Hello everyone,
I’m not sure if this is the right place for my question, but I’ll give it a try
We have been struggling for several months with the question of what is “better”: building a new house or buying an existing property. We currently have an existing property in sight and could also purchase a plot of land (small new development). Both options have a good location for us.
The existing property:
Detached single-family house with a granny flat (secondary dwelling),
Garage,
Small but more than sufficient garden
140 sqm (1500 sq ft) living space (+40 sqm (430 sq ft) granny flat)
800 sqm (8600 sq ft) plot
Built in 1991
Very well maintained, but nothing modernized. So still the old gas heating system, bathroom, etc. (However, the bathroom is white and in very good condition)
Purchase price around 370,000 euros, including all additional costs.
A few thousand euros would still be needed for new wallpaper and some paint. After that, our budget would be exhausted for further (not necessary) renovation work, such as a modern bathroom, nicer tiles, a new heating system (current heating costs about 2000 euros per year – roughly three times as much as for a new build), and so on. (Of course, reserves for any urgent repairs are still available.)
New build:
The plot (600 sqm (6500 sq ft)) would cost about 80,000 euros.
The new build, without a granny flat (so roughly the same living area of 140 sqm (1500 sq ft)), amounts to about 280,000 euros.
+ additional building costs
+ garage
+ landscaping
+ who knows what else...
So, roughly calculated, it’s more expensive.
However, we would have everything just the way we want it – the tiles, doors, windows, electrical outlets, bathroom, etc.
Also, the new build would be more energy-efficient (supposedly about 600 euros heating costs per year with gas heating due to better insulation, modern windows, modern heating system, etc.)
We are skilled DIYers, but both of us work full time and have a small child. So, there really isn’t much time to do a lot of work ourselves on a new build. With the existing property, we could theoretically move in immediately.
Do you have any tips or experiences that could help us with our decision?
Of course, I understand that we need to make the decision ourselves, but maybe there are things we haven’t considered.
Thanks in advance,
Best regards, Peter
I’m not sure if this is the right place for my question, but I’ll give it a try
We have been struggling for several months with the question of what is “better”: building a new house or buying an existing property. We currently have an existing property in sight and could also purchase a plot of land (small new development). Both options have a good location for us.
The existing property:
Detached single-family house with a granny flat (secondary dwelling),
Garage,
Small but more than sufficient garden
140 sqm (1500 sq ft) living space (+40 sqm (430 sq ft) granny flat)
800 sqm (8600 sq ft) plot
Built in 1991
Very well maintained, but nothing modernized. So still the old gas heating system, bathroom, etc. (However, the bathroom is white and in very good condition)
Purchase price around 370,000 euros, including all additional costs.
A few thousand euros would still be needed for new wallpaper and some paint. After that, our budget would be exhausted for further (not necessary) renovation work, such as a modern bathroom, nicer tiles, a new heating system (current heating costs about 2000 euros per year – roughly three times as much as for a new build), and so on. (Of course, reserves for any urgent repairs are still available.)
New build:
The plot (600 sqm (6500 sq ft)) would cost about 80,000 euros.
The new build, without a granny flat (so roughly the same living area of 140 sqm (1500 sq ft)), amounts to about 280,000 euros.
+ additional building costs
+ garage
+ landscaping
+ who knows what else...
So, roughly calculated, it’s more expensive.
However, we would have everything just the way we want it – the tiles, doors, windows, electrical outlets, bathroom, etc.
Also, the new build would be more energy-efficient (supposedly about 600 euros heating costs per year with gas heating due to better insulation, modern windows, modern heating system, etc.)
We are skilled DIYers, but both of us work full time and have a small child. So, there really isn’t much time to do a lot of work ourselves on a new build. With the existing property, we could theoretically move in immediately.
Do you have any tips or experiences that could help us with our decision?
Of course, I understand that we need to make the decision ourselves, but maybe there are things we haven’t considered.
Thanks in advance,
Best regards, Peter
D
Doc.Schnaggls9 Apr 2015 14:25Hello Peter,
Something can always break down.
In our condominium (now rented out), completely unexpected repairs last year caused a significant dent in our budget.
The mixer faucets in the shower and at the washbasin (both Hans Grohe, so not cheap parts), the dishwasher (Siemens), and a broken roller shutter mechanism made 2014 unexpectedly expensive. The apartment (and therefore everything built into it) is from the year 2000, so it was just 14 years old… Our tenants are now happy with various new parts.
Things you should also consider when renting out:
- Tax liability (though this can sometimes be partially disregarded if financing is involved)
- Maintenance obligation (if an appliance like the stove, refrigerator, etc., breaks down in the rented secondary unit, it’s your responsibility as the landlord to replace it)
- You will always have someone in the building whom you should be considerate of, or who, in the worst case, might constantly bother you with noise, odors, or similar nuisances
- Risk of rental income loss, which can quickly have serious consequences if you have an ongoing mortgage or financing
Although we also rent out our apartment, we do not live in the same building. That is a big difference. For example, my parents rented out an apartment in the same building – I would never want to switch places with them, based on the experiences I had while still living at home.
