ᐅ Building a House Approaching 60? Risks of Building or Buying a Home.
Created on: 16 Oct 2014 14:16
R
ruedigold
Before my first post: first, a kind greeting to all the friendly posters.
Until now, I was a firm tenant... because of flexibility, as well as financial and family reasons. Now, Mr. Draghi and his supporters have turned the world upside down: money is the cheapest thing you can buy.
For a house building project, I can put my substantial rent into the balance and add some of my own money. With 40% equity properly secured, such a house (well, 60% would still belong to the bank) would probably make economic sense. I lose my flexibility, but I no longer need it as I used to.
I understand as little about real estate as about cars. Both are necessary assets that take a big bite out of your wallet and cause trouble. Still, both have their appeal. For the first time, I am seriously considering what it would mean to own a house, that is, to have one built, because I cannot contribute any work myself.
What bothers me are the risks of building or buying a house. Again, I use the car comparison. With a car, I get 100% delivered as ordered. In case of defects, there are a few attempts to fix them, then the vehicle goes back to the seller. But how is it with a house? Consumer protection is virtually nonexistent.
Nevertheless, given the circumstances, it seems worth a try. I am making a plan now. First, I will visit the model home village in Frechen. Already there, I have the uneasy feeling that I will be pretty much alone with my questions and doubts.
That is why I have my first strategic thought at all, and thus this post here: I need advice. Someone who can advise me reliably based on their own long-term experience. Someone who knows the pitfalls that a newcomer stumbles over. An architect? Why do I need an architect if the house is delivered by the prefab house manufacturer and, as the contract stipulates, just set up? What could an architect tell me?
Then I read that contracts with house manufacturers often contain serious defects because services are not listed. That guarantees trouble. I want to avoid that proactively at all costs.
In the manufacturers’ brochures, I only ever see houses. But what about the garages? Where do the four trash bins go? Where do my bikes fit? Where do I keep my grill in winter and in summer? My neighbors with a semi-detached house plus garage often have three cars parked everywhere except in the garage. The garage is the missing storage room in the house. Was all of this originally planned by an architect?
I understand so little of this that a building project still intimidates me. How do people with experience view the picture I have painted here? I would really appreciate your insight, thank you very much.
Until now, I was a firm tenant... because of flexibility, as well as financial and family reasons. Now, Mr. Draghi and his supporters have turned the world upside down: money is the cheapest thing you can buy.
For a house building project, I can put my substantial rent into the balance and add some of my own money. With 40% equity properly secured, such a house (well, 60% would still belong to the bank) would probably make economic sense. I lose my flexibility, but I no longer need it as I used to.
I understand as little about real estate as about cars. Both are necessary assets that take a big bite out of your wallet and cause trouble. Still, both have their appeal. For the first time, I am seriously considering what it would mean to own a house, that is, to have one built, because I cannot contribute any work myself.
What bothers me are the risks of building or buying a house. Again, I use the car comparison. With a car, I get 100% delivered as ordered. In case of defects, there are a few attempts to fix them, then the vehicle goes back to the seller. But how is it with a house? Consumer protection is virtually nonexistent.
Nevertheless, given the circumstances, it seems worth a try. I am making a plan now. First, I will visit the model home village in Frechen. Already there, I have the uneasy feeling that I will be pretty much alone with my questions and doubts.
That is why I have my first strategic thought at all, and thus this post here: I need advice. Someone who can advise me reliably based on their own long-term experience. Someone who knows the pitfalls that a newcomer stumbles over. An architect? Why do I need an architect if the house is delivered by the prefab house manufacturer and, as the contract stipulates, just set up? What could an architect tell me?
Then I read that contracts with house manufacturers often contain serious defects because services are not listed. That guarantees trouble. I want to avoid that proactively at all costs.
In the manufacturers’ brochures, I only ever see houses. But what about the garages? Where do the four trash bins go? Where do my bikes fit? Where do I keep my grill in winter and in summer? My neighbors with a semi-detached house plus garage often have three cars parked everywhere except in the garage. The garage is the missing storage room in the house. Was all of this originally planned by an architect?
I understand so little of this that a building project still intimidates me. How do people with experience view the picture I have painted here? I would really appreciate your insight, thank you very much.
D
Doc.Schnaggls23 Nov 2014 09:59ruedigold schrieb:
And I have to pay property tax on the land plus the house.In your case, with the combination of land and house, the construction company (or their proof of the land) will also make this happen.
The tax office will then consider it a connected transaction.
