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
B
Bieber081514 Apr 2015 09:05Dirk Grafe schrieb:
A 4 in front. That way, the new build in a better location with a garden and all additional costs could be financed. What needs to be checked (without looking up details about the existing property possibly mentioned elsewhere in the thread). In our case, it is like this:
- Existing property with just under 180 m² (1937 sq ft) of living space, full basement, great garden, 600 m² (6500 sq ft) plot size, excellent (!) location, land value guideline 74 €/m² (IMHO too low; compared to vacant plots selling well over 100 €/m²). ==> All-in after renovation (electrical, heating, plumbing, painting/flooring) just under 400,000 euros.
- New build from 100 €/m² (approximately 9.30 sq ft), depending on location/availability, realistic land prices around 100,000 euros (specific properties known). This leaves 300,000 euros for the house including all additional costs and exterior work. This new build will either be more expensive than the existing property or smaller without a basement and without a garden. (I might report later, as we are currently planning the new build.)
Ultimately, it depends on the individual case!
Hello Bieber,
€100/m² (approximately $108/yd²) and €100,000 (about $108,000) for the plot corresponds to a land area of 1,000m² (10,764 ft²). The original poster wants to buy 600m² (6,458 ft²) in the new development, so that already means about €40,000 (around $43,000) less in costs. For the two comparison properties, that roughly fits or at least as far as you can judge from the keyboard.
That’s one cost estimate, right? You also need to deduct (at least) around €40–50,000 (about $43,000–54,000) for the smaller/larger plot here, since the new build would have 400m² (4,306 ft²) more garden. If the building plot were also “only” 600m² (6,458 ft²), then immediately about €40,000 (approximately $43,000) more would be available for the house, or more capital is invested in the land and thus in a significantly better location.
The standard land value does not come out of nowhere but is based on purchases made in recent years in that area. If you say that a €74/m² (about $80/yd²) standard land value corresponds to a great location, and the new development or free plots are traded at €100/m²++ (more than $108/yd²), then the location there is not just great but very likely significantly better than in the €74 zone. (Or the sellers’ price expectations are astronomically high.)
Whether one location or another is more advantageous for a buyer has to be examined in detail. On top of that comes the individual assessment of the existing property, where comparability is quite difficult. With the basic data as described above, my own property (purchase/renovation in 2011) compares quite well in terms of costs; whether both properties can really be compared, I hardly believe.
Best regards,
Dirk Grafe
€100/m² (approximately $108/yd²) and €100,000 (about $108,000) for the plot corresponds to a land area of 1,000m² (10,764 ft²). The original poster wants to buy 600m² (6,458 ft²) in the new development, so that already means about €40,000 (around $43,000) less in costs. For the two comparison properties, that roughly fits or at least as far as you can judge from the keyboard.
- Existing property with just under 180m² (1,938 ft²) of living space, full basement, great garden, 600m² (6,458 ft²) plot size, excellent (!) location, standard land value 74 €/m² (about $80/yd²) (in my opinion too low; by comparison, free plots sell well above 100 €/m²). ==> All-in after renovation (electrical, heating, plumbing, painting/flooring) just under €400,000 (about $430,000).
That’s one cost estimate, right? You also need to deduct (at least) around €40–50,000 (about $43,000–54,000) for the smaller/larger plot here, since the new build would have 400m² (4,306 ft²) more garden. If the building plot were also “only” 600m² (6,458 ft²), then immediately about €40,000 (approximately $43,000) more would be available for the house, or more capital is invested in the land and thus in a significantly better location.
The standard land value does not come out of nowhere but is based on purchases made in recent years in that area. If you say that a €74/m² (about $80/yd²) standard land value corresponds to a great location, and the new development or free plots are traded at €100/m²++ (more than $108/yd²), then the location there is not just great but very likely significantly better than in the €74 zone. (Or the sellers’ price expectations are astronomically high.)
Whether one location or another is more advantageous for a buyer has to be examined in detail. On top of that comes the individual assessment of the existing property, where comparability is quite difficult. With the basic data as described above, my own property (purchase/renovation in 2011) compares quite well in terms of costs; whether both properties can really be compared, I hardly believe.
Best regards,
Dirk Grafe
B
Bieber081514 Apr 2015 23:03Dirk, regarding the plot of land. I recently looked at several specific plots (all in fairly good locations). There were plots between 450 and 600 m² (4800 and 6500 sq ft) and others between 800 and 1200 m² (8600 and 13,000 sq ft). Strangely, the price was always around 100,000 euros. The point is, you can’t buy half of a large plot for half the price—it doesn’t work that way. Otherwise, I can agree with your idea, no question.
The 400,000 euros are based on the asking sale price, estimated additional costs, and quotes from all necessary trades (I would say an accuracy of +20% / -10%).
