Hello everyone,
We have owned a plot of land for one year. It is not very large (389 m² (4185 ft²)), but the zoning plan allows quite a lot of development.
We have decided against building a single-family house ourselves.
Friends encouraged us to consider whether we might build a multi-family house on the property as an investment. Especially now that the KFW provides higher repayment subsidies.
Several ideas have emerged.
1. Build a multi-family house maximizing the living area, with all apartments rented out.
2. Build a three-family house, with one apartment per floor. We would live in the ground-floor apartment and rent out the upper and attic floors to two of my siblings.
3. Build a duplex with one of my siblings, where each of us would have and live in an independent condominium unit.
Would you consider doing something like this, or is there anyone here who has already done something similar?
What is the best way to proceed? Should we request offers for all three options and then choose the best one?
We have owned a plot of land for one year. It is not very large (389 m² (4185 ft²)), but the zoning plan allows quite a lot of development.
We have decided against building a single-family house ourselves.
Friends encouraged us to consider whether we might build a multi-family house on the property as an investment. Especially now that the KFW provides higher repayment subsidies.
Several ideas have emerged.
1. Build a multi-family house maximizing the living area, with all apartments rented out.
2. Build a three-family house, with one apartment per floor. We would live in the ground-floor apartment and rent out the upper and attic floors to two of my siblings.
3. Build a duplex with one of my siblings, where each of us would have and live in an independent condominium unit.
Would you consider doing something like this, or is there anyone here who has already done something similar?
What is the best way to proceed? Should we request offers for all three options and then choose the best one?
nordanney schrieb:
Let’s just do the math to get an idea of whether it’s worth it.
270 m² (2,900 sq ft) of living space at €2,200 = €600,000 + €100,000 for additional construction costs, etc. = €700,000 total costs.
270 m² (2,900 sq ft) of living space rented at €10 per square meter (should be easily achievable even in a small town) = €34,000 including parking spaces per year.
That’s just under a 5% gross yield. It’s doable, even for someone without real estate experience. You forgot the value of the land, which reduces the yield accordingly.
Matthew03 schrieb:
What is the current standard land value? Or better: what are private buyers currently paying per square meter there?I would need to look up the standard land value, but the adjacent plot with 483 sqm (5,198 sq ft) and an old building (house to be demolished) was sold for 150k.
Edit: that is probably about three times the standard land value!
M
Matthew0331 Jan 2020 16:16Then the demand is there, making the benchmark irrelevant.
I would run through both scenarios and compare them, since everyone has a different point at which the anticipated effort becomes worthwhile.
I would run through both scenarios and compare them, since everyone has a different point at which the anticipated effort becomes worthwhile.
N
nordanney31 Jan 2020 16:19guckuck2 schrieb:
You forgot the value of the plot, which reduces the return accordingly.I left that out because I get the impression the original poster does not want to sell. So it is "idle" capital. Of course, you can also calculate the return on equity. But I’m not in the mood for that now, with management costs, taxes, and all that hassle...nordanney schrieb:
I left that out because I got the impression the OP does not want to sell. So it’s "idle" capital.
Of course, you can also calculate the return on equity. But I’m not in the mood to deal with operating costs, taxes, and all that hassle right now... I just think the land price is important to accurately calculate the invested capital and thus determine the return. Its impact is quite significant. I don’t want to go into detail though.
Matthew03 schrieb:
Then there is demand, so the reference value is irrelevant.
I would run through both scenarios and compare them; everyone has a different point at which the foreseeable effort becomes worthwhile. The demand is probably quite high. Today, I saw a listing on a classifieds site and contacted the seller. He has a plot of land of about 1300sqm (14000 sqft) for sale with a demolition property on it. I asked about the price because the listing only stated "negotiable." The response was starting at €275 per sqm (€25.5 per sqft) and subject to highest bid.
I don’t want to force anything at all costs. But surely everyone knows what it’s like: as soon as the topic of building and land or similar comes up, it starts with "if I were in your position…" and that has been going on for the last six months. Everyone would either build for themselves or invest in a multi-family building to rent out. So the idea came up to work through the options. If it doesn’t work out, we certainly won’t rush into anything disastrous.