Good morning everyone, and I hope you’re all having a nice Sunday. I’m new here and have quite a bit of text for you 🙄
The topic:
Due to family reasons, we want to move to a larger space and are looking for critical suggestions about which options are possible and make sense. I would appreciate it if you could also question options that we consider unrealistic, in case we are on the wrong track. One option is to buy a property from my father if we build a small new structure for him on the same plot. What possibilities do you think are reasonable?
About us:
We are a family of four: M33, F33, child 5, child 2, living in Hesse in Gelnhausen in the Main-Kinzig district, in a favorable location near the major city Frankfurt am Main, renting an apartment of 92m2 (990 sq ft) for 580€ (cold rent). My wife is a civil servant working full time, and I am permanently employed part-time (50%) in the public sector. In the future, as the kids get older, I plan to increase my hours a bit. Currently, our combined net income is 4500€. Our life philosophy is definitely to enjoy life without focusing too much on money. We travel a lot and don’t want to be financially restricted by a house or rent in the future. This also means we have relatively little savings of about 15000€, which we would prefer to keep as a reserve. Additionally, we have about 10000€ saved in a home savings contract but also a car loan of 250€/month for the next 5 years.
Even though we like our apartment very much (we’ve lived here for 5 years), we will need an additional children’s room. We considered adding a wall in the large living room here and already got landlord approval. However, we are not fully convinced by this solution because the apartment is quite noisy and we also prefer to have a garden for the kids. Staying here would be our last option if nothing else works out.
We regularly look for rental apartments, houses for rent, or houses for purchase. The market is very limited. Every two weeks there is a new listing, and the number of applicants is huge.
Rental apartments:
Some larger apartments of 100m2+ (1,075 sq ft) come up regularly, but they often do not have enough rooms and are listed for over 900€ (cold rent).
Rental houses:
The same applies for rental houses. If any are available, the price is about 1100€+ (cold rent).
Houses for purchase:
There are very few offers, starting at around 400,000€, often needing significant renovation. Since we have little to no equity, buying a house seems quite unrealistic. Agent fees, property transfer tax, and notary will add up to about 50,000€ in additional costs. That does not include any renovation, and our estimated monthly payment would be about 1600€+ for the next 30 years.
Buying my father’s house:
Our current favorite is buying my father’s semi-detached house in the same town. An independent appraisal values it at 200,000€ (100,000€ house, 90,000€ land, 10,000€ outbuildings). The catch/advantage is that my father would like to keep living on the property. We considered this because he lives alone and the house is too big for him. My mother passed away 8 years ago, and I already inherited 1/6 of the house (33,000€, 4/6 belong to my father and 1/6 to my sister). My father has an outstanding mortgage of about 30,000€, so our net equity is roughly 28,000€.
Current situation:
We would buy the entire house from my father and sister and then build a small house or extension on the same property for my father. We currently prefer this approach because we want to avoid paying out my sister after my father passes. He is just shy of 60 years old and will need a small place for the next 25 years.
We see this option as advantageous on several levels:
1. We get a house with a garden without needing much equity
2. My father can downsize
3. We can support each other with vacations, shopping, cooking, etc.
4. Grandpa can look after the grandchildren
5. We can care for him more easily in the future
We both prefer a clear separation. Whatever is built will be clearly separated, even though it belongs to us. If my father moves out later, we would rent the unit or use it for our children.
Is this financially feasible?
This was a lot of background to involve you and hopefully get help in case we are on the wrong track.
We imagine a small unit of about 50m2 (540 sq ft) for him, as inexpensive as possible. It feels strange to move into a house worth 100,000€ and then build a new one for him that costs twice that. We know 100,000€ is not enough, but maybe you have ideas.
We asked several banks about our maximum loan with a target monthly payment of 1000€, comparable to rent, so we can maintain our lifestyle. The bank would lend us 395,000€ under these conditions.
172,000€ for house and land including the inherited share
23,000€ renovation (new small bathroom, new carpet and wallpaper everywhere, possibly moving the stove, possibly breaking through a wall)
10,000€ demolition of the barn
170,000€ left for extension/foundation/expansion (50m2)
= 375,000€, which means a monthly payment of about 1300€ and leaves 20,000€ as reserve in case costs are higher. This fits our desired total monthly payment of 1400€.
450€ would be paid by my father as rent, 950€ by us, and 50€ into savings.
So far, so good. Please critically question the numbers if something looks off.
Extension or barn renovation?
I am attaching a sketch so you can hopefully visualize it better. There are several approaches. At the moment, the barn is connected to the main house by a suspended room.
