ᐅ New Construction or Buying and Renovating a House in Bavaria
Created on: 26 Oct 2023 22:51
W
Wo1z3rl
Hello everyone,
I have been a mostly silent reader in this forum for several years. About four years ago, my husband and I moved from the city to the Bavarian countryside, and for the past three years, we have been searching for a suitable property. Unfortunately, we never really found the right one—sometimes we were a day too late, other times the desired property was sold to a neighbor, and so on.
We are a family of four, with two children aged 2 1/2 and 5 years. I work full-time, while my husband is a stay-at-home dad. We have good savings and an additional net income of about 4,500 euros (including child and family allowances but excluding potential bonuses).
Here is the situation: My grandmother owns a plot of land in our town, about 1,200 m² (of which approximately 300 m² is a private road, so around 900 m² could be built on). About a year ago, she offered to transfer this land to us free of charge (to give some context, the standard land value in the new development area is about 135 euros per m²). After talking with my grandmother, I discussed this with the potential heirs—my father and three uncles—and initially, none of them seemed to have any objections. However, at least one uncle appears to have some underlying concerns, as he began discussing my grandmother’s possible will with her (there is none), which she did not appreciate at all.
The plot is located in the center of town and is not subject to a specific development plan but is designated as a mixed-use area in the land-use plan. The neighboring properties mostly consist of pitched-roof houses, ranging from single-family homes to multi-family buildings. In 2003, there was an approved building permit process for a house with a granny flat initiated by one of my uncles, but he eventually decided against building. The floor plans are no longer really up to date (pellet heating with a large tank in the basement, etc.); my uncle showed them to me. To make a long story short, my husband and I decided at that time, after the whole drama (and because I am quite picky and would prefer a south- or west-facing slope), to continue looking for renovation projects instead.
Currently, in our region, only run-down properties are available for at least 250,000 euros, while reasonably decent houses, mostly from the 1980s, cost around 450,000 euros. There have also been new semi-detached houses in the neighboring town priced at 430,000 euros, but these are too small for us (lack of a home office), and the neighboring town is remote with no shops within walking distance.
My father-in-law currently lives in the apartment next to us. If we can afford it, we would like to include him in a granny flat or separate apartment. Most of the older existing properties have very large living spaces of 220-300 m², so it seemed logical and sensible to us to somehow integrate him into the planning. We would of course try to do the same in a new build.
The big question now is whether we should continue looking for a renovation project or seize the opportunity to build on my grandmother’s land? We envision a house with about 160 m² of living space, a 40 m² (430 sq ft) granny flat, and a double carport—all within a budget of about 500,000 euros plus a 10% buffer. According to the rule of thumb of 3,000 euros per m², this seems very tight. :-(
My husband usually has some free time in the mornings, but in my opinion, he lacks significant practical skills, so I would try to subcontract all trades.
I have already compiled a list of construction companies within a radius of about 50 kilometers (30 miles). The issue that concerns me currently is the financial stability or liquidity of these companies: They are usually limited liability companies—how should one assess this as a potential future builder? Would it be better to avoid smaller firms and choose a larger one?
Thank you very much for reading!
I have been a mostly silent reader in this forum for several years. About four years ago, my husband and I moved from the city to the Bavarian countryside, and for the past three years, we have been searching for a suitable property. Unfortunately, we never really found the right one—sometimes we were a day too late, other times the desired property was sold to a neighbor, and so on.
We are a family of four, with two children aged 2 1/2 and 5 years. I work full-time, while my husband is a stay-at-home dad. We have good savings and an additional net income of about 4,500 euros (including child and family allowances but excluding potential bonuses).
Here is the situation: My grandmother owns a plot of land in our town, about 1,200 m² (of which approximately 300 m² is a private road, so around 900 m² could be built on). About a year ago, she offered to transfer this land to us free of charge (to give some context, the standard land value in the new development area is about 135 euros per m²). After talking with my grandmother, I discussed this with the potential heirs—my father and three uncles—and initially, none of them seemed to have any objections. However, at least one uncle appears to have some underlying concerns, as he began discussing my grandmother’s possible will with her (there is none), which she did not appreciate at all.
