Hello everyone!
After reading here for a while, I’ve now decided to actively participate (with questions! Unfortunately, my knowledge isn’t enough to provide answers).
Who we are:
A brief introduction: we are a family of six facing a move due to work. It doesn’t need to happen immediately. Currently, my husband commutes and the pressure isn’t very high. In the medium term, however, we would like to relocate closer to his job.
We’re not firmly set on building a house, but after watching the market for some time, we’ve realized that we either have to rent a rundown place, spend an enormous amount of money, or hope for a lucky find. Unfortunately, the housing market is not designed for large families. Almost all listings are poorly laid out or too small. Sometimes suitable homes do appear, but often we’re simply too slow due to distance. The same goes for buying existing houses. Somehow, the market seems pretty depleted.
As a sort of Plan B, we’re now considering building and are starting to explore that slowly. We’re (still!) complete beginners and have little clue, so I’m hoping for answers to many basic questions here.
What we are looking for:
We don’t need luxury but want to plan thoughtfully (eventually the children will leave home), aiming for reasonable energy efficiency and, if possible, a clear, simple architectural style. Specifically, a house without unnecessary frills. Ideally designed as a house with “two separate living units.” Not only to potentially benefit from double government subsidies (such as the KFW building loan program / similar grant schemes, though as a layperson I don’t fully understand or know if those loans are really top priority—probably a topic to revisit later)—but also to avoid living in a house that’s too large once the kids have moved out.
We want to build affordably but not cheaply. That means carefully considering what is truly needed, keeping things simple and pared down, and (in many but not all areas) opting for relatively basic finishes. We currently live in a (very well planned!) house of about 140 sqm (1500 sq ft). In our opinion, more space isn’t necessary with good design.
How much will it cost?
I keep running into cost-per-square-meter figures related to building. It’s often stated that you can build for around €1100 (about $1200) per sqm (simple finishes), up to €2000 (about $2200) for higher-end finishes (with no clear upper limit). But I wonder: can you really build a decent house for €1500 (about $1650) per sqm? From browsing various prefab home catalogs, that seems too low to me. But I’m happy to be proven wrong.
Cost calculation:
We don’t want to rush into building just for the sake of it. Right now, we’re mainly considering whether we can afford to build at all. Here is a rough example calculation running through my mind for you to review. Please: where is the mistake? What have I overlooked?
House, 150 sqm (1600 sq ft) - €225,000 (about $247,000)
Plot, fully serviced (picked at random—some can be cheaper, some much more expensive) - €35,000 (about $38,000)
Additional construction costs (according to this forum) - €40,000 (about $44,000)
Garden - €10,000 (about $11,000) (probably underestimated, but this is an area where we can do a lot ourselves)
Contingency for unexpected costs / overruns / whatever - €10,000 (about $11,000)
Contingency for extras (e.g., a new kitchen or carport) - €10,000 (about $11,000)
———
Total: €320,000 (about $351,000)
Architect fees are not included yet. I have no idea what they might cost.
If I enter this into a mortgage calculator, it produces an offer (loan amount minus our equity) with a 15-year term at 2% effective annual interest rate for about €900 (about $980) per month.
Besides the KFW option, there is also the possibility of a loan from the Investment and Structural Bank RLP for €125,000 (about $137,000), also with a 15-year term at 2.0% or 10 years at 1.6%. Not really cheaper, but prepayments of 10% per year are allowed. This is interesting for us because a second income will come in a few years, which we won’t fully need for living expenses (currently one income suffices).
I find this incredibly affordable and wonder: what am I missing? Where’s the catch? If this calculation is even remotely realistic, building a house would be quite manageable.
If you factor in about €400 (about $440) per month for utilities and other running costs, we’d be paying about the same as we do in rent now. In a newly built home close to the job, daycare fees would be eliminated (saving about €250 (about $275) per month) and my husband’s commuting costs would roughly halve (saving another €250 (about $275)). So we would have about €500 (about $550) extra per month to save.
Currently, we live on one income. In no more than five years, a second income will be added. By the time the loan term ends, at least two, more likely three children will be out of the house, so the “granny flat” or second unit could be rented out.
More generally, I’m wondering how to approach this sensibly. How do I find someone who would build for the prices mentioned above (if it’s financially doable)? If we build, it will be securely financed. Of course, that probably means no more three vacations a year. But the children should still be able to continue horse riding or music lessons. How can I get an overview of this complicated market? Is there a good book on the subject? Or any other tips for our first steps?
Thank you very much already,
kauderwelsch (That’s exactly how building feels to me right now)
After reading here for a while, I’ve now decided to actively participate (with questions! Unfortunately, my knowledge isn’t enough to provide answers).
Who we are:
A brief introduction: we are a family of six facing a move due to work. It doesn’t need to happen immediately. Currently, my husband commutes and the pressure isn’t very high. In the medium term, however, we would like to relocate closer to his job.
We’re not firmly set on building a house, but after watching the market for some time, we’ve realized that we either have to rent a rundown place, spend an enormous amount of money, or hope for a lucky find. Unfortunately, the housing market is not designed for large families. Almost all listings are poorly laid out or too small. Sometimes suitable homes do appear, but often we’re simply too slow due to distance. The same goes for buying existing houses. Somehow, the market seems pretty depleted.
As a sort of Plan B, we’re now considering building and are starting to explore that slowly. We’re (still!) complete beginners and have little clue, so I’m hoping for answers to many basic questions here.
