ᐅ Buy an old house, keep the land, sell the house, build a new house
Created on: 1 Oct 2016 12:03
M
mustermann123
Hello Homebuilding Community,
I’ll try to keep this brief as it’s a relatively complex project. My family and I want to buy a house, divide the land, resell the existing building along with part of the property, and then build a new house on the remaining land.
The semi-detached house is located in a suburb south of Kempten and will cost 280,000 plus real estate agent fees. It was built in 1968, has about 100m² (1,076 sq ft) of living space, a 475m² (5,114 sq ft) lot, windows from 1980, a gas heating system from 1997, is partly clad with asbestos cement panels, bathrooms need renovation, and the roof was insulated and converted amateurishly.
It’s already clear that building on the property is allowed, so that should be fine.
The problems and uncertainties are:
- We do not yet have a valuation report for the house
- What additional costs should we expect (taxes on the sale, property tax on the purchase—even if only part of the land is kept, capital gains tax?, subdivision costs, etc.)
- We have an advisor who has already checked whether building on the “remaining land” is possible, but he is focusing too much on the new construction, even though we can only deal with the new build after the semi-detached house has been sold
- How can we finance the temporary ownership of the house (flexible loan with later conversion into a “normal” mortgage)
- Where might there be hidden costs that we haven’t listed yet?
- As we move forward, significant costs are already coming up (reservation fees, advisor fees, notary costs for contract drafts, etc.), which would all be lost if we decide against this “model” at a later stage
An additional problem is that the sellers are only prepared to reserve the property for us for a limited time, AND we leave for our annual vacation the day after tomorrow, not returning until shortly before the signing deadline at the notary.
As you can see, it’s quite tricky. If we hadn’t already been searching for so long (a house, semi-detached house, land, anything), we’d probably cancel immediately. This is our first somewhat realistic chance to build here… (land is simply not available in this area).
That’s enough for now…
I look forward to your opinions, recommendations, and assessments!
Greetings from the Allgäu
Florian
I’ll try to keep this brief as it’s a relatively complex project. My family and I want to buy a house, divide the land, resell the existing building along with part of the property, and then build a new house on the remaining land.
The semi-detached house is located in a suburb south of Kempten and will cost 280,000 plus real estate agent fees. It was built in 1968, has about 100m² (1,076 sq ft) of living space, a 475m² (5,114 sq ft) lot, windows from 1980, a gas heating system from 1997, is partly clad with asbestos cement panels, bathrooms need renovation, and the roof was insulated and converted amateurishly.
It’s already clear that building on the property is allowed, so that should be fine.
The problems and uncertainties are:
- We do not yet have a valuation report for the house
- What additional costs should we expect (taxes on the sale, property tax on the purchase—even if only part of the land is kept, capital gains tax?, subdivision costs, etc.)
- We have an advisor who has already checked whether building on the “remaining land” is possible, but he is focusing too much on the new construction, even though we can only deal with the new build after the semi-detached house has been sold
- How can we finance the temporary ownership of the house (flexible loan with later conversion into a “normal” mortgage)
- Where might there be hidden costs that we haven’t listed yet?
- As we move forward, significant costs are already coming up (reservation fees, advisor fees, notary costs for contract drafts, etc.), which would all be lost if we decide against this “model” at a later stage
An additional problem is that the sellers are only prepared to reserve the property for us for a limited time, AND we leave for our annual vacation the day after tomorrow, not returning until shortly before the signing deadline at the notary.
As you can see, it’s quite tricky. If we hadn’t already been searching for so long (a house, semi-detached house, land, anything), we’d probably cancel immediately. This is our first somewhat realistic chance to build here… (land is simply not available in this area).
That’s enough for now…
I look forward to your opinions, recommendations, and assessments!
Greetings from the Allgäu
Florian
M
Michael804 Oct 2016 16:39Hello Florian,
if you want to divide the 480m² (about 5166 sq ft), what would be left? Since the existing building is centered on the boundary line, the left plot would probably only get around 180-200m² (about 1937-2153 sq ft), especially because the front slopes down at an angle. Even if you say you don’t want a garden, etc., that’s still really quite small.
From my feeling, I would rather stay away from this. We ourselves searched for the right property for 5 years, and in the end, only bought a plot, and are now building new on 750m² (about 8073 sq ft).
I wouldn’t touch a 200m² (about 2153 sq ft) plot.
Aside from the money you would spend on repairs and so on, you won’t get away with less than 350,000-400,000 euros. Assuming 280m² (about 3014 sq ft) and the renovated house on it, I would pay a maximum of 200,000-250,000 euros (without even having seen the property).
But I think it’s also a matter of personal taste whether you can imagine living on such a plot.
And I wouldn’t let yourself be pressured. Approach it with the mindset “If it’s gone, it wasn’t meant to be,” and then you’ll find the right one for you.
Best regards,
Michael
if you want to divide the 480m² (about 5166 sq ft), what would be left? Since the existing building is centered on the boundary line, the left plot would probably only get around 180-200m² (about 1937-2153 sq ft), especially because the front slopes down at an angle. Even if you say you don’t want a garden, etc., that’s still really quite small.
From my feeling, I would rather stay away from this. We ourselves searched for the right property for 5 years, and in the end, only bought a plot, and are now building new on 750m² (about 8073 sq ft).
I wouldn’t touch a 200m² (about 2153 sq ft) plot.
Aside from the money you would spend on repairs and so on, you won’t get away with less than 350,000-400,000 euros. Assuming 280m² (about 3014 sq ft) and the renovated house on it, I would pay a maximum of 200,000-250,000 euros (without even having seen the property).
But I think it’s also a matter of personal taste whether you can imagine living on such a plot.
And I wouldn’t let yourself be pressured. Approach it with the mindset “If it’s gone, it wasn’t meant to be,” and then you’ll find the right one for you.
Best regards,
Michael
Michael80 schrieb:
I wouldn’t touch a 200m² (2,150 sq ft) plot.
Setting aside the money you’ll need for repairs and so on, you won’t get away with less than 350,000–400,000 euros. For an assumed 280m² (3,000 sq ft) plot with a modernized house on it, I would now pay a maximum of 200,000–250,000 euros (without having seen the property).The house from the 1960s has a rough value according to NHK of about €60,000 plus the land.
If you estimate €80,000 for the property, then with the current purchase price, €200,000 remain for the land, which corresponds to a land value price of €421 per m² (39 sq ft).
If you renovate the old house for €60,000 and set the remaining very small plot (about 120m² (1,290 sq ft)) at 75% of the land value price, you would achieve a sale price of around €180,000. Considering renovation costs, this would leave a land value of (280,000 + 60,000 – 180,000) / 350m² (3,770 sq ft) = €457 per m².
Additional realtor and subdivision costs would be added on top, so you would definitely end up above €465 per m².
This will probably already exceed anything that is usually asked for in Kempten. Kempten is about the same size as my small hometown— for over €465 per m², I can buy retail space in the second-best downtown location here (with the best location at about €650 per m²). The most expensive residential building land here has a land value price of about €200 per m², and even if prices actually reach €250 or €300, it would still be far from more than €400 or almost €500.
So, Bayern bonus or not—this doesn’t add up at all, because after subdivision, two very small or awkwardly shaped plots remain, and the existing house is not a high-priced, fully renovated gem. My purchase price would probably be far below the asking €280,000, depending on the inspection of the 1960s house. It could well be worthwhile to renovate—but it could just as well already be a case for the wrecking ball, purely from a financial perspective.
Best regards,
Dirk Grafe