B
Bauexperte23 Nov 2014 11:51Hello,
It refers to the period during which the house is built: for example, contract signed in March 2013, construction done from June to November/December = year of construction 2013.
That is a question of cost versus benefit. If the plot belongs to you and the appraisal results are within a reasonable range: buy it, but be aware that several months of contractor work will be needed to make the house livable. Otherwise, better stay away 😉
It is still 2013 and you’re buying the house—if at all—in 2013, right? The exact timing might be tricky—I’m not sure whether the agent’s commission becomes due at the moment of the listing or the actual purchase. In NRW, the property transfer tax will also increase—the relevant date is when the notarized contract is signed, which forms the basis for the tax. Yet another calculation example 😀
My certificate says "**Kaufmann" (businessman) – should I feel discriminated against now?
Expensive is relative; we’re talking about 2,500-3,000 EUR for TÜV® and DEKRA®; external construction supervision depends on the contract terms and also starts at about 3,000 EUR.
You can be suspicious, as "lastdrop" mentioned, but keep in mind that TÜV® is a commercial organization that depends on a good to very good reputation. Building according to the four-eyes principle (double-checking) is never a bad idea!
Whether you involve external construction supervision primarily depends on your confidence level or the offer from a provider you trust, assuming you ultimately decide to build new.
Regards, Bauexperte
ruedigold schrieb:
What does the term "year of construction" actually mean for a house, like it does for a car?
It refers to the period during which the house is built: for example, contract signed in March 2013, construction done from June to November/December = year of construction 2013.
ruedigold schrieb:
Conclusion: the house, which is only 4 years old, would need significant renovations to become ready to move in.
That is a question of cost versus benefit. If the plot belongs to you and the appraisal results are within a reasonable range: buy it, but be aware that several months of contractor work will be needed to make the house livable. Otherwise, better stay away 😉
ruedigold schrieb:
And I have to pay property tax on the land plus the house. And the real estate agent’s fee, but the seller has to pay that from January, is that correct?
It is still 2013 and you’re buying the house—if at all—in 2013, right? The exact timing might be tricky—I’m not sure whether the agent’s commission becomes due at the moment of the listing or the actual purchase. In NRW, the property transfer tax will also increase—the relevant date is when the notarized contract is signed, which forms the basis for the tax. Yet another calculation example 😀
ruedigold schrieb:
Terrible, the term sugarcoating reality by the way; and don’t women build houses?
My certificate says "**Kaufmann" (businessman) – should I feel discriminated against now?
ruedigold schrieb:
It’s supposed to be expensive but useful and reassuring. Is that true?
Expensive is relative; we’re talking about 2,500-3,000 EUR for TÜV® and DEKRA®; external construction supervision depends on the contract terms and also starts at about 3,000 EUR.
You can be suspicious, as "lastdrop" mentioned, but keep in mind that TÜV® is a commercial organization that depends on a good to very good reputation. Building according to the four-eyes principle (double-checking) is never a bad idea!
Whether you involve external construction supervision primarily depends on your confidence level or the offer from a provider you trust, assuming you ultimately decide to build new.
Regards, Bauexperte
Bauexperte schrieb:
We are still in 2013 and you are buying the house – if at all – in 2013, right? Scroll your calendar forward by one year – we are already in 2014.
Have a great Sunday, everyone!
B
Bauexperte23 Nov 2014 12:33Hello Yvonne,
My (half) free Sunday should really be for relaxation *embarrassed
Wishing you a sunny day as well!
Regards, Bauexperte
ypg schrieb:yxö#+.;- ....
scroll your calendar one year ahead – we are already in 2014
My (half) free Sunday should really be for relaxation *embarrassed
Wishing you a sunny day as well!
Regards, Bauexperte
R
ruedigold23 Nov 2014 19:06First of all, thanks for the continued interest... special thanks to DocSchnaggels for the tips regarding financing... phew, I really have to be careful with my all-in-one-source strategy...
But it’s not that far yet... 😉
Today I was out again, in a town in the Eifel region, about 500 m (1,640 ft) above sea level — a "dream house"... at least 17 years ago, when the builders proudly moved in...
Today, I still can’t believe it, it’s practically in need of a complete renovation, in my opinion.
Not only the family, but the house is totally off track. Someone built it completely out of touch with their real needs.
A few details: back then, the cost price was 1.2 million DM (I fully believe it, just judging by what you see), today the asking price is about 400,000 euros.