Best regards,
Dirk
Something can always break down.
In our condominium (now rented out), completely unexpected repairs last year caused a significant dent in our budget.
The mixer faucets in the shower and at the washbasin (both Hans Grohe, so not cheap parts), the dishwasher (Siemens), and a broken roller shutter mechanism made 2014 unexpectedly expensive. The apartment (and therefore everything built into it) is from the year 2000, so it was just 14 years old… Our tenants are now happy with various new parts.
Things you should also consider when renting out:
- Tax liability (though this can sometimes be partially disregarded if financing is involved)
- Maintenance obligation (if an appliance like the stove, refrigerator, etc., breaks down in the rented secondary unit, it’s your responsibility as the landlord to replace it)
- You will always have someone in the building whom you should be considerate of, or who, in the worst case, might constantly bother you with noise, odors, or similar nuisances
- Risk of rental income loss, which can quickly have serious consequences if you have an ongoing mortgage or financing
Although we also rent out our apartment, we do not live in the same building. That is a big difference. For example, my parents rented out an apartment in the same building – I would never want to switch places with them, based on the experiences I had while still living at home.
Best regards,
Dirk
Thanks, Dirk, for outlining the unexpected costs. I hadn’t considered these small items, which add up to a considerable amount overall.
The pros and cons of the granny flat are clear. But as mentioned, we currently see it more as an advantage.
@ Dirk Grafe:
How do I calculate this using the standard land values? According to the map, the price per square meter of the existing property is 80 euros, and in the new development area, it is 70 euros.
One more piece of information: During the financing consultation, an advisor calculated the average prices of houses around here and was only a few euros off the exact purchase price.
The pros and cons of the granny flat are clear. But as mentioned, we currently see it more as an advantage.
@ Dirk Grafe:
How do I calculate this using the standard land values? According to the map, the price per square meter of the existing property is 80 euros, and in the new development area, it is 70 euros.
One more piece of information: During the financing consultation, an advisor calculated the average prices of houses around here and was only a few euros off the exact purchase price.
Okay, I just wanted to rule out that there are major differences.
What causes the premium in the new development area? According to the official land value, your plot is worth 600m² (6500 ft²) x €70, so €42,000. You should be paying around €80,000. The question is what accounts for this difference or what else is included in the €80,000 besides the bare land? Don’t get me wrong – €80,000 can be reasonable, please explain.
If we assume for the existing property 800m² (8600 ft²) x about €90, that results in a land value of around €70,000, leaving €266,000 just for the house (calculated with 10% additional costs). So you are paying around €1480 per square meter (sq ft) for the existing property including repair backlog. I find that quite high, even compared to my own purchase. Of course, the property might justify the price/value, but depending on the extent of needed repairs, total costs can quickly reach a point where new construction makes more sense – although I personally prefer buying an existing property and would still choose that in many cases. However, this strongly depends on the purchase price.
If my calculation is correct, you should have been offered a purchase price of about €335,000 including land. If you basically like the house, I would suggest a re-inspection with an expert or architect to assess the repair backlog. Based on that, you could make a written offer and set a personal limit for the purchase price. Without having seen it and based on your description, I can’t imagine a price starting with “3” being justified for me. For that, the repair backlog would have to be very low, the fittings high quality, and its usability fully intact without any remodeling.
Best regards,
Dirk Grafe
What causes the premium in the new development area? According to the official land value, your plot is worth 600m² (6500 ft²) x €70, so €42,000. You should be paying around €80,000. The question is what accounts for this difference or what else is included in the €80,000 besides the bare land? Don’t get me wrong – €80,000 can be reasonable, please explain.
If we assume for the existing property 800m² (8600 ft²) x about €90, that results in a land value of around €70,000, leaving €266,000 just for the house (calculated with 10% additional costs). So you are paying around €1480 per square meter (sq ft) for the existing property including repair backlog. I find that quite high, even compared to my own purchase. Of course, the property might justify the price/value, but depending on the extent of needed repairs, total costs can quickly reach a point where new construction makes more sense – although I personally prefer buying an existing property and would still choose that in many cases. However, this strongly depends on the purchase price.
If my calculation is correct, you should have been offered a purchase price of about €335,000 including land. If you basically like the house, I would suggest a re-inspection with an expert or architect to assess the repair backlog. Based on that, you could make a written offer and set a personal limit for the purchase price. Without having seen it and based on your description, I can’t imagine a price starting with “3” being justified for me. For that, the repair backlog would have to be very low, the fittings high quality, and its usability fully intact without any remodeling.
Best regards,
Dirk Grafe
Thank you very much for the detailed answers and tips.
