ᐅ Homebuilding Forum – Would You Choose to Buy or Build a House Again?
Created on: 11 Dec 2015 11:09
X
xycrazy
Hello,
we are about to sign the contract with the developer but have started seriously reconsidering whether we should go through with it.
We negotiated for 8 months and were quite sure about it. However, towards the end, some issues arose regarding the contract and other matters, which we managed to resolve.
It now looks like we would be paying a third of our net income to the bank for 22 years. I think we can afford it. But when you are used to paying monthly rent of about €800-900 (divided by 2), this is quite a different level.
With a house, it’s not just the loan payments; there are ongoing maintenance costs as well. From what we’ve read, this is roughly €2-3 per m² (about 0.2-0.3 per sq ft) per month. So that’s another €400-500 per month. And, of course, there is much more work involved too.
Admittedly, this is stressing us out quite a bit, especially my partner. She is worried about the heavy financial burden each month. Is that justified?
We don’t want to live just for the house; we want to go on vacations, avoid problems with children, and so on. As I said, the current situation is manageable, but we wonder if we might be underestimating the costs.
So here’s my question to the community: looking back at everything you know now about loans, maintenance costs, upkeep, and so forth, would you buy or build a house again?
If yes, why? If not, why not? I’m really interested to hear your thoughts! And were there any surprises—positive or negative—that you didn’t expect?
Regards
we are about to sign the contract with the developer but have started seriously reconsidering whether we should go through with it.
We negotiated for 8 months and were quite sure about it. However, towards the end, some issues arose regarding the contract and other matters, which we managed to resolve.
It now looks like we would be paying a third of our net income to the bank for 22 years. I think we can afford it. But when you are used to paying monthly rent of about €800-900 (divided by 2), this is quite a different level.
With a house, it’s not just the loan payments; there are ongoing maintenance costs as well. From what we’ve read, this is roughly €2-3 per m² (about 0.2-0.3 per sq ft) per month. So that’s another €400-500 per month. And, of course, there is much more work involved too.
Admittedly, this is stressing us out quite a bit, especially my partner. She is worried about the heavy financial burden each month. Is that justified?
We don’t want to live just for the house; we want to go on vacations, avoid problems with children, and so on. As I said, the current situation is manageable, but we wonder if we might be underestimating the costs.
So here’s my question to the community: looking back at everything you know now about loans, maintenance costs, upkeep, and so forth, would you buy or build a house again?
If yes, why? If not, why not? I’m really interested to hear your thoughts! And were there any surprises—positive or negative—that you didn’t expect?
Regards
There are many arguments, but I see some differently.
Even when you are younger, you shouldn’t go into heavy debt just to buy a house. Before this one, we only had a modest single-family home. Yes, that kind with a stairway window and a woven fence to the neighbor. But that place was paid off at age 50. Now I’m almost 60, I sold it, got a life insurance policy, and was able to almost fully finance my retirement home. At the moment, we have 48,000 euros (about 53,000 USD) in debt and 42,000 euros (about 46,000 USD) in savings.
Is there a more effective way to save than through homeownership? No. Because all the financial experts overlook one thing. A property is located on land. Land, like gold, is a finite resource and cannot be increased. And land holds its value regardless of which currency is used. It is a very secure investment that will almost certainly appreciate in value. I would even go so far as to say that if you have free capital, it’s smarter to buy 10 hectares (25 acres) of farmland and lease it out, even with a 1.8% return, than to invest in stocks.
I also think you should look beyond yourself. I always tell my children that we, Mom and Dad, will leave something behind for them. We are happy to do so. We don’t give up everything, of course, but it’s nice to leave a legacy. To multiply it. For your children, and so on. We are a family, a clan, more than just individuals.
We will continue to live on in you. Karsten
Even when you are younger, you shouldn’t go into heavy debt just to buy a house. Before this one, we only had a modest single-family home. Yes, that kind with a stairway window and a woven fence to the neighbor. But that place was paid off at age 50. Now I’m almost 60, I sold it, got a life insurance policy, and was able to almost fully finance my retirement home. At the moment, we have 48,000 euros (about 53,000 USD) in debt and 42,000 euros (about 46,000 USD) in savings.
