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
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:
Skipping the basement is not an optionDoes the neighboring building also have a basement? If not, then it gets really complicated.
S
Sunshine3878 Jan 2023 21:53The housing market is currently just as tight as the single-family home market. Sellers are still sticking to their 2021 prices and don’t realize that current prices are about 20% too high. Also, buying an apartment that likely costs around 500,000 (50k) in your area doesn’t really help. Because even then, you have the high interest rates, and whether those will go down in a few years is uncertain. That means you may never be able to start building your house. If you then decide to sell the apartment, you lose around €50,000 (about $50,000) in additional purchase costs. That’s a lot of money wasted. So my advice: go for it now and lower your expectations. Instead of a garage, opt for two gravel parking spaces. Instead of a basement, choose a higher roof with 2 meters (6.6 feet) clearance (30 degrees). (That also looks okay with a hip roof.) This way, you have an attic for storage and, if necessary, a garden shed. Unfortunately, that’s all you can afford right now, as it’s a very expensive time to build. All three options below are equally likely.
1.) Buy an apartment (paying 50,000 euros in additional costs) and build when interest rates drop
2.) Build a house and lower your expectations
3.) Buy an apartment (paying 50,000 euros in additional costs) and never move into a house, because interest rates rise further, inflation eats up your salary, and you never get to build. Building in the coming years will remain reserved for the wealthier class due to expensive energy, even higher interest rates, and rising construction costs.
I would choose option 2, because otherwise, you might own a piece of land but never see a house built on it. Who says it will get cheaper? I believe it will at best stabilize at a high level. Buying an apartment (at currently overpriced prices, which you may have to sell for less in a few years) could cost you your dream of building a house. Whether building will ever be cheaper, nobody knows—including me.
1.) Buy an apartment (paying 50,000 euros in additional costs) and build when interest rates drop
2.) Build a house and lower your expectations
3.) Buy an apartment (paying 50,000 euros in additional costs) and never move into a house, because interest rates rise further, inflation eats up your salary, and you never get to build. Building in the coming years will remain reserved for the wealthier class due to expensive energy, even higher interest rates, and rising construction costs.
I would choose option 2, because otherwise, you might own a piece of land but never see a house built on it. Who says it will get cheaper? I believe it will at best stabilize at a high level. Buying an apartment (at currently overpriced prices, which you may have to sell for less in a few years) could cost you your dream of building a house. Whether building will ever be cheaper, nobody knows—including me.
Welcome to the forum.
I wouldn’t spend money on an apartment first; if possible, it’s better to build.
irmsche schrieb:What exactly does that mean? Is the family planning complete so you can rely on a steady income?
Both have above-average salaries.
irmsche schrieb:A €2500 loan plus additional costs sounds discouraging, but if you both earn above average, it should still be feasible. Inflation will likely help. Salaries are expected to increase accordingly. It really depends on your lifestyle. A potential inheritance can also be very helpful, especially if something remains after expensive long-term care in a worst-case scenario. For now, it’s best to calculate without considering any inheritance.
Here comes the problem.
With the current interest rate, despite fully owning the land [equity], we cannot secure financing.
The monthly payments are too high (around 2300-2500
I wouldn’t spend money on an apartment first; if possible, it’s better to build.
Sunshine387 schrieb:
The apartment market is currently just as tight as the single-family home market. Sellers are still sticking to their 2021 prices and don’t realize that current prices are about 20% too high. Also, if you’re looking at an apartment that costs around 500,000€ (about $540,000) in your area, you’re not actually gaining anything. Because there you also face high interest rates, and whether they will go down in a few years is uncertain. Then you might never be able to start building your house. If you then decide to sell the apartment, you will have lost 50,000€ (about $54,000) in additional purchase costs. A lot of money for nothing. So my advice is: go all in now and lower your expectations. No garage but two gravel parking spaces. No basement but a higher roof with 2m (6.5 ft) ceiling height (30 degrees). (That also looks fine with a hipped roof). Then you have an attic for storage and, if necessary, a garden shed. Unfortunately, that’s all you can do right now, as building at the moment is very expensive. These three scenarios are equally likely.
1.) Buy an apartment (pay 50k in additional purchase costs) and build when interest rates have fallen
2.) Build a house and lower your expectations
3.) Buy an apartment (pay 50k in additional purchase costs) and never move into a house because interest rates keep rising, inflation eats up your income, and you never manage to build. Because in the next few years, building will remain something only the affluent can afford due to expensive energy, even higher interest rates, and rising construction costs.
I would choose option 2, because otherwise you might have a plot of land but never see a house built on it. Who says it will get cheaper? I believe it will at best stabilize at a high level. Buying an apartment now (at currently overpriced prices, which you may have to sell for less in a few years) could cost you your dream of building a house. Whether building will ever be cheaper — nobody knows. Neither do I.The neighboring building has a basement, and on my plot there is an old building also with a basement. The demolition is included in the 80,000€ (about $86,000) additional costs. Every provider says adding a basement is doable and not as expensive as it ends up with new land where everything has to be excavated.
A hipped roof is not possible; it must be a gable roof. We are currently planning with knee walls, but if the building authority allows a full additional floor, it will be built as a full floor.
So unfortunately, there is no potential for savings here.
We are also planning for a second child. Therefore, 2,500€ (about $2,700) monthly payments are simply unrealistic. Or if the second child was already born, the subsidy volume through the state bank (L-Bank) would be higher again. It’s just a disaster right now. We have equity, both work, and yet I see no way out at the moment. The idea of an apartment was just because we don’t have a children’s room in our rented flat here. But if I rent a larger apartment, I also pay 1,100€ (about $1,200) cold rent (excluding utilities). If I can find an apartment to buy, say 3 to 3.5 rooms for 320,000–385,000€ (about $345,000–415,000), the monthly repayment would definitely be much lower compared to 2,500€ for a house, just repayment without utilities or other expenses.
S
Sunshine3878 Jan 2023 22:25Then reduce the living area to 50m² (540 ft²) per floor. Bam, 100,000 saved. Be creative!
irmsche schrieb:
We are also planning for another child. From that perspective, 2500 monthly is simply unrealistic.Parental allowance is 1800€ + 200€ child benefit. That already covers about two-thirds of the housing costs. Could that not be enough? The difficult period is between the end of parental leave and returning to work, if childcare does not work out. But financial reserves can be used for this.Would you like to provide specific numbers? Otherwise, I stick to my opinion: build anyway. Inflation quickly reduces the real value of the debt.
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