We want a house with lots of wood inside. It can also be a log cabin. It should have a stove and a small guest room for when my sister visits.
Here are all the ideas so far. In all cases, the garage will be demolished.
1. Renovate the barn
2. Build an extension onto the barn where the garage was
3. Demolish the barn; keep the suspended room and integrate it into the extension
4. Demolish barn and suspended room and build a new structure
5. Do you have alternative ideas?
1. Renovate the barn:
It’s not in the best condition. It’s quite damp. Waterproofing from below would have to be added later (a foundation slab after the fact?). The intermediate ceiling must be removed as there is just enough headroom on the ground floor. The roof probably needs to be replaced. Window openings must be altered and electrical and plumbing installed. A benefit is that the structure already sits on the plot boundaries and so no new negotiations with the building authority or neighbors would be needed.
2. Build an extension onto the barn at the garage site:
A benefit is additional storage space that both we and my father can continue to use. Wood and a workshop area can remain in the barn. A drawback is reduced garden space and the plots would not be clearly separated anymore, as garden and barn are shared.
3. Demolish the barn; keep suspended room integrated into new build:
The advantage is additional space from the suspended room and the covered area it creates. This is useful for hanging laundry or being outside in the rain. A challenge is integrating the suspended room into the new build, which might require custom solutions, increasing the cost. It would also result in a connected extension, as the suspended room links both buildings.
4. Demolish barn and suspended room and build a new structure:
The advantage could be a wider choice of design options for the new building. The question is whether this still counts as an extension. Water and electricity would be supplied via the main house but it would be physically separate.
5. Do you have alternative ideas?
Our current approach
Our first step was to contact an architect who visited the site. Several phone calls followed, during which I noticed we kept discussing things that should have been settled already. I found this very frustrating and exhausting. Now I wonder if going through an architect is the right way or if we can proceed more cheaply otherwise. As mentioned, our requirements are minimal. I do want to share a few points from him here: he said he would tear down the barn and suspended room right away. He considers an extension unproblematic as it is supplied through the main house. Separation would be more difficult.
Open questions
What is the right approach? (Discussing here on the forum what the most sensible option is and then making targeted inquiries, or is there someone who can tell us what is cheapest?)
Who should we contact (another architect, a construction company, a prefab house company)?
Who can answer our questions without focusing on their own profit?
What would you do?
When does an extension officially count as an extension?
Do you have any questions?
Conclusion
I want to thank everyone who started reading, and especially those who have made it this far. 🙂 This is a lot and probably worth 4-10 forum threads. I decided to write everything down in one go to also help myself get organized, which was helpful.
Thank you very much for your help, and it’s great that there is such a large and active forum.
Have a nice Sunday and stay healthy!
The topic:
Due to family reasons, we want to move to a larger space and are looking for critical suggestions about which options are possible and make sense. I would appreciate it if you could also question options that we consider unrealistic, in case we are on the wrong track. One option is to buy a property from my father if we build a small new structure for him on the same plot. What possibilities do you think are reasonable?
About us:
We are a family of four: M33, F33, child 5, child 2, living in Hesse in Gelnhausen in the Main-Kinzig district, in a favorable location near the major city Frankfurt am Main, renting an apartment of 92m2 (990 sq ft) for 580€ (cold rent). My wife is a civil servant working full time, and I am permanently employed part-time (50%) in the public sector. In the future, as the kids get older, I plan to increase my hours a bit. Currently, our combined net income is 4500€. Our life philosophy is definitely to enjoy life without focusing too much on money. We travel a lot and don’t want to be financially restricted by a house or rent in the future. This also means we have relatively little savings of about 15000€, which we would prefer to keep as a reserve. Additionally, we have about 10000€ saved in a home savings contract but also a car loan of 250€/month for the next 5 years.
Even though we like our apartment very much (we’ve lived here for 5 years), we will need an additional children’s room. We considered adding a wall in the large living room here and already got landlord approval. However, we are not fully convinced by this solution because the apartment is quite noisy and we also prefer to have a garden for the kids. Staying here would be our last option if nothing else works out.
We regularly look for rental apartments, houses for rent, or houses for purchase. The market is very limited. Every two weeks there is a new listing, and the number of applicants is huge.
Rental apartments:
Some larger apartments of 100m2+ (1,075 sq ft) come up regularly, but they often do not have enough rooms and are listed for over 900€ (cold rent).
Rental houses:
The same applies for rental houses. If any are available, the price is about 1100€+ (cold rent).
Houses for purchase:
There are very few offers, starting at around 400,000€, often needing significant renovation. Since we have little to no equity, buying a house seems quite unrealistic. Agent fees, property transfer tax, and notary will add up to about 50,000€ in additional costs. That does not include any renovation, and our estimated monthly payment would be about 1600€+ for the next 30 years.
