ᐅ Apartment building with $250,000 equity on owned land? Is it feasible?

Hello Dear Homebuilding Forum,

Initially, our plans were based on our relatively large plot (46x16m (150x52 feet), close to the city – Münster square meter price around 10€) to build a single-family or two-family house next to our existing home.
After some careful consideration, we have come to the conclusion that this might not be the best idea, as it would mostly tie up our own equity.

Our current idea is to simply tear down our 80-year-old, quite worn-down house and move into a multi-family building, where we could live in about 100 sqm (1,080 sq ft) or slightly less.
It is important for us that it is built barrier-free, as our current home is far from accessible.
We also know that we will have to consult a financial advisor, and we are currently in regular discussions about taxes, loans, and general financing costs.

Am I correct in thinking that it would be wise to build a single-family house of about 350-400 sqm (3,765-4,305 sq ft) that includes multiple separate units, so that we can apply for the KFW subsidy several times per unit?

Our budget is around 900,000 euros, as this would still be an acceptable amount of equity invested, right?

We already have a temporary residence for the construction period. We also know that such a large project is not without challenges, and at the moment we are only making rough plans. