ᐅ Renovation or New Construction? Buying a House with a Large Plot of Land!
Created on: 21 Feb 2025 23:53
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Flo1990
Hello community,
We have the opportunity to quickly purchase a house (160 m2 (1,722 sq ft) living area, built in 1966, with 7 rooms) on a large plot of land (1,400 m2 (15,070 sq ft)). The structure is in good condition, solidly built, with a basement. We have basically already decided to buy it, as it’s a unique chance in our area!
However, there are several options for what we can do with the property:
Option 1:
Renovate the house and keep the plot. We would completely renovate it, including a new roof with an extension, heating, electrical system, plumbing, bathrooms, etc. Minimal personal work, just demolition and preparation.
Estimated costs from the architect: around €500,000 (about $550,000).
Option 2:
Cosmetically update the house so we can rent it out. Does anyone know if we would need to replace the oil heating system from 1990 and the oil tanks from 1966? What minimum costs should we expect for this?
Then build a new house on the large plot. Access to the new house past the existing building is not a problem. This has been approved by the local building authority (building permit/planning permission), and we are allowed to build a second house here.
Option 3:
Subdivide the plot, which has also been approved by the relevant building authority. Sell the existing house in its current condition along with a part of the plot. We would retain access to the new building and keep the plot for the new house.
We have an appointment soon with an independent mortgage advisor. We are mainly interested in which option banks are most likely to approve based on your experience. Do banks generally require more collateral and recommend selling the existing house when building new, or do they tend to support rental properties more?
Also, what is the current situation with renovation projects regarding bank financing? The renovation costs more than the property itself. Do banks even finance such projects? Or do they recommend building new instead for the renovation budget?
Thanks for your help!!
We have the opportunity to quickly purchase a house (160 m2 (1,722 sq ft) living area, built in 1966, with 7 rooms) on a large plot of land (1,400 m2 (15,070 sq ft)). The structure is in good condition, solidly built, with a basement. We have basically already decided to buy it, as it’s a unique chance in our area!
However, there are several options for what we can do with the property:
Option 1:
Renovate the house and keep the plot. We would completely renovate it, including a new roof with an extension, heating, electrical system, plumbing, bathrooms, etc. Minimal personal work, just demolition and preparation.
Estimated costs from the architect: around €500,000 (about $550,000).
Option 2:
Cosmetically update the house so we can rent it out. Does anyone know if we would need to replace the oil heating system from 1990 and the oil tanks from 1966? What minimum costs should we expect for this?
Then build a new house on the large plot. Access to the new house past the existing building is not a problem. This has been approved by the local building authority (building permit/planning permission), and we are allowed to build a second house here.
Option 3:
Subdivide the plot, which has also been approved by the relevant building authority. Sell the existing house in its current condition along with a part of the plot. We would retain access to the new building and keep the plot for the new house.
We have an appointment soon with an independent mortgage advisor. We are mainly interested in which option banks are most likely to approve based on your experience. Do banks generally require more collateral and recommend selling the existing house when building new, or do they tend to support rental properties more?
Also, what is the current situation with renovation projects regarding bank financing? The renovation costs more than the property itself. Do banks even finance such projects? Or do they recommend building new instead for the renovation budget?
Thanks for your help!!
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wiltshire22 Feb 2025 10:28I am an outspoken advocate for large plots of land, so my first instinct is to keep the property and renovate the house if it has a basic character I like. Of course, location and terrain play a role. And naturally, finances are also important, as the option to keep the property can potentially be more expensive—not only in terms of purchase price but also regarding taxes and maintenance.
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felicitias_122 Feb 2025 11:23If financially possible, I would never voluntarily divide a plot like that. We have 1200 m² (approximately 13,000 sq ft) and make good use of it. If it were possible, we would gladly have a few more. We definitely lack space for a few more fruit trees.
Flo1990 schrieb:
The plot is 1400 m2 (15,070 ft2).felicitias_1 schrieb:
If financially possible, I would never voluntarily divide a plot like that.For "huge," I was expecting more than 4000 m2 (43,000 ft2). For many, splitting a plot that size would almost be a relief. But in my opinion, the original poster has a completely different idea of what constitutes a huge plot. Must be an urban kid.If you need to take out a loan from the bank, I would still divide the plot and sell the old house. You can build up to the maximum allowed floor area ratio and keep the largest portion of the land.
M
motorradsilke22 Feb 2025 15:05If it is financially feasible and the floor plan of the existing house suits you, I would keep the plot. It is not huge, but it has a nice size for a single-family home. A larger plot means more open space, neighbors are far away, and no one overlooks your table.
The seller wants to complete the sale quickly. He aims to finalize everything with the notary by the end of March at the latest.
Our mortgage advisor recommended today that we arrange a bridge loan through our main bank. It can be made available within one week.
This would give us enough time to plan and decide what we actually want to do with the property.
What should you know about a bridge loan? Is it generally possible to get regular financing afterwards (for renovation or new construction)?
And is it true that you can only get financing from banks and complete the sale with the notary if you have a current energy performance certificate?
Thanks again for the information.
Our mortgage advisor recommended today that we arrange a bridge loan through our main bank. It can be made available within one week.
This would give us enough time to plan and decide what we actually want to do with the property.
What should you know about a bridge loan? Is it generally possible to get regular financing afterwards (for renovation or new construction)?
And is it true that you can only get financing from banks and complete the sale with the notary if you have a current energy performance certificate?
Thanks again for the information.