ᐅ Large plot of land with potential for additional construction – investor opportunity?
Created on: 30 Jul 2017 17:03
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Helmut-Karl
Hello everyone,
I am new here and have many questions, hoping to get tips and advice.
Our family owns a farmhouse that we fully restored in 1999, but the children are not interested in it.
So, we are considering how to market the property.
The plot is located in the village center, and the infrastructure is adequate. The nearest cities, Hamburg, Bremen, and Hanover, are between 30 and 80 km (19 and 50 miles) away.
The plot measures 2,600 square meters (28,000 square feet) and includes the restored farmhouse with an area of 20 m x 12 m (65.6 ft x 39.4 ft). There is also a red brick barn measuring 20 m x 12 m (65.6 ft x 39.4 ft).
In the garden, there is a building plot with its own access road.
There are some interested buyers for the farmhouse, but they want to purchase it as cheaply as possible and then renovate it themselves.
We are now considering possibly converting the barn into apartments ourselves and also building apartments in the garden.
However, we cannot manage this on our own since we have already invested a significant amount of capital into restoring the farmhouse.
Once everything is built, we want to sell profitably together with our partners.
Does anyone have experience with investors or construction companies suitable for this kind of project?
Best regards,
Helmut-Karl
I am new here and have many questions, hoping to get tips and advice.
Our family owns a farmhouse that we fully restored in 1999, but the children are not interested in it.
So, we are considering how to market the property.
The plot is located in the village center, and the infrastructure is adequate. The nearest cities, Hamburg, Bremen, and Hanover, are between 30 and 80 km (19 and 50 miles) away.
The plot measures 2,600 square meters (28,000 square feet) and includes the restored farmhouse with an area of 20 m x 12 m (65.6 ft x 39.4 ft). There is also a red brick barn measuring 20 m x 12 m (65.6 ft x 39.4 ft).
In the garden, there is a building plot with its own access road.
There are some interested buyers for the farmhouse, but they want to purchase it as cheaply as possible and then renovate it themselves.
We are now considering possibly converting the barn into apartments ourselves and also building apartments in the garden.
However, we cannot manage this on our own since we have already invested a significant amount of capital into restoring the farmhouse.
Once everything is built, we want to sell profitably together with our partners.
Does anyone have experience with investors or construction companies suitable for this kind of project?
Best regards,
Helmut-Karl
Helmut-Karl30 Jul 2017 20:26Hello 77.willo, hello Karsten,
we completely renovated the house in 1999, which cost us about 200,000 euros.
There are 3 apartments in the house, 1 fully developed hallway with wooden floors (wooden planks), oak studs, etc. The hallway has a floor area of approximately 80 m² (860 sq ft).
There is a garden terrace fully fitted with wooden planks, and the barn is also built with red bricks and has a complete concrete floor.
The total area of the courtyard is about 2,600 m² (28,000 sq ft). The land price here is around 125 euros per m² (about 12 per sq ft).
So when the real estate agent offers me 350,000 euros, it just doesn’t match.
That’s why I would like to build some additions to increase the price.
Of course, different buyers will be needed then, but I hope to find them as well.
Best regards
Helmut
we completely renovated the house in 1999, which cost us about 200,000 euros.
There are 3 apartments in the house, 1 fully developed hallway with wooden floors (wooden planks), oak studs, etc. The hallway has a floor area of approximately 80 m² (860 sq ft).
There is a garden terrace fully fitted with wooden planks, and the barn is also built with red bricks and has a complete concrete floor.
The total area of the courtyard is about 2,600 m² (28,000 sq ft). The land price here is around 125 euros per m² (about 12 per sq ft).
So when the real estate agent offers me 350,000 euros, it just doesn’t match.
That’s why I would like to build some additions to increase the price.
Of course, different buyers will be needed then, but I hope to find them as well.
Best regards
Helmut
350 is quite low.
What willo means is, if you want to achieve 1 million, but you have to borrow 600, you might as well sell for 350. If you want to make a million and bring in an investor who puts in 600, which they have financed, they will want a share of the profit and won’t leave you with 350.
Whatever you do, it’s probably best to find a buyer with a special interest in this particular property.
But discuss it with someone who knows you and the local conditions well, like your main bank. I hope you have one, not just some internet-based company.
What willo means is, if you want to achieve 1 million, but you have to borrow 600, you might as well sell for 350. If you want to make a million and bring in an investor who puts in 600, which they have financed, they will want a share of the profit and won’t leave you with 350.
Whatever you do, it’s probably best to find a buyer with a special interest in this particular property.
But discuss it with someone who knows you and the local conditions well, like your main bank. I hope you have one, not just some internet-based company.
A few more notes. For a rental property, the value is roughly twenty times the annual net cold rent.
Regarding the 125 per square meter for land. Is that for serviced building land? Is the entire plot serviced building land? In other words, can I potentially demolish the old house and divide the 2300 m² (about 25,000 sq ft) into four plots, or five semi-detached houses, or eight terraced houses? If not, the 125 only applies where it is possible. The rest would then probably be garden land. As a farmer, you know what that means. Karsten
Regarding the 125 per square meter for land. Is that for serviced building land? Is the entire plot serviced building land? In other words, can I potentially demolish the old house and divide the 2300 m² (about 25,000 sq ft) into four plots, or five semi-detached houses, or eight terraced houses? If not, the 125 only applies where it is possible. The rest would then probably be garden land. As a farmer, you know what that means. Karsten
Helmut-Karl30 Jul 2017 21:12Hello Karsten,
according to the municipality, the plot is buildable up to 0.4. However, demolishing the house wouldn’t make sense, as it is an old farmhouse made of oak beams and clinker bricks.
But there is still enough space for new buildings. Especially since the municipality favors infill development.
according to the municipality, the plot is buildable up to 0.4. However, demolishing the house wouldn’t make sense, as it is an old farmhouse made of oak beams and clinker bricks.
But there is still enough space for new buildings. Especially since the municipality favors infill development.
If that is the case, there would be two options without having to borrow much. Option one: I find someone for whom this arrangement fits perfectly and who pays me fairly. A tight market, beneficial for both parties. That’s how we had our lucky break with Diakonie as the buyer.
Option two would be to sell the rural property as an investment, subdivide the land, conduct a new survey, establish a division agreement, and assign a new parcel number. The separated part could then be sold separately as building land. The rental building would bring in the equivalent of 20 years of net cold rent, and the land around 125,-.
All other approaches would require a larger capital investment and are probably, as willo pointed out, not more profitable than option one or two. Karsten
Note: The subdivided part must also be officially closed, otherwise the 125,- will not work.
Option two would be to sell the rural property as an investment, subdivide the land, conduct a new survey, establish a division agreement, and assign a new parcel number. The separated part could then be sold separately as building land. The rental building would bring in the equivalent of 20 years of net cold rent, and the land around 125,-.
All other approaches would require a larger capital investment and are probably, as willo pointed out, not more profitable than option one or two. Karsten
Note: The subdivided part must also be officially closed, otherwise the 125,- will not work.
Hello everyone, when selling a property, apart from the investment you still need to make if you want to do any renovations, keep in mind that under certain circumstances, the proceeds from the sale must be declared in your income tax return! It’s best to get advice from a tax consultant before the sale.
If you have to invest a lot, and then also have to pay income tax on the sale proceeds, that would be quite unfortunate 😉
If you have to invest a lot, and then also have to pay income tax on the sale proceeds, that would be quite unfortunate 😉