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?
Concerns about a long mortgage and a high remaining debt are really only justified if you are building a property that cannot be sold.
Acquaintances are building on their parents’ land, converting a large barn behind the main house into a residential building, in the middle of nowhere. This is practically unsellable, unless you sell the entire land with everything on it, but it is still about 40 minutes from the nearest town with a population of 15,000.
It costs just under one million and repaying it would require nearly half of the income.
Acquaintances are building on their parents’ land, converting a large barn behind the main house into a residential building, in the middle of nowhere. This is practically unsellable, unless you sell the entire land with everything on it, but it is still about 40 minutes from the nearest town with a population of 15,000.
It costs just under one million and repaying it would require nearly half of the income.
Germany is a leading exporter (okay, no longer number one, but still in a strong third place) and is expected to stay there in the medium term.
Berlin is the capital.
Take a look at other capitals and see what houses and land cost there, then appreciate how affordable everything still is in Berlin. Without war, prices will rise. Many refuse to see this and talk about a bubble, but their perspective usually does not extend beyond their own state borders.
In many regions around the world, it is common to spend 50% of the household's net income on rent.
How much would renting a comparable house cost you? So why exactly should your house-building project be cheaper than that?
We pay 50% of our household net income (at the time of application) as mortgage payments – in 7 years our payments will be lower than comparable rent, in 10 years our property (in the commuter belt) will be worth twice as much, and in 20 years our parents will have passed away. In 35 years I will retire, and our household retirement income today is already three times the mortgage payment. This trend is rising.
Our household net income increased by 17% between the loan application and full loan disbursement thanks to collective agreements, career progression, and my wife changing jobs.
So just take out half a million, build something nice. The limiting factor is not the external circumstances or the bank. If you want to build, the banks are waiting for you. If you prefer to wait, you will probably have to wait a very, very long time.
Berlin is the capital.
Take a look at other capitals and see what houses and land cost there, then appreciate how affordable everything still is in Berlin. Without war, prices will rise. Many refuse to see this and talk about a bubble, but their perspective usually does not extend beyond their own state borders.
In many regions around the world, it is common to spend 50% of the household's net income on rent.
How much would renting a comparable house cost you? So why exactly should your house-building project be cheaper than that?
We pay 50% of our household net income (at the time of application) as mortgage payments – in 7 years our payments will be lower than comparable rent, in 10 years our property (in the commuter belt) will be worth twice as much, and in 20 years our parents will have passed away. In 35 years I will retire, and our household retirement income today is already three times the mortgage payment. This trend is rising.
Our household net income increased by 17% between the loan application and full loan disbursement thanks to collective agreements, career progression, and my wife changing jobs.
So just take out half a million, build something nice. The limiting factor is not the external circumstances or the bank. If you want to build, the banks are waiting for you. If you prefer to wait, you will probably have to wait a very, very long time.
B
Buchweizen13 Jun 2019 08:52Lumpi_LE schrieb:
Concerns about a long loan and a high remaining debt are really only justified if you are building a property that cannot be sold. But even then, you only need to worry if you are not mainly building or buying for yourself and the new lifestyle, but with the expectation or necessity of making a profit through a future sale.
Lumpi_LE schrieb:
Acquaintances are building on their parents’ land, converting a large barn behind the main house into a residential building, located in the middle of nowhere. This is practically unsellable unless you sell the entire land with everything on it, but it is still 40 minutes away from the nearest town of 15,000 inhabitants.
It costs nearly one million, and repaying the loan takes up almost half their income. If it is worth it to them, then it’s fine. Everything is worth exactly as much as someone is willing to pay for it.
Do you happen to watch “Mountain Life” on TLC? They show, in my opinion, the most amazing houses you can imagine sold at bargain prices. Bargain here means modern homes with 250 m² (2,690 sq ft) of living space on 4 hectares (10 acres) of land in beautiful nature for under $400,000. Why is it so affordable compared to an average tiny apartment in New York, which is unaffordable? Because these houses stand in the middle of nowhere. Many people simply don’t want that. For everyday life, especially when you get older, it’s not practical. But those few people who like it and don’t need easy access to a city do pay. Although not the millions an equivalent house in New York would cost (though I believe there are no houses that large in New York).
B
Buchweizen13 Jun 2019 08:55fragg schrieb:
Take a look at other capital cities and see what houses and land cost there, then be glad that everything in Berlin is so affordable. Without war, prices will rise. Many don’t want to see this and talk about a bubble, but their perspective usually doesn’t go beyond their own region.
Exactly! Just try looking for a house in London and then light a candle to be thankful that prices in Germany are so low.
And I absolutely don’t believe prices will get even lower, meaning fall, even if interest rates rise. Prices won’t increase as much as they have in recent years, but they also won’t collapse.
N
nordanney13 Jun 2019 10:37Buchweizen schrieb:
Just try looking for houses in London ... and as a local homeowner, be frustrated that prices have dropped significantly.
I have mentioned a few times that you carry "debt" with yourself for the rest of your life, as you still need to cover your living expenses. This includes housing and everything else that comes with it. You have to earn money until you eventually reach retirement... For example, if I waste €3,000,000 per month, then over the next 26 years until retirement, I still need to come up with almost a million!
Concerns about job loss, economic collapse, war, or other disasters are certainly justified but affect everyone equally. Owning your own house may be more expensive than renting an apartment (and in an emergency, you could move to "one room, kitchen, bath"), but either way, you have to pay for it.
It’s a matter of mindset whether you are optimistic or pessimistic.
If in 15 years my mortgage ends and I truly can’t manage a follow-up loan, then I will have enjoyed 15 years of living well, the children will be out of the house by then, and hopefully, the remaining debt will not exceed the property value in the sought-after major city.
It’s understandable that you might not want to keep paying after retirement, that the first renovations will be due after 15–20 years, and it’s nice to have paid off a good portion by then.
For you, it’s about feeling comfortable with this payment rate (which then determines the loan amount). And if that is not enough for a property in Berlin… then you simply don’t want or can’t afford one. But that is a decision everyone has to make for themselves.
Concerns about job loss, economic collapse, war, or other disasters are certainly justified but affect everyone equally. Owning your own house may be more expensive than renting an apartment (and in an emergency, you could move to "one room, kitchen, bath"), but either way, you have to pay for it.
It’s a matter of mindset whether you are optimistic or pessimistic.
If in 15 years my mortgage ends and I truly can’t manage a follow-up loan, then I will have enjoyed 15 years of living well, the children will be out of the house by then, and hopefully, the remaining debt will not exceed the property value in the sought-after major city.
It’s understandable that you might not want to keep paying after retirement, that the first renovations will be due after 15–20 years, and it’s nice to have paid off a good portion by then.
For you, it’s about feeling comfortable with this payment rate (which then determines the loan amount). And if that is not enough for a property in Berlin… then you simply don’t want or can’t afford one. But that is a decision everyone has to make for themselves.