Hello everyone,
Since I started exploring the topic of house construction two months ago, I have now registered on this forum.
A brief introduction about me and my wife: We are both employed (civil engineer and real estate assistant) with a net income of 4xxx.
Equity capital: 50,000 euros.
One would actually assume that with this equity and net income, buying a property should be easy. However, since I do not want to repay a loan over 30-35 years but rather a maximum of 25 years, and I don’t want to fully stretch the limit, the monthly installment and therefore the total amount quickly become restricted. A total of 250,000 net plus additional construction costs equivalent to the equity capital would be the limit here. In Berlin and its surrounding area? Practically unthinkable.
I am a civil engineer (although specializing in concrete repair and thus not an expert in single-family houses, etc.) and can therefore assess construction prices, combined with my wife’s interest in the real estate sector, allowing us to understand the high general prices for land.
With 250,000 net plus additional construction costs, there is generally not much you can do nationwide for new builds — this is my initial assessment.
There has already been a lot of discussion here in other threads about construction costs, potential capital, and what is needed. When I see bargain houses on TV, I also facepalm. My assumption is that such homes don’t bring much joy. Heating systems, plumbing, electrical installations, thermal insulation — these are often overestimated.
Currently, I am researching prefabricated houses with self-finishing options. However, I do have some concerns, even though I assume that nowadays the materials at least meet certain standards.
So, what are the options?
Being bound for 30 years and pushing the loan to the limit?
House auctions?
Hoping for a bargain plot including an affordable prefab house as a self-build (lots of work and potentially many worries)
Since I plan to start building within the next 24-36 months, my initial findings are sobering.
At least the construction company I work for could provide the foundation slab plus groundwork like drainage, etc., at a low cost. I also know structural engineers and others involved. Maybe the project can be realized with a “small” budget thanks to these circumstances.
Has anyone managed to do this before?
Since I started exploring the topic of house construction two months ago, I have now registered on this forum.
A brief introduction about me and my wife: We are both employed (civil engineer and real estate assistant) with a net income of 4xxx.
Equity capital: 50,000 euros.
One would actually assume that with this equity and net income, buying a property should be easy. However, since I do not want to repay a loan over 30-35 years but rather a maximum of 25 years, and I don’t want to fully stretch the limit, the monthly installment and therefore the total amount quickly become restricted. A total of 250,000 net plus additional construction costs equivalent to the equity capital would be the limit here. In Berlin and its surrounding area? Practically unthinkable.
I am a civil engineer (although specializing in concrete repair and thus not an expert in single-family houses, etc.) and can therefore assess construction prices, combined with my wife’s interest in the real estate sector, allowing us to understand the high general prices for land.
With 250,000 net plus additional construction costs, there is generally not much you can do nationwide for new builds — this is my initial assessment.
There has already been a lot of discussion here in other threads about construction costs, potential capital, and what is needed. When I see bargain houses on TV, I also facepalm. My assumption is that such homes don’t bring much joy. Heating systems, plumbing, electrical installations, thermal insulation — these are often overestimated.
Currently, I am researching prefabricated houses with self-finishing options. However, I do have some concerns, even though I assume that nowadays the materials at least meet certain standards.
So, what are the options?
Being bound for 30 years and pushing the loan to the limit?
House auctions?
Hoping for a bargain plot including an affordable prefab house as a self-build (lots of work and potentially many worries)
Since I plan to start building within the next 24-36 months, my initial findings are sobering.
At least the construction company I work for could provide the foundation slab plus groundwork like drainage, etc., at a low cost. I also know structural engineers and others involved. Maybe the project can be realized with a “small” budget thanks to these circumstances.
Has anyone managed to do this before?
I believe there was a comparative calculation on this topic in Spiegel magazine, which concluded that building a house has never been as affordable as it is today. Just three points to consider: salaries in the 1990s, interest rates, and construction costs.
Hardly anyone pays for a house out of pocket or within 10 years; owning a home is a lifestyle choice that you either commit to or you continue renting.
Hardly anyone pays for a house out of pocket or within 10 years; owning a home is a lifestyle choice that you either commit to or you continue renting.
A basic question: why are we discussing 100% financing here? Neither the original poster nor most participants are financing 100%. Anyone doing so should be aware of the possible consequences under certain conditions.
If you build with a general contractor on your own land (purchased from the municipality), you essentially have no additional purchase fees. Ancillary construction costs are part of new construction and must naturally be paid by the new buyer.
Anyone buying from a developer, and possibly also through a real estate agent, will of course not see any profit from the sale for a certain period (with 100% financing). That’s their own responsibility if they buy like this and don’t look further or don’t want to spend time finding reasonable solutions.
If you build with a general contractor on your own land (purchased from the municipality), you essentially have no additional purchase fees. Ancillary construction costs are part of new construction and must naturally be paid by the new buyer.
Anyone buying from a developer, and possibly also through a real estate agent, will of course not see any profit from the sale for a certain period (with 100% financing). That’s their own responsibility if they buy like this and don’t look further or don’t want to spend time finding reasonable solutions.
Bardamu schrieb:
So, in your opinion, does everyone who spends only the money they have already earned have "fear" and is "scared stiff"?
Then, according to your logic, it is very brave and heroic to borrow from others for something you actually cannot afford. That is not heroic, it is normal. If you were only allowed to buy a property with cash, the homeownership rate would be much worse.
Besides, that’s how our economic system works. No company (except some sole proprietorships) can operate without loans.
A property has value to back it up.
What do you think rental prices would look like if every rental apartment were financed solely with equity?