The land value standard of 74 euros/m² (7 USD/sq ft) is, in my opinion, outdated and definitely too low. If the land were free, buildable, and belonged to me, I would demand—and get—200 euros/m² (19 USD/sq ft) for it (I’d bet a case of beer on that). It is expected that building land will soon be available just three streets away. This will very likely be traded at over 100 euros/m² (9.50 USD/sq ft) (I estimate around 120 euros/m² or more). I know the area very well personally… Maybe I’m mixing up land value standard, market value, and transaction value??
By the way, the location for the 74-euro land value is definitely better than that of “our” plot, which is now supposed to cost 100 euros/m² (9.50 USD/sq ft). And yes, the seller has quite ambitious price expectations. It’s no coincidence that we’re now also considering new construction as an alternative.
This is getting a bit off-topic… Where you are absolutely right: the new vs. old comparison only works when applied very specifically to particular properties and considering the living conditions of the buyers. And the houses will always differ anyway, charm vs. state-of-the-art technology and so on.
The 400,000 euros are based on the asking sale price, estimated additional costs, and quotes from all necessary trades (I would say an accuracy of +20% / -10%).
The land value standard of 74 euros/m² (7 USD/sq ft) is, in my opinion, outdated and definitely too low. If the land were free, buildable, and belonged to me, I would demand—and get—200 euros/m² (19 USD/sq ft) for it (I’d bet a case of beer on that). It is expected that building land will soon be available just three streets away. This will very likely be traded at over 100 euros/m² (9.50 USD/sq ft) (I estimate around 120 euros/m² or more). I know the area very well personally… Maybe I’m mixing up land value standard, market value, and transaction value??
By the way, the location for the 74-euro land value is definitely better than that of “our” plot, which is now supposed to cost 100 euros/m² (9.50 USD/sq ft). And yes, the seller has quite ambitious price expectations. It’s no coincidence that we’re now also considering new construction as an alternative.
This is getting a bit off-topic… Where you are absolutely right: the new vs. old comparison only works when applied very specifically to particular properties and considering the living conditions of the buyers. And the houses will always differ anyway, charm vs. state-of-the-art technology and so on.
Then buy the 1200m² (12,917 sq ft) plot for €100,000, split it into two 600m² (6,458 sq ft) plots, sell one half for €200/m², which means €120,000 income... and realize that no one will actually pay €200/m².
If they do: after deducting surveying costs of around €15,000, your net profit would be about €15,000, and your own land would effectively be free.
You don’t really believe that would work, do you?
No. There are many more issues involved that you can hardly resolve through the Internet or a forum. I strongly recommend seeking advice from experts and/or local architects. I am quite sure they will quickly bring you back down to reality.
Best regards
Dirk Grafe
If they do: after deducting surveying costs of around €15,000, your net profit would be about €15,000, and your own land would effectively be free.
You don’t really believe that would work, do you?
Bieber0815 schrieb:
Maybe I'm mixing up the base land value, market value, and transaction value??
No. There are many more issues involved that you can hardly resolve through the Internet or a forum. I strongly recommend seeking advice from experts and/or local architects. I am quite sure they will quickly bring you back down to reality.
Best regards
Dirk Grafe
B
Bieber081515 Apr 2015 20:58Dirk Grafe schrieb:
Then buy the 1200 m² (12,917 ft²) plot for 100,000€, split it into two 600 m² (6,458 ft²) lots, sell one half for 200€/m² (18.58$/ft²), meaning 120,000€ income... and realize that no one will pay you 200€/m². One of the 600 m² (6,458 ft²) parcels wouldn’t have street access, so I already know that this won’t work (also, I don’t expect a price significantly above 100€/m² (9.29$/ft²) there, as it’s a bit farther out). Where the building plot is offered for 100€/m² (9.29$/ft²), the official land value today is 81€/m² (7.53$/ft²). (Then there is another, more central location where building land is offered to us at 200€/m² (18.58$/ft²). The official land value there is 109€/m² (10.13$/ft²)).
For the used house, the asking price is too high—in my view, that won’t work out. But there’s nothing I can do about it (other than decline, which is why a new build is being planned). If you have other ideas, feel free to send a private message; I’m always happy to learn!
Bieber0815 schrieb:
One of the 600 m² (about 6458 sq ft) plots wouldn't have street access, Nonsense. There are several solutions for that, and they can be explained in five minutes.
So I understand that it’s not possible (and I don’t expect a price significantly over 100 euros/m²; it’s a bit farther out). Where the building plot is offered for 100 euros/m², the current standard land value is 81 euros/m². (Then there is another, more central location where we are offered building land at 200 euros/m². The standard land value there is 109 euros/m²).
For the existing house, the asking price is too high in my opinion — that will not work out. But I can’t do anything about it (other than decline, which is why we are planning a new build). If you have other ideas, feel free to send me a private message; I’m happy to learn more!Try negotiating down.
Best regards,
Dirk Grafe
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