Buying my father’s house:
Our current favorite is buying my father’s semi-detached house in the same town. An independent appraisal values it at 200,000€ (100,000€ house, 90,000€ land, 10,000€ outbuildings). The catch/advantage is that my father would like to keep living on the property. We considered this because he lives alone and the house is too big for him. My mother passed away 8 years ago, and I already inherited 1/6 of the house (33,000€, 4/6 belong to my father and 1/6 to my sister). My father has an outstanding mortgage of about 30,000€, so our net equity is roughly 28,000€.
Current situation:
We would buy the entire house from my father and sister and then build a small house or extension on the same property for my father. We currently prefer this approach because we want to avoid paying out my sister after my father passes. He is just shy of 60 years old and will need a small place for the next 25 years.
We see this option as advantageous on several levels:
1. We get a house with a garden without needing much equity
2. My father can downsize
3. We can support each other with vacations, shopping, cooking, etc.
4. Grandpa can look after the grandchildren
5. We can care for him more easily in the future
We both prefer a clear separation. Whatever is built will be clearly separated, even though it belongs to us. If my father moves out later, we would rent the unit or use it for our children.
Is this financially feasible?
This was a lot of background to involve you and hopefully get help in case we are on the wrong track.
We imagine a small unit of about 50m2 (540 sq ft) for him, as inexpensive as possible. It feels strange to move into a house worth 100,000€ and then build a new one for him that costs twice that. We know 100,000€ is not enough, but maybe you have ideas.
We asked several banks about our maximum loan with a target monthly payment of 1000€, comparable to rent, so we can maintain our lifestyle. The bank would lend us 395,000€ under these conditions.
172,000€ for house and land including the inherited share
23,000€ renovation (new small bathroom, new carpet and wallpaper everywhere, possibly moving the stove, possibly breaking through a wall)
10,000€ demolition of the barn
170,000€ left for extension/foundation/expansion (50m2)
= 375,000€, which means a monthly payment of about 1300€ and leaves 20,000€ as reserve in case costs are higher. This fits our desired total monthly payment of 1400€.
450€ would be paid by my father as rent, 950€ by us, and 50€ into savings.
So far, so good. Please critically question the numbers if something looks off.
Extension or barn renovation?
I am attaching a sketch so you can hopefully visualize it better. There are several approaches. At the moment, the barn is connected to the main house by a suspended room.
We want a house with lots of wood inside. It can also be a log cabin. It should have a stove and a small guest room for when my sister visits.
Here are all the ideas so far. In all cases, the garage will be demolished.
1. Renovate the barn
2. Build an extension onto the barn where the garage was
3. Demolish the barn; keep the suspended room and integrate it into the extension
4. Demolish barn and suspended room and build a new structure
5. Do you have alternative ideas?
1. Renovate the barn:
It’s not in the best condition. It’s quite damp. Waterproofing from below would have to be added later (a foundation slab after the fact?). The intermediate ceiling must be removed as there is just enough headroom on the ground floor. The roof probably needs to be replaced. Window openings must be altered and electrical and plumbing installed. A benefit is that the structure already sits on the plot boundaries and so no new negotiations with the building authority or neighbors would be needed.
2. Build an extension onto the barn at the garage site:
A benefit is additional storage space that both we and my father can continue to use. Wood and a workshop area can remain in the barn. A drawback is reduced garden space and the plots would not be clearly separated anymore, as garden and barn are shared.
3. Demolish the barn; keep suspended room integrated into new build:
The advantage is additional space from the suspended room and the covered area it creates. This is useful for hanging laundry or being outside in the rain. A challenge is integrating the suspended room into the new build, which might require custom solutions, increasing the cost. It would also result in a connected extension, as the suspended room links both buildings.
4. Demolish barn and suspended room and build a new structure:
The advantage could be a wider choice of design options for the new building. The question is whether this still counts as an extension. Water and electricity would be supplied via the main house but it would be physically separate.
5. Do you have alternative ideas?
Our current approach
Our first step was to contact an architect who visited the site. Several phone calls followed, during which I noticed we kept discussing things that should have been settled already. I found this very frustrating and exhausting. Now I wonder if going through an architect is the right way or if we can proceed more cheaply otherwise. As mentioned, our requirements are minimal. I do want to share a few points from him here: he said he would tear down the barn and suspended room right away. He considers an extension unproblematic as it is supplied through the main house. Separation would be more difficult.
Open questions
What is the right approach? (Discussing here on the forum what the most sensible option is and then making targeted inquiries, or is there someone who can tell us what is cheapest?)