Don’t get me wrong—I view 100% financing and above very critically, except in justified individual cases. But the idea of paying rent to the bank, having no freedom, and being forced into something is exaggerated fear.
That said, everyone can do as they please.
nordanney schrieb:
That's true (at least for a minimum of 10 years), but it is also the source of greatest joy!!!We had ours for even 20 years
F
Fleckenzwerg14 Jun 2019 11:04With my first post, I would like to join the discussion here.
We are currently dealing with home financing as well, and this is the first time we are taking on debt.
On the premise that the financing is sustainable long-term and paid off by retirement:
In my opinion, it also comes down to one’s mindset about it. The topic has already been mentioned—the good feeling of owing no one anything, which you give up when signing a loan agreement.
The alternatives would be inheriting (unlikely), winning the lottery (practically impossible), or renting forever. The option to buy a home outright with your savings only once you retire might exist, but
1. much less/slower equity builds up because rent is paid instead. Of course, you can live frugally and pay low rent, but is that what you want? Especially during the active years between 30 and 60?
2. you don’t want a house only in your mid-60s—you want it NOW.
You have to understand that if you want to live in a place comparable to homeownership as a renter, you’re not paying off your own house, but your landlord’s. Every dollar of rent you pay is gone forever.
As a renter, you do not owe anyone money, but there is always the risk of having to move if you can no longer afford the rent at some point. With homeownership, at least you get the sale proceeds minus any remaining loan balance from the bank. Rent paid until then is lost.
Or the landlord suddenly claims they need the property for personal use or renovates for some reason (which happens often), justifying a substantial rent increase.
Renting is also a form of dependence. I think this is a very important point that is often forgotten.
Just today on the train, I read a few passages in a guide that helps to see loan debt in a less negative light.
You enter into a contract with the bank. Both parties have rights and obligations. You are not entering into servitude with the bank. The bank lends you a huge sum of money! The trade-off is that you repay the amount within a reasonably fixed time frame, plus some interest. Consider it a partnership on equal terms; do not put the bank on a pedestal where it looks down on you with little appreciation. This perspective of equality is already valuable during loan discussions, as the bank is also interested in a good deal. And if you are fortunate enough to have sufficient equity, that also opens some room for negotiation, not just regarding the interest rate.
Often it is treated as if you are making a pact with the devil. But it is perfectly legitimate that banks want to earn something. Of course, there are cases where the bank is in a very advantageous position, for example, if it is the only owner of a series of plots in a desirable location. If you cannot afford the high prices, it’s not the bank’s fault, nor yours. In that case, the housing market (market = supply/demand) is simply overheated. Here, politics should intervene and provide more affordable housing. It is clear that this does not help you at that moment. I just want to point out that you cannot blame the bank for it. Because if I can sell something for $1,000, I won’t sell it willingly for $600 or $800.
This got longer than intended. I just wanted to share my thoughts and views (which I do not claim to be universally valid!).
We are currently dealing with home financing as well, and this is the first time we are taking on debt.
On the premise that the financing is sustainable long-term and paid off by retirement:
In my opinion, it also comes down to one’s mindset about it. The topic has already been mentioned—the good feeling of owing no one anything, which you give up when signing a loan agreement.
The alternatives would be inheriting (unlikely), winning the lottery (practically impossible), or renting forever. The option to buy a home outright with your savings only once you retire might exist, but
1. much less/slower equity builds up because rent is paid instead. Of course, you can live frugally and pay low rent, but is that what you want? Especially during the active years between 30 and 60?
2. you don’t want a house only in your mid-60s—you want it NOW.
You have to understand that if you want to live in a place comparable to homeownership as a renter, you’re not paying off your own house, but your landlord’s. Every dollar of rent you pay is gone forever.
As a renter, you do not owe anyone money, but there is always the risk of having to move if you can no longer afford the rent at some point. With homeownership, at least you get the sale proceeds minus any remaining loan balance from the bank. Rent paid until then is lost.
Or the landlord suddenly claims they need the property for personal use or renovates for some reason (which happens often), justifying a substantial rent increase.
Renting is also a form of dependence. I think this is a very important point that is often forgotten.
Just today on the train, I read a few passages in a guide that helps to see loan debt in a less negative light.
You enter into a contract with the bank. Both parties have rights and obligations. You are not entering into servitude with the bank. The bank lends you a huge sum of money! The trade-off is that you repay the amount within a reasonably fixed time frame, plus some interest. Consider it a partnership on equal terms; do not put the bank on a pedestal where it looks down on you with little appreciation. This perspective of equality is already valuable during loan discussions, as the bank is also interested in a good deal. And if you are fortunate enough to have sufficient equity, that also opens some room for negotiation, not just regarding the interest rate.
Often it is treated as if you are making a pact with the devil. But it is perfectly legitimate that banks want to earn something. Of course, there are cases where the bank is in a very advantageous position, for example, if it is the only owner of a series of plots in a desirable location. If you cannot afford the high prices, it’s not the bank’s fault, nor yours. In that case, the housing market (market = supply/demand) is simply overheated. Here, politics should intervene and provide more affordable housing. It is clear that this does not help you at that moment. I just want to point out that you cannot blame the bank for it. Because if I can sell something for $1,000, I won’t sell it willingly for $600 or $800.
This got longer than intended. I just wanted to share my thoughts and views (which I do not claim to be universally valid!).
berny schrieb:
We had ours for even 20 years But in the end, you probably didn’t have to argue anymore about who gets to go to practice today