The 80,000 for the plot is an estimate. We don’t have a concrete offer yet. We applied for it a few months ago, and the plots are expected to be allocated soon. Then you receive the exact size (probably between 600 and 700 square meters (6,458 and 7,535 square feet)), the zoning plan (building plan/planning permission), and the exact price, so you can make a decision. According to information from the building authority, we should expect infrastructure development costs of about 100 to 120 euros per square meter (approximately 9 to 11 dollars per square foot), plus the property transfer tax. That’s why I’m estimating around 80,000 euros.
The 70 euros mentioned earlier were for areas around the NB zone (new development area). So it might turn out to be more expensive there.
Another offer for the existing property would not help since there are other interested parties as well. However, we were the first to commit and live nearby, so people “know” us. Also, people here say the house is in great condition and has the best plot in this residential area.
What exactly can be included in backlog repairs?
To me, it looks like nothing really needs to be done at the moment (except a bit of wallpaper and paint on the plaster).
The phrase “not modernized,” as I described in my first post, might have given the wrong impression about the condition. The heating system is clear to me—it is old but, according to the heating engineer, still in good condition with excellent exhaust values (according to the sellers). A new circulating pump and an expansion tank have already been installed there. The roof, as far as I can tell, is fine. The façade, wooden windows, and roof overhang were repainted only two years ago. The shutters have also been replaced with new ones. Otherwise, tiles, doors, and parquet floors show little wear—it all seems generally in good shape.
Now, about building—I keep hearing that it’s total stress. You have to run after the craftsmen all the time, and in the end, the result wouldn’t be as good as it used to be.
Is it really that bad?
What additional costs should be expected? How high are the extra fees? What does the landscaping cost?
How long does it usually take until everything is finished?
Regards,
Peter
The 80,000 for the plot is an estimate. We don’t have a concrete offer yet. We applied for it a few months ago, and the plots are expected to be allocated soon. Then you receive the exact size (probably between 600 and 700 square meters (6,458 and 7,535 square feet)), the zoning plan (building plan/planning permission), and the exact price, so you can make a decision. According to information from the building authority, we should expect infrastructure development costs of about 100 to 120 euros per square meter (approximately 9 to 11 dollars per square foot), plus the property transfer tax. That’s why I’m estimating around 80,000 euros.
The 70 euros mentioned earlier were for areas around the NB zone (new development area). So it might turn out to be more expensive there.
Another offer for the existing property would not help since there are other interested parties as well. However, we were the first to commit and live nearby, so people “know” us. Also, people here say the house is in great condition and has the best plot in this residential area.
What exactly can be included in backlog repairs?
To me, it looks like nothing really needs to be done at the moment (except a bit of wallpaper and paint on the plaster).
The phrase “not modernized,” as I described in my first post, might have given the wrong impression about the condition. The heating system is clear to me—it is old but, according to the heating engineer, still in good condition with excellent exhaust values (according to the sellers). A new circulating pump and an expansion tank have already been installed there. The roof, as far as I can tell, is fine. The façade, wooden windows, and roof overhang were repainted only two years ago. The shutters have also been replaced with new ones. Otherwise, tiles, doors, and parquet floors show little wear—it all seems generally in good shape.
Now, about building—I keep hearing that it’s total stress. You have to run after the craftsmen all the time, and in the end, the result wouldn’t be as good as it used to be.
Is it really that bad?
What additional costs should be expected? How high are the extra fees? What does the landscaping cost?
How long does it usually take until everything is finished?
Regards,
Peter
I would choose the existing property because at least you don’t have to deal with construction defects that could ruin you financially or lead to huge additional costs. I think it’s more important to see the potential in the house than to like it immediately.
Our house was a real eyesore, which is why no one wanted to buy it, but I’m slowly starting to like it. We mainly took it because our three pairs of rabbits each had their own room, and there were still five rooms left that we could “fill” somehow. Far from just bedroom-living room-kitchen-bathroom. Also, the house is basically located in the woods. The appearance was actually secondary, and by now we’re well underway with completely renovating and tearing out everything, so that in the end, except for the foundation walls, nothing will be the same as before.
I like the idea of a granny flat (later for a child?), but I would never want to rent it out. On the one hand, I don’t like strangers on the property—otherwise, I could have just stayed in the rental apartment—and on the other hand, the responsibilities and considerations would be too annoying for me.
There’s definitely room to negotiate the house price (a 10% discount would be the minimum for me).
Our house was a real eyesore, which is why no one wanted to buy it, but I’m slowly starting to like it. We mainly took it because our three pairs of rabbits each had their own room, and there were still five rooms left that we could “fill” somehow. Far from just bedroom-living room-kitchen-bathroom. Also, the house is basically located in the woods. The appearance was actually secondary, and by now we’re well underway with completely renovating and tearing out everything, so that in the end, except for the foundation walls, nothing will be the same as before.
I like the idea of a granny flat (later for a child?), but I would never want to rent it out. On the one hand, I don’t like strangers on the property—otherwise, I could have just stayed in the rental apartment—and on the other hand, the responsibilities and considerations would be too annoying for me.
There’s definitely room to negotiate the house price (a 10% discount would be the minimum for me).