The plot is huge, but entirely overgrown. The owners never lifted a finger to maintain the grounds after their professional completion. How could they? Working full-time six days a week leaves no spare time to keep such a property in order.
Another lesson learned: if you don’t accurately calculate the ongoing work needed after moving in, and don’t clearly decide who will do the work and how it will be paid for, this is exactly what happens.
Living for the house instead of in the house, for so many years. Sad.
If we were seriously interested, the first thing I would do is get a full cost estimate: what would it take to make the garden and house livable again? I’d bet restoring the wild garden costs more than starting fresh on bare land. Reclaiming 1,300 sqm (14,000 sq ft) of wilderness… any idea of what that might cost?
Inside it’s a comparable story, but I won’t go into details.
It’s becoming clearer to me why an apartment in a multi-unit building is so attractive: you don’t have to do any work on it. It will never overwhelm or overburden you.
A house like this can only be managed if all trades are contracted out professionally… and that’s for the period after moving in, mind you.
I would deduct $150,000 from the asking price to cover the complete renovation.
And then there’s the whole topic of owning a house in the first place: just adding up the interest on the original 1.2 million DM over 17 years… what could the owners have rented for that kind of money? And would they still have their equity today… plus compound interest on top?
Phew… I still don’t believe it’s economically sensible (especially in rural areas where land prices don’t really rise) to build or buy a house before knowing the numbers exactly.
In contrast, apartments in the crane houses in Cologne Rheinauhafen are said to have doubled in price… wonder why?
By the way, there were more houses for sale in the area, between 10 and 20 years old…
And what strikes me is how fast houses age! They age faster than people…
The real estate agent said: yes, a 20-year-old house is considered old on the market and is therefore harder to sell.
That would also apply to my new build… what will it be worth in 20 years? Half? I’m already getting depressed just thinking about it… and what will my descendants say when they eventually have to sell the property?
Enjoy the rest of your Sunday… I didn’t, and it’s my own fault.
But it’s not that far yet... 😉
Today I was out again, in a town in the Eifel region, about 500 m (1,640 ft) above sea level — a "dream house"... at least 17 years ago, when the builders proudly moved in...
Today, I still can’t believe it, it’s practically in need of a complete renovation, in my opinion.
Not only the family, but the house is totally off track. Someone built it completely out of touch with their real needs.
A few details: back then, the cost price was 1.2 million DM (I fully believe it, just judging by what you see), today the asking price is about 400,000 euros.
The plot is huge, but entirely overgrown. The owners never lifted a finger to maintain the grounds after their professional completion. How could they? Working full-time six days a week leaves no spare time to keep such a property in order.
Another lesson learned: if you don’t accurately calculate the ongoing work needed after moving in, and don’t clearly decide who will do the work and how it will be paid for, this is exactly what happens.
Living for the house instead of in the house, for so many years. Sad.
If we were seriously interested, the first thing I would do is get a full cost estimate: what would it take to make the garden and house livable again? I’d bet restoring the wild garden costs more than starting fresh on bare land. Reclaiming 1,300 sqm (14,000 sq ft) of wilderness… any idea of what that might cost?
Inside it’s a comparable story, but I won’t go into details.
It’s becoming clearer to me why an apartment in a multi-unit building is so attractive: you don’t have to do any work on it. It will never overwhelm or overburden you.
A house like this can only be managed if all trades are contracted out professionally… and that’s for the period after moving in, mind you.
I would deduct $150,000 from the asking price to cover the complete renovation.
And then there’s the whole topic of owning a house in the first place: just adding up the interest on the original 1.2 million DM over 17 years… what could the owners have rented for that kind of money? And would they still have their equity today… plus compound interest on top?
Phew… I still don’t believe it’s economically sensible (especially in rural areas where land prices don’t really rise) to build or buy a house before knowing the numbers exactly.
In contrast, apartments in the crane houses in Cologne Rheinauhafen are said to have doubled in price… wonder why?
By the way, there were more houses for sale in the area, between 10 and 20 years old…
And what strikes me is how fast houses age! They age faster than people…
The real estate agent said: yes, a 20-year-old house is considered old on the market and is therefore harder to sell.
That would also apply to my new build… what will it be worth in 20 years? Half? I’m already getting depressed just thinking about it… and what will my descendants say when they eventually have to sell the property?
Enjoy the rest of your Sunday… I didn’t, and it’s my own fault.
R
ruedigold23 Nov 2014 19:12Bauexperte schrieb:
My certificate says "**Kaufmann" - should I feel discriminated against now?Check yourself first.....;)Similar topics