The plot is located in the center of town and is not subject to a specific development plan but is designated as a mixed-use area in the land-use plan. The neighboring properties mostly consist of pitched-roof houses, ranging from single-family homes to multi-family buildings. In 2003, there was an approved building permit process for a house with a granny flat initiated by one of my uncles, but he eventually decided against building. The floor plans are no longer really up to date (pellet heating with a large tank in the basement, etc.); my uncle showed them to me. To make a long story short, my husband and I decided at that time, after the whole drama (and because I am quite picky and would prefer a south- or west-facing slope), to continue looking for renovation projects instead.
Currently, in our region, only run-down properties are available for at least 250,000 euros, while reasonably decent houses, mostly from the 1980s, cost around 450,000 euros. There have also been new semi-detached houses in the neighboring town priced at 430,000 euros, but these are too small for us (lack of a home office), and the neighboring town is remote with no shops within walking distance.
My father-in-law currently lives in the apartment next to us. If we can afford it, we would like to include him in a granny flat or separate apartment. Most of the older existing properties have very large living spaces of 220-300 m², so it seemed logical and sensible to us to somehow integrate him into the planning. We would of course try to do the same in a new build.
The big question now is whether we should continue looking for a renovation project or seize the opportunity to build on my grandmother’s land? We envision a house with about 160 m² of living space, a 40 m² (430 sq ft) granny flat, and a double carport—all within a budget of about 500,000 euros plus a 10% buffer. According to the rule of thumb of 3,000 euros per m², this seems very tight. :-(
My husband usually has some free time in the mornings, but in my opinion, he lacks significant practical skills, so I would try to subcontract all trades.
I have already compiled a list of construction companies within a radius of about 50 kilometers (30 miles). The issue that concerns me currently is the financial stability or liquidity of these companies: They are usually limited liability companies—how should one assess this as a potential future builder? Would it be better to avoid smaller firms and choose a larger one?
Thank you very much for reading!
This is how I understand it: With grandma’s gift, the usual rule is the 10-year period. That means if grandma passes away 10 years after the gift is given, the property fully belongs to you. Otherwise, for each year earlier, you pay 10% to the heirs. So, for example, after 8 years, 80% belongs to you and 20% is considered part of the inheritance.
You have €550,000 (approximately $590,000) in equity and a net monthly income of €4,300 (about $4,600)? Plus, your father-in-law can sell his apartment if necessary? And you practically already have a plot of land.
If you can’t make this work, then I don’t know what else to say. We financed €550,000 (about $590,000) last year with a net income of €5,500 (around $5,900).
Even if you end up needing an additional €100,000 (around $107,000), you can easily finance that. You already have collateral through the land.
In my opinion, the only issue is that there are still many things you haven’t clarified for yourselves. Talk to your father-in-law to see if he is really willing to sell the apartment and get it appraised. Make sure you finalize all the details regarding the land early on. Do this well in advance and separate the land purchase clearly from the house construction; otherwise, you might have to pay property transfer tax on both.
After that, I would recommend sitting down and calculating your financial means precisely. With the apartment sale and possibly a small loan, you should easily reach €700,000 to €800,000 (approximately $750,000 to $860,000). That would make the whole project quite feasible.
If you can’t make this work, then I don’t know what else to say. We financed €550,000 (about $590,000) last year with a net income of €5,500 (around $5,900).
Even if you end up needing an additional €100,000 (around $107,000), you can easily finance that. You already have collateral through the land.
In my opinion, the only issue is that there are still many things you haven’t clarified for yourselves. Talk to your father-in-law to see if he is really willing to sell the apartment and get it appraised. Make sure you finalize all the details regarding the land early on. Do this well in advance and separate the land purchase clearly from the house construction; otherwise, you might have to pay property transfer tax on both.
After that, I would recommend sitting down and calculating your financial means precisely. With the apartment sale and possibly a small loan, you should easily reach €700,000 to €800,000 (approximately $750,000 to $860,000). That would make the whole project quite feasible.
