with children. Or at least be aware of the consequences. My mother is over 70 years old. You never know how long people will live, and the thought that if I only see her once a year, I might be able to count on two hands how many more times we will meet was unbearable for me.
Edit: Since finances can’t be entirely ignored here: with an 800k loan and a net income of 4.4k, of course, I would not recommend this to you.
I think the issue has resolved itself due to the recent rise in construction loan interest rates.
Land 350,000€ (development, taxes, notary included?)
House 450,000€ (standard single-family house with pitched roof)
Additional construction costs 50,000€
Another 50,000€ (driveway, garden, carport, fence, kitchen – probably not enough, so rather 75,000€)
This adds up to a realistic total of 925,000€
If you exclude the 10,000€ equity buffer for double burdens, the breakdown is:
925,000€ loan, of which 30,000€ is equity, 60,000€ is interest-free borrowed money.
835,000€ at about 2.3% interest (20 years)
Just the initial interest payments are around 1,600€/month.
It’s hard to get below a 3,000€ monthly installment,
plus 500€ additional running and operating costs,
plus the eventual repayment of 60,000€ borrowed from friends (when are you supposed to save for that?)
Insane!
Are you going to live on millet and water then or what?
Land 350,000€ (development, taxes, notary included?)
House 450,000€ (standard single-family house with pitched roof)
Additional construction costs 50,000€
Another 50,000€ (driveway, garden, carport, fence, kitchen – probably not enough, so rather 75,000€)
This adds up to a realistic total of 925,000€
If you exclude the 10,000€ equity buffer for double burdens, the breakdown is:
925,000€ loan, of which 30,000€ is equity, 60,000€ is interest-free borrowed money.
835,000€ at about 2.3% interest (20 years)
Just the initial interest payments are around 1,600€/month.
It’s hard to get below a 3,000€ monthly installment,
plus 500€ additional running and operating costs,
plus the eventual repayment of 60,000€ borrowed from friends (when are you supposed to save for that?)
Insane!
Are you going to live on millet and water then or what?
TmMike_2 schrieb:
The estimate of €925,000 (approx. $1,000,000) is quite realistic.
If you exclude the €10,000 (approx. $11,000) equity buffer for double financing, the breakdown is as follows:
€925,000 (approx. $1,000,000) loan, of which €30,000 (approx. $33,000) is equity, €60,000 (approx. $66,000) is an interest-free loan.
That leaves €835,000 (approx. $900,000) at about 2.3% interest (20 years).
The initial interest payments alone are around €1,600 (approx. $1,750) per month.
It’s hard to keep the monthly installment below €3,000 (approx. $3,300)
plus €500 (approx. $550) for additional operating costs.
Plus the eventual repayment of €60,000 (approx. $66,000) borrowed from friends (when exactly will this be saved up?).
With a minimum 1% principal repayment (some banks might allow this), the monthly payment would still be close to €2,300 (approx. $2,500).
Possibly the last option would be a loan with deferred principal repayment.
But what should happen to the remaining €800,000 (approx. $870,000) debt in 20 to 30 years?
Crixton schrieb:
With a minimum 1% repayment rate (some banks might accept this), it would still be nearly €2,300 per month.
Perhaps the only remaining option is a repayment suspension loan.
But what will happen to the remaining debt of €800,000 (about $870,000) in 20-30 years? As my colleague recently said so well:
I always wanted to drive a car worth half a million.
I just didn’t realize it would be a Ford Focus 😉.