Who should we contact (another architect, a construction company, a prefab house company)?
Who can answer our questions without focusing on their own profit?
What would you do?
When does an extension officially count as an extension?
Do you have any questions?
Conclusion
I want to thank everyone who started reading, and especially those who have made it this far. 🙂 This is a lot and probably worth 4-10 forum threads. I decided to write everything down in one go to also help myself get organized, which was helpful.
Thank you very much for your help, and it’s great that there is such a large and active forum.
Have a nice Sunday and stay healthy!
apokolok schrieb:
What I don’t quite understand: You pay your father the full price for the house, build an extension for him with lifelong right of residence and low rent. That’s already a pretty good deal for him, but it really increases your overall costs. Hmm, maybe we’re being a bit hasty? Right now, we see buying him out as the only way to get something bigger. As mentioned, many additional costs don’t apply because there’s no real estate agent, no property transfer tax, and we have extra equity from inheriting one-sixth. Advantages like having grandpa on the property, who can also look after the kids, and being able to support him better later. Plus, the house’s value will increase if sold later.
apokolok schrieb:
Does your father need the money? In my opinion, it would be fairer to factor in the right of residence and maybe only pay 50% of the house value to your father. Then you could also skip the basic rent, and he would only cover operating costs. He doesn’t need the money. And if he no longer pays rent, we don’t want to pay a mortgage rate of 1400€ (about 1400 USD).
There are several reasons we currently prefer the full buyout:
- At the moment, everything belongs to my father. If I buy him out completely, then it belongs to us and I don’t have to ask him for anything anymore. He would then be our “slave” :p and I’m no longer in the son role in that context. It’s a gut feeling—if he still owns something, I have to beg to be allowed to remove the bush.
- If we don’t buy it all and an inheritance case arises, I would have to pay my sister out. I don’t just have 60,000€ (about 60,000 USD) lying around. That worries me.
- Any other ideas?
apokolok schrieb:
Or is that already the ‘family discount price’ that takes the right of residence into account, but disadvantages your sister somewhat? My parents bought the house 12 years ago for 160,000€. It has 93m² (about 1,000 sq ft) of living space, plus 43m² (about 460 sq ft) partially finished basement (my former bedroom). The roof was redone 7 years ago, and the heating system was replaced 10 years ago. According to the inspection report, the windows are in good condition.
I could also attach the full inspection report, but I’m more interested in fairness regarding buyout payments in the event of inheritance and the approach suggested in the original post. What might be the most cost-effective solution, and how should we proceed to find out?
Thanks a lot! Have a great day.
I didn’t mean that you shouldn’t fully compensate him.
Rather, that he shouldn’t receive the full price for it.
He is receiving, in return, an extension with a low rent and a lifelong right to live there.
The extension only represents limited added value for you; renting it out later is not so easy and may not even be desirable. Whether a child would want to use it as a student flat is possible but not guaranteed, and it doesn’t save a significant amount of money either.
It is right and necessary that you want to establish clear arrangements.
I meant that you pay your sister in full (33,000) and your father gets 66,000 plus the right to live there.
That way, you would need to take out less credit, pay lower installments, he still has money available, and the living situation is resolved as desired—it also seems fair to me.
The appraiser’s valuation will probably be fine. As long as your sister is satisfied with it, it doesn’t really matter.
Regarding equity in case you decide to buy something externally: It’s misleading to say that 1/6 of a house is worth a certain amount of euros. The bank only recognizes that as equity once the house is sold and cash is in hand. You can’t sell 1/6 of a house.
At most, you could register a lien, but as I understand it, this is already encumbered, and all co-owners must agree. Realistically, given your income, equity, and spending habits (which I find totally reasonable), another property is not feasible. So if you want to own a home with a garden, this will be the solution.
Rather, that he shouldn’t receive the full price for it.
He is receiving, in return, an extension with a low rent and a lifelong right to live there.
The extension only represents limited added value for you; renting it out later is not so easy and may not even be desirable. Whether a child would want to use it as a student flat is possible but not guaranteed, and it doesn’t save a significant amount of money either.
It is right and necessary that you want to establish clear arrangements.
I meant that you pay your sister in full (33,000) and your father gets 66,000 plus the right to live there.
That way, you would need to take out less credit, pay lower installments, he still has money available, and the living situation is resolved as desired—it also seems fair to me.
The appraiser’s valuation will probably be fine. As long as your sister is satisfied with it, it doesn’t really matter.
Regarding equity in case you decide to buy something externally: It’s misleading to say that 1/6 of a house is worth a certain amount of euros. The bank only recognizes that as equity once the house is sold and cash is in hand. You can’t sell 1/6 of a house.
