Hello everyone,
we recently received an unexpected offer for a building plot in my hometown on short notice and are unsure about what to do. Since we originally expected long waiting times for a plot, we had planned to focus on this in more detail only in 2-3 years.
At the moment, we rent with a monthly rent of about 850 euros (cold rent), with an increasing trend.
Our current fixed expenses amount to 2100 euros.
I am still a student but earn 1300 euros net from my part-time job as a nurse. In 2.5 years, I will finish my studies. According to current pay scales, my starting salary will then be around 3800 euros net (doctor, tax class 3).
My husband works as a media designer in the public sector and currently earns 2400 euros net, tax class 3.
We have no other debts.
We could cover the plot with our equity (€70,000).
There is a building obligation of a maximum of 3.5 years.
My husband is likely to inherit his grandfather’s house one day, which he would also like to renovate. However, he does not want to "wait" for the grandfather’s passing since he is currently very healthy. In addition, it is uncertain whether the house will actually be inherited by my husband.
The idea now is to build a relatively small, as inexpensive as possible house on this plot, as an investment, and later rent it out after the grandfather has passed and the other house has been renovated.
However, we have concerns about overextending ourselves financially and falling into debt if we take out a relatively large loan now and possibly need another one in about 10 years for the renovation of the other house. On the other hand, we do not want to continue paying rent for another 10 years.
Maybe someone has advice or a brief, objective assessment for us.
we recently received an unexpected offer for a building plot in my hometown on short notice and are unsure about what to do. Since we originally expected long waiting times for a plot, we had planned to focus on this in more detail only in 2-3 years.
At the moment, we rent with a monthly rent of about 850 euros (cold rent), with an increasing trend.
Our current fixed expenses amount to 2100 euros.
I am still a student but earn 1300 euros net from my part-time job as a nurse. In 2.5 years, I will finish my studies. According to current pay scales, my starting salary will then be around 3800 euros net (doctor, tax class 3).
My husband works as a media designer in the public sector and currently earns 2400 euros net, tax class 3.
We have no other debts.
We could cover the plot with our equity (€70,000).
There is a building obligation of a maximum of 3.5 years.
My husband is likely to inherit his grandfather’s house one day, which he would also like to renovate. However, he does not want to "wait" for the grandfather’s passing since he is currently very healthy. In addition, it is uncertain whether the house will actually be inherited by my husband.
The idea now is to build a relatively small, as inexpensive as possible house on this plot, as an investment, and later rent it out after the grandfather has passed and the other house has been renovated.
However, we have concerns about overextending ourselves financially and falling into debt if we take out a relatively large loan now and possibly need another one in about 10 years for the renovation of the other house. On the other hand, we do not want to continue paying rent for another 10 years.
Maybe someone has advice or a brief, objective assessment for us.
H
hampshire5 Jan 2020 16:36If it is a good plot of land at a good price, no capital is lost. Since you can finance the land with your own funds, no liquidity is lost either. You can always extend the 3.5 years if necessary.
If you can pay for the land using your existing equity and it is in a good location, I would go for it. However, I would not factor in the grandfather’s house at all when planning the new build, but approach it as if it did not exist. No one can say how long grandpa will live (hopefully for a long time) or what the market situation and condition of the house will be when the inheritance occurs.
Renting out houses is always tricky. For the rent you would have to charge, tenants can currently afford to build or buy their own place easily. Especially in rural areas, I would be cautious about finding reliable long-term tenants. I would think carefully about this.
Renting out houses is always tricky. For the rent you would have to charge, tenants can currently afford to build or buy their own place easily. Especially in rural areas, I would be cautious about finding reliable long-term tenants. I would think carefully about this.
N
nominator5 Jan 2020 17:27Buy the land and wait. If securing your own capital and your building plans works out within about 4 years, then get started.
Those who rely on an inheritance have often already dealt with setbacks. Live your life, and if there is an inheritance, great, but don’t base your expectations on it—that rarely helps.
Those who rely on an inheritance have often already dealt with setbacks. Live your life, and if there is an inheritance, great, but don’t base your expectations on it—that rarely helps.
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