Hello,
after receiving such great help here in the forum regarding my question about cancellation periods, I’m coming back with another situation.
Maybe there are experts here who can help me make a decision on this topic as well.
Here’s the deal:
On our neighboring property, there is an old house, estimated to have been built around 1900, with a thatched roof, and the plot is about 800 square meters (8600 square feet).
The house belongs to my mother-in-law.
Currently, there are two rental units in the house; one is vacant at the moment, and the other is rented out.
Now the property is up for sale because the money is needed.
The construction company said that renovating for personal use is not worthwhile; demolition and rebuilding would be cheaper.
A real estate agent apparently came to appraise the property—I’m not entirely sure, but he suggested they might get around €160,000 (about $175,000) for it.
Although the bank is only considering €120,000 (about $130,000).
I know it’s hard to assess much from a distance and with limited information, but we are facing the decision whether to buy the house and then continue renting out the apartments.
The problem is that the entire building is quite old, and it seems inevitable that some renovations will be necessary over time.
Would you go for it?
Interest rates are extremely low right now, so the time for buying would be favorable.
Is it realistic to cover the entire financing through the rental income, or is that too risky?
We don’t want to put much equity in, so the plan would be to fully finance it and then effectively pay off the loan through the rental income...
You’re probably going to tell me right away to stay away from it...
But I would still appreciate any opinions.
Regards,
Egon
after receiving such great help here in the forum regarding my question about cancellation periods, I’m coming back with another situation.
Maybe there are experts here who can help me make a decision on this topic as well.
Here’s the deal:
On our neighboring property, there is an old house, estimated to have been built around 1900, with a thatched roof, and the plot is about 800 square meters (8600 square feet).
The house belongs to my mother-in-law.
Currently, there are two rental units in the house; one is vacant at the moment, and the other is rented out.
Now the property is up for sale because the money is needed.
The construction company said that renovating for personal use is not worthwhile; demolition and rebuilding would be cheaper.
A real estate agent apparently came to appraise the property—I’m not entirely sure, but he suggested they might get around €160,000 (about $175,000) for it.
Although the bank is only considering €120,000 (about $130,000).
I know it’s hard to assess much from a distance and with limited information, but we are facing the decision whether to buy the house and then continue renting out the apartments.
The problem is that the entire building is quite old, and it seems inevitable that some renovations will be necessary over time.
Would you go for it?
Interest rates are extremely low right now, so the time for buying would be favorable.
Is it realistic to cover the entire financing through the rental income, or is that too risky?
We don’t want to put much equity in, so the plan would be to fully finance it and then effectively pay off the loan through the rental income...
You’re probably going to tell me right away to stay away from it...
But I would still appreciate any opinions.
Regards,
Egon
H
HilfeHilfe11 Sep 2019 08:19SuperEgon schrieb:
The plot is probably in the usual local range of 80-100€/m² (9-10.7 USD/sq ft)
I’m not exactly sure at the moment again
As a landlord, you also have a duty of care. There are rental agreements that include an obligation for the tenant to renovate the property. In that case, you are off the hook. But then the rent is usually so low that it’s not worth it.
SuperEgon schrieb:
The plot price is probably around the local average of 80-100 €/m² (8 to 9.3 USD/ft²)Alright, so if the plot is worth €64,000 (about 68,000 USD), then €100,000 (about 106,000 USD) remains for the building shell itself.
H
hampshire11 Sep 2019 15:43Using a rented property to generate capital is a well-established method. It is advisable to have enough liquidity to carry out repairs and renovations as soon as they are due.
Renting out a building with deferred maintenance only makes sense if you do not intend to preserve the property—for example, due to plans for a new construction or the sale of a building plot.
Someone with renovation expertise and a reliable network of tradespeople and assistants can find some real bargains this way. You don’t seem to have this expertise, and that is your risk. What advice can anyone give you here other than to consult a professional expert?
Renting out a building with deferred maintenance only makes sense if you do not intend to preserve the property—for example, due to plans for a new construction or the sale of a building plot.
Someone with renovation expertise and a reliable network of tradespeople and assistants can find some real bargains this way. You don’t seem to have this expertise, and that is your risk. What advice can anyone give you here other than to consult a professional expert?