At most, you could register a lien, but as I understand it, this is already encumbered, and all co-owners must agree. Realistically, given your income, equity, and spending habits (which I find totally reasonable), another property is not feasible. So if you want to own a home with a garden, this will be the solution.
Is it allowed to build a second residential unit on the property (which is a semi-detached house plot)? What is the floor area ratio for living space?
Regarding the barn: it seems to have an edge development restriction? A house or living areas are generally not permitted to be built within the edge development zone. Exception: terraced houses and semi-detached houses... however, the terraced house is already attached on the left side according to the plan.
Regarding the barn: it seems to have an edge development restriction? A house or living areas are generally not permitted to be built within the edge development zone. Exception: terraced houses and semi-detached houses... however, the terraced house is already attached on the left side according to the plan.
J
JuliaMünchen18 Jan 2021 17:39Regarding questions about remodeling and financing, I’m unfortunately unable to assist. However, for questions about inheritance, a combination of a notary and a tax advisor might be helpful. After purchasing our plot, we received excellent joint advice as a couple to clarify what happens if one partner passes away first or wants to sell, etc. Since inheritance issues can quickly lead to conflicts, I would strongly recommend involving your sister and, of course, your father closely. No house in the world is worth a family divided, and especially your father should continue to feel at home and comfortable. Perhaps a lifetime gift to the children with registered residential rights or a similar arrangement could also be considered. Even if it costs a bit of money upfront, I believe it’s worth scheduling consultations with a notary, tax advisor, a construction company (a quote is free at first), and inquiries with the local authorities about the general buildability.
ypg schrieb:
Is it allowed to build a second dwelling unit on the property (since it is a semi-detached lot)? What is the floor area ratio for residential space?
Regarding the barn: does it have edge development? A house or living areas are generally not permitted in the edge development zone. Exceptions are semi-detached and terraced houses... however, the terraced house is already attached on the left side of the plan. This is also a critical point for me. From the response to my question, I understand that it is not yet completely clear, but there was apparently a positive indication?
JuliaMünchen schrieb:
Even though it costs a bit of money upfront, I believe it’s worthwhile to schedule consultations with a notary, a tax advisor, a construction company (getting a quote is usually free at first 🙂 ), and to check with the local authority about the general buildability of the site.ypg schrieb:
Is it allowed to build a second residential unit on the property (it’s a semi-detached house plot, right)? What is the floor area ratio for residential space?
Regarding the barn: it seems to have an edge building line? Living areas or rooms intended for regular use are generally not permitted within the edge building line. Exceptions apply for row houses and semi-detached houses... however, the row house is already attached on the left side of the plan.Ysop*** schrieb:
This is also a tricky point for me. From the answer to my question, I gather that it’s not yet completely clear, but there was a somewhat positive response?A tax advisor was able to advise us on the financial feasibility connected with the expected rental income. The person at the building department knows me and I know her on a casual basis — she’s the mother of a former club teammate. She told me over the phone that this area doesn’t have a formal zoning plan, so the building must simply fit the existing character of the neighborhood. The architect said the same. However, there is nothing in writing. The architect planned to use the existing boundaries of the barn, which is built on the property line on two sides (west side adjacent to the neighbor’s barn and north side facing the neighbor’s garden), also for the extension.
@JulianMünchen: You mentioned going to a construction company: Which one would you recommend? Who can advise me on what would be the most cost-effective or suitable option for us? (Barn conversion/extension/extension attached to the barn/alternative)
I feel like I need to tell the company what I want — but I don’t know that yet, since I don’t know what’s actually allowed or what the pros and cons of each option are. Who can help me without making me feel like every advisor just aims to maximize their own profit? For example: an architect might want to design a large, expensive, complex extension to justify their expertise, avoid boredom, and maximize their fees. Or a timber frame builder might say that converting the barn isn’t practical, too much effort, not cost-effective, and that they could build a great timber house instead. Or a prefab home manufacturer might suggest placing a modular unit like a “Flying Space” because it’s the simplest solution.
Although I haven’t tested this yet, I do have this concern. Maybe you can tell me the best way to approach this. I know I’m repeating myself, but it feels strange to move into a house worth 100,000 and build my father a modern place costing 1,700,000 with half the living space. He has spent the last few years in an old house where he felt comfortable. So it doesn’t have to be a high-end build. If the result is that 170,000 is the minimum investment for the bare minimum, we can always say no. But right now, we hope to find the most affordable (not cheapest) solution.
Need help 🙂
Thanks again to all of you for your feedback