ᐅ Land plot available but currently own a condominium?

Hello everyone,

I am married and have a one-year-old son.
My wife and I are both 30 years old.
We come from the area south of Baden-Württemberg – around Freiburg.
Both of us have above-average incomes.
My wife is currently on parental leave.

We finally acquired a plot of land three months ago through a private sale at a reasonable price.
[300m2 (3200 sq ft) for about 125,000 Euros including additional costs].

Now we have gathered several offers from prefabricated house suppliers, both solid construction and timber frame, etc.
When we calculated everything, the total cost of the entire building project—without the land, including additional costs, exterior works, kitchen, etc.—comes to about 600,000 Euros, truly turnkey, with a buffer included.

Here is the problem.
With the current interest rate, despite owning the land outright [equity], we cannot finance it.
The monthly burden is too high (around 2300–2500 Euros, including an L-Bank loan, which is currently basically in limbo with the state bank).

My idea is to buy a condominium first.
(Secure the land, fully paid (125,000 Euros)).
Our current apartment is too small for the long term.
Financing a condominium would be much easier since the loan amount is significantly lower than for building a house.

We will definitely inherit something in the coming years (the older generation has not yet passed anything on in advance, unfortunately, when it was needed).

My plan would be to buy and live in the condo, paying it off monthly.
Once the inheritance comes through, fully pay off the condo and then build the house. That way, we have the security of owning a paid-off condo and monthly rental income to support the repayment of the house loan.

What do you think? Do you have other ideas?

Regards,
Peter

irmsche schrieb:

Hello everyone.

I am married and have a one-year-old son.
My wife and I are both 30 years old.
We live near Freiburg in the southern Baden-Württemberg region.
Both of us have above-average incomes.
My wife is currently on parental leave.

We finally purchased a plot of land three months ago—through a private sale at a reasonable price.
[300m2 (3,229 ft2) for about 125,000 euros including additional costs].

We have requested several offers from prefabricated house providers, including solid construction and timber frame options.
After calculating everything, the total cost for the entire building project comes to around 600,000 euros, excluding the land but including additional costs, landscaping, kitchen, etc.—basically a turnkey solution, with a contingency included.

Now the problem arises.
With current interest rates, despite having fully paid for the land [equity], we cannot get financing.
The monthly burden is too high (about 2,300–2,500 euros including a loan from L-Bank, which is currently uncertain at the state bank).

My idea is to buy an apartment first.
(The land is secure and fully paid for [125,000 euros].)
Our current apartment is too small for the long term.
An apartment would also be easier to finance because the loan amount is significantly lower than for building a house.

We expect to inherit something within the next few years (the older generation is not releasing anything in advance at the moment, even though it would be helpful).

My plan is to buy and live in an apartment, repay it monthly, and once we inherit, pay off the apartment completely and then build the house. This way, we have the security of a paid apartment and monthly rental income that could be used to cover the mortgage for the house.

What do you think? Do you have other ideas?

Regards,
Peter

What do you want to do with a 300m2 (3,229 ft2) plot? That’s too small for a decent single-family house. If you buy an apartment now, the land becomes dead capital that only generates ongoing costs like property tax.
If you can’t finance building a house, sell the land (try not to take a loss) and put that money into your apartment.

Marvinius schrieb:

What do you want to do with a 300m² (3,230 sq ft) plot? It’s too small for a decent single-family house. If you buy an apartment now, the land is dead capital that only causes costs like property tax.
If the house construction isn’t financed, sell the land (try to avoid losses) and invest the money in your condominium.

The plot is more than enough. We can build directly adjacent to the neighboring building, so no setback is required.
The house has been planned with an architect on paper and it works.

1. The bigger the plot, the more work involved.
2. I have no idea what land prices are like in your area, but here you pay 300,000 euros or more for 450m² (4,840 sq ft) or bigger.

Please provide more detailed figures about your planned house and your situation.
What are your above-average incomes? What do your expenses look like?
How do you arrive at the $600,000 loan / what calculation is it based on?

Do you have any concrete offers for condominiums? Freiburg isn’t exactly the cheapest area. Even with additional purchase costs, you quickly end up around half a million for a condo, without it being really cheaper. I think with your approach you combine the disadvantages: you invest money in a plot of land but only get an annual property tax bill in return.

Maybe you could provide more details about the construction costs. What size are you planning, with or without a basement, garage, planned DIY work or none, etc.? Times are tough, but 600k seems a bit high to me. It should actually be possible to stay around 500k, which would bring you much closer to the cost of a condominium.

WilderSueden schrieb:

Do you have any concrete offers for condominiums? Freiburg is not exactly the cheapest area. Even with a condominium, including additional purchase costs, you quickly reach half a million and it’s not really cheaper. I think with your option you combine the disadvantages: you invest money in a plot of land and get nothing from it except an annual property tax bill.

Maybe you could explain the construction costs in more detail. What size are you planning, with or without a basement, a garage, planned self-performed work or not, etc.? These are difficult times, but 600k seems a bit high to me. It should actually be possible to come in around 500k, which would be much closer to the cost of a condominium.

Solid 55 Ytong, 9.84m (32.3 ft) length – 9.50m (31.2 ft) width, basement, ground floor, upper floor, garage with roof connected to the house.
Total basement area approx. 60m² (645 sq ft)
Ground floor approx. 60m² (645 sq ft)
Upper floor 60m² (645 sq ft)

House price 455,000
Garage with roof 28,000
Estimated additional construction costs 80,000
= 563,000 excluding landscaping, kitchen, lighting

No deduction yet for self-performed work, turnkey price.

We will do self-performed work, which we would also have to do for the loan from L-Bank. But I prefer to calculate with the prices I have on paper.

Comparison offer for timber frame prefab house about €30,000 cheaper compared to the Solid 55.

Leaving out the basement is not an option – the plot is 300m² (3,230 sq ft), and we need storage space.