Thank you for your answers. Unfortunately, my husband is very strict about taking out a loan, so I need to discuss that with him again. To be honest, except for one uncle, nobody in our families has built a house. Everyone has bought and renovated existing houses or apartments. As a result, we have only heard horror stories about costs spiraling out of control, architects taking advantage of you, and that with a new build you can only end up with a tiny box-shaped house, and so on. I’m not really sure where these stories come from, given the lack of personal experience. ;-) My parents tend to recommend "bargain houses" (very old castles for 100,000–200,000 euros (110,000–220,000 USD)) and say "you could renovate a lot yourself…". One time the house was on a very steep, purely north-facing slope… well.
@11ant
The lady is an architect (university of applied sciences) – I’m not sure if I’m allowed to mention names? I found her website and portfolio appealing; how the chemistry will be in person of course remains to be seen. I can also name the construction companies on my list, even though they are probably not known nationwide.
I have only been in permanent employment since March; before that, life was rather frugal, living on a student salary.
@11ant
The lady is an architect (university of applied sciences) – I’m not sure if I’m allowed to mention names? I found her website and portfolio appealing; how the chemistry will be in person of course remains to be seen. I can also name the construction companies on my list, even though they are probably not known nationwide.
I have only been in permanent employment since March; before that, life was rather frugal, living on a student salary.
At the latest since the last "heating law," it should be clear to everyone that "old castles" come with significant disadvantages and costs compared to new builds. Additionally, there is the personal freedom in design. Sorry, but best regards to the relatives: their opinion is as outdated as those so-called castles and is best demolished or at least "renovated" right away.
W
WilderSueden27 Oct 2023 15:29Wo1z3rl schrieb:
Thank you for your answers. Unfortunately, my husband is very strict about not taking out a loan, so I need to discuss that with him again. To be honest, no one in our families (except for one uncle) has ever built a house. Everyone has bought and renovated houses or apartments instead. Accordingly, we’ve only heard horror stories about costs spiraling out of control, architects exploiting you, or that with a new build you can only end up with a shoebox, and so on. I’m not sure where these stories without experience come from. ;-) My parents always try to recommend “bargain houses” (so really old castles for 100,000-200,000 euros (110,000-220,000 US dollars)) to us, saying “you could renovate so much yourself...” One time the house was on a very steep, north-facing slope… well. I believe there are very few house building projects that stay within budget. Renovations, however, rarely do either. In my impression, when it comes to new builds, the homeowners often share some of the responsibility—whether due to insufficient preparation (poor soil, underestimated slope conditions, low construction standards of the general contractor, etc.), lack of discipline during selections, or spontaneous upgrades (for example, our patio roof). In the end, whether a faceless shoebox or a beautiful home is built largely depends on the homeowner.
Of course, new construction is initially more expensive, but everything is new and up to current standards. Bringing an old house up to a somewhat comparable standard usually means gutting it to a bare shell, and at that point, there’s not much room for DIY work, unlike with superficial renovations.
H
HeimatBauer27 Oct 2023 15:33The situation sounds quite familiar to me. I had—or rather, still have—two neighboring plots of land; one has a house built in 1953, and the other was ready for development. I had a decent amount of capital, but of course not enough for a large house. Then came all the advice from people who neither know modern construction techniques nor can use Excel. Sorry, but that was the case.
Looking back, I have to say: Unfortunately, I didn’t use an architect’s help at the time—if I were to do it again, I would follow 11ant’s advice exactly. However, not everything is always agreed upon within the building partnership (meaning: spouses), and I was very fortunate to have two knowledgeable advisors who were accepted by both me and my wife. They first helped us get rid of all the common misconceptions and explained how building works and what the differences between renovating an old house and building new are.
The result: We maximized the buildable area down to the last centimeter, didn’t splurge on luxury fixtures, but already designed a house five years ago that is only now becoming mainstream. When I go into the house on the neighboring plot, even though I grew up there, I just want to tear it down because I simply don’t have enough money to maintain it.