Is there a more effective way to save than through homeownership? No. Because all the financial experts overlook one thing. A property is located on land. Land, like gold, is a finite resource and cannot be increased. And land holds its value regardless of which currency is used. It is a very secure investment that will almost certainly appreciate in value. I would even go so far as to say that if you have free capital, it’s smarter to buy 10 hectares (25 acres) of farmland and lease it out, even with a 1.8% return, than to invest in stocks.
I also think you should look beyond yourself. I always tell my children that we, Mom and Dad, will leave something behind for them. We are happy to do so. We don’t give up everything, of course, but it’s nice to leave a legacy. To multiply it. For your children, and so on. We are a family, a clan, more than just individuals.
We will continue to live on in you. Karsten
kaho674 schrieb:
Land is the only thing worth working, fighting, and dying for. Because only the land is eternal, nothing else.
Gone with the Wind Gone with the Wind is no longer up to date either – we have a ground lease, which we consciously chose.
I prefer to work for my comfort – the land doesn’t have to be my own for that.
@Nordlys
Karsten, I think once you reach your second or third property, your mindset and approach naturally change.
You deliberately took a more economical approach this time; we also built differently by choice. Everything is affordable thanks to the income from the first property.
The illusion of retirement provision... was it @Evolith whose parents paid everything off in their 50s?
Congratulations, but now the house is aging: if no work is done now, it won’t sell for anywhere near what was invested. Keep in mind they still had interest costs, which hardly anyone here (OP) can afford.
There is no leaning back. Stay alert and don’t become blind to the business. Otherwise, the land will only be sold on the market at a loss after deducting demolition costs of the house.
Yvonne, tenants also contribute to repair and maintenance costs, although they might not notice it directly. As a landlord, you usually calculate rent roughly like this: invested capital, a 5% pre-tax return, plus a 1.5% surcharge on the property value for maintenance. Additionally, you add other incidental costs.
For example, if the price of the residential units is 200, and the land is 100, that totals 300. Five percent of that is 15, plus 1.5% of 200 for maintenance—since land requires no maintenance—which is 3. The total is 18, divided by 12 monthly payments, resulting in a base rent of 1,500 for a house like yours.
An apartment will usually be cheaper since the land share decreases the more units are built per square meter. In some locations, I might not be able to push for 5%, but in others, I can sometimes achieve 6%. In any case, the tenant also pays for maintenance costs, but the landlord really needs to set that money aside; otherwise, things can get tight. Karsten
For example, if the price of the residential units is 200, and the land is 100, that totals 300. Five percent of that is 15, plus 1.5% of 200 for maintenance—since land requires no maintenance—which is 3. The total is 18, divided by 12 monthly payments, resulting in a base rent of 1,500 for a house like yours.
An apartment will usually be cheaper since the land share decreases the more units are built per square meter. In some locations, I might not be able to push for 5%, but in others, I can sometimes achieve 6%. In any case, the tenant also pays for maintenance costs, but the landlord really needs to set that money aside; otherwise, things can get tight. Karsten
ypg schrieb:
The illusion of retirement planning... was it @Evolith whose parents have fully paid off everything now in their 50s?
Congrats, because now the house is aging: if nothing is done now, it won’t come close to the amount invested when sold. Keep in mind they still had interest costs, which hardly any original poster here can afford.
There is no relaxing. Stay alert and don’t become blind to the situation. Otherwise, the land will only sell on the market minus the demolition costs of the house.That’s the nice part. The house is only 13 years old. They built small and at a very low cost back then.
The only thing that needs to be done is what my mother is slowly getting tired of seeing.
But of course, I don’t share the illusion that things will be sorted as quickly for us. We still need almost 25 years.
Ypg is right when they say everyone is afraid of something. I agree with them.
I think it is important to know how to deal with that fear. Basically, I would never ignore fear. You really need to look within and listen. It doesn’t help otherwise. It all sounds a bit like hippie talk, but that’s how it is.
I think it is important to know how to deal with that fear. Basically, I would never ignore fear. You really need to look within and listen. It doesn’t help otherwise. It all sounds a bit like hippie talk, but that’s how it is.
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