What we are looking for:
We don’t need luxury but want to plan thoughtfully (eventually the children will leave home), aiming for reasonable energy efficiency and, if possible, a clear, simple architectural style. Specifically, a house without unnecessary frills. Ideally designed as a house with “two separate living units.” Not only to potentially benefit from double government subsidies (such as the KFW building loan program / similar grant schemes, though as a layperson I don’t fully understand or know if those loans are really top priority—probably a topic to revisit later)—but also to avoid living in a house that’s too large once the kids have moved out.
We want to build affordably but not cheaply. That means carefully considering what is truly needed, keeping things simple and pared down, and (in many but not all areas) opting for relatively basic finishes. We currently live in a (very well planned!) house of about 140 sqm (1500 sq ft). In our opinion, more space isn’t necessary with good design.
How much will it cost?
I keep running into cost-per-square-meter figures related to building. It’s often stated that you can build for around €1100 (about $1200) per sqm (simple finishes), up to €2000 (about $2200) for higher-end finishes (with no clear upper limit). But I wonder: can you really build a decent house for €1500 (about $1650) per sqm? From browsing various prefab home catalogs, that seems too low to me. But I’m happy to be proven wrong.
Cost calculation:
We don’t want to rush into building just for the sake of it. Right now, we’re mainly considering whether we can afford to build at all. Here is a rough example calculation running through my mind for you to review. Please: where is the mistake? What have I overlooked?
House, 150 sqm (1600 sq ft) - €225,000 (about $247,000)
Plot, fully serviced (picked at random—some can be cheaper, some much more expensive) - €35,000 (about $38,000)
Additional construction costs (according to this forum) - €40,000 (about $44,000)
Garden - €10,000 (about $11,000) (probably underestimated, but this is an area where we can do a lot ourselves)
Contingency for unexpected costs / overruns / whatever - €10,000 (about $11,000)
Contingency for extras (e.g., a new kitchen or carport) - €10,000 (about $11,000)
———
Total: €320,000 (about $351,000)
Architect fees are not included yet. I have no idea what they might cost.
If I enter this into a mortgage calculator, it produces an offer (loan amount minus our equity) with a 15-year term at 2% effective annual interest rate for about €900 (about $980) per month.
Besides the KFW option, there is also the possibility of a loan from the Investment and Structural Bank RLP for €125,000 (about $137,000), also with a 15-year term at 2.0% or 10 years at 1.6%. Not really cheaper, but prepayments of 10% per year are allowed. This is interesting for us because a second income will come in a few years, which we won’t fully need for living expenses (currently one income suffices).
I find this incredibly affordable and wonder: what am I missing? Where’s the catch? If this calculation is even remotely realistic, building a house would be quite manageable.
If you factor in about €400 (about $440) per month for utilities and other running costs, we’d be paying about the same as we do in rent now. In a newly built home close to the job, daycare fees would be eliminated (saving about €250 (about $275) per month) and my husband’s commuting costs would roughly halve (saving another €250 (about $275)). So we would have about €500 (about $550) extra per month to save.
Currently, we live on one income. In no more than five years, a second income will be added. By the time the loan term ends, at least two, more likely three children will be out of the house, so the “granny flat” or second unit could be rented out.
More generally, I’m wondering how to approach this sensibly. How do I find someone who would build for the prices mentioned above (if it’s financially doable)? If we build, it will be securely financed. Of course, that probably means no more three vacations a year. But the children should still be able to continue horse riding or music lessons. How can I get an overview of this complicated market? Is there a good book on the subject? Or any other tips for our first steps?
Thank you very much already,
kauderwelsch (That’s exactly how building feels to me right now)
Many points are so general that it is difficult to make a definitive statement about them.
Prices vary greatly depending on the region, and what one person considers a luxury, another may see as a basic requirement.
Choose a suitable example plot of land.
Request informational material from builders.
Select 1 to 3 appropriate companies and obtain quotes.
Based on real offers for land and house, along with well-calculated additional costs and generously estimated extra expenses, you can at least establish a realistic budget.
With this, you can approach the bank to find out how much the whole project would cost you.
Prices vary greatly depending on the region, and what one person considers a luxury, another may see as a basic requirement.
Choose a suitable example plot of land.
Request informational material from builders.
Select 1 to 3 appropriate companies and obtain quotes.
Based on real offers for land and house, along with well-calculated additional costs and generously estimated extra expenses, you can at least establish a realistic budget.
With this, you can approach the bank to find out how much the whole project would cost you.
K
kauderwelsch27 Jul 2017 12:21Jay69 schrieb:
Hello kauderwelsch, your calculation is also missing the full additional costs (property transfer tax, notary, land registry)! Aren't those included in the 40,000 building-related additional costs?
kauderwelsch schrieb:
Are the additional construction costs included in the 40,000?No, purchase/acquisition incidental costs and additional construction costs are treated separately.K
kauderwelsch27 Jul 2017 12:24@Zaba12 just to clarify for understanding. Architect 45k = 45,000€???
Otherwise, a noticeably higher loan would probably better meet our need for security. With four children, we don’t want to take unnecessary risks. Then it’s better to wait a few years until the second income is established and save, and build with a significantly better financial framework.
Otherwise, a noticeably higher loan would probably better meet our need for security. With four children, we don’t want to take unnecessary risks. Then it’s better to wait a few years until the second income is established and save, and build with a significantly better financial framework.
Therefore, always purchase land separately and in advance. For example, on $60,000 for the land, you would pay about 5% land transfer tax (around $3,000), plus some fees for the notary and court, which would be roughly another $1,000. The house is then exempt from the land transfer tax later on. Karsten