I never really understood the comfort of a newly built house until I had a well-designed and properly constructed one. In that house, even minor details like the air exchange rate are just right. The heating system isn’t made up of 87.2 pieced-together parts but is a straightforward air-to-water heat pump with underfloor heating. We considered installing a fireplace but quickly ruled it out due to the one-time and ongoing costs, environmental impact, regulatory uncertainties, and a quick calculation of heat input.
Renovating a house? Why do you think the bargains are so cheap? Sure, depending on the construction year, there may be properties worth renovating, but they usually aren’t the real bargains. Once you tear out everything that needs renovation, what remains is just a terrible floor plan.
I would say you first need to agree with your husband about the mortgage. A newly built house lasts many decades; if you take out a loan for anything, it should be for that. You two need to come to an agreement on this. Then the land needs to be secured in a way that you can do whatever you want with it—no family clauses in the title deed, just: your property. Then follow 11ant’s plan. Aim to move in within two years—if it’s sooner, that’s great.
And when I read the description, “our two children are 2 1/2 and 5 years old. I work full-time while my husband is a stay-at-home dad,” then, in my opinion, even thinking about fully renovating an old house is just crazy.
As a building team, you have to stick to your plan. For years—of course only when we weren’t around—people complained that building new in the first place was pointless, that we were building too big, and so on. Then came the pandemic, and nobody mocked the size anymore. Then energy prices rose, and nobody laughed about energy-efficient construction. Then they visited in winter, and since then nobody has laughed about the central ventilation system. Then they came in summer, and since then nobody has laughed about the cooling system.
So when those remarks come up, you have to ask yourself: Who am I actually building for here? Who will live in the house later? The critics or me? That’s why my house is exactly how I want it.
Looking back, I have to say: Unfortunately, I didn’t use an architect’s help at the time—if I were to do it again, I would follow 11ant’s advice exactly. However, not everything is always agreed upon within the building partnership (meaning: spouses), and I was very fortunate to have two knowledgeable advisors who were accepted by both me and my wife. They first helped us get rid of all the common misconceptions and explained how building works and what the differences between renovating an old house and building new are.
The result: We maximized the buildable area down to the last centimeter, didn’t splurge on luxury fixtures, but already designed a house five years ago that is only now becoming mainstream. When I go into the house on the neighboring plot, even though I grew up there, I just want to tear it down because I simply don’t have enough money to maintain it.
I never really understood the comfort of a newly built house until I had a well-designed and properly constructed one. In that house, even minor details like the air exchange rate are just right. The heating system isn’t made up of 87.2 pieced-together parts but is a straightforward air-to-water heat pump with underfloor heating. We considered installing a fireplace but quickly ruled it out due to the one-time and ongoing costs, environmental impact, regulatory uncertainties, and a quick calculation of heat input.
Renovating a house? Why do you think the bargains are so cheap? Sure, depending on the construction year, there may be properties worth renovating, but they usually aren’t the real bargains. Once you tear out everything that needs renovation, what remains is just a terrible floor plan.
I would say you first need to agree with your husband about the mortgage. A newly built house lasts many decades; if you take out a loan for anything, it should be for that. You two need to come to an agreement on this. Then the land needs to be secured in a way that you can do whatever you want with it—no family clauses in the title deed, just: your property. Then follow 11ant’s plan. Aim to move in within two years—if it’s sooner, that’s great.
And when I read the description, “our two children are 2 1/2 and 5 years old. I work full-time while my husband is a stay-at-home dad,” then, in my opinion, even thinking about fully renovating an old house is just crazy.
As a building team, you have to stick to your plan. For years—of course only when we weren’t around—people complained that building new in the first place was pointless, that we were building too big, and so on. Then came the pandemic, and nobody mocked the size anymore. Then energy prices rose, and nobody laughed about energy-efficient construction. Then they visited in winter, and since then nobody has laughed about the central ventilation system. Then they came in summer, and since then nobody has laughed about the cooling system.
So when those remarks come up, you have to ask yourself: Who am I actually building for here? Who will live in the house later? The critics or me? That’s why my house is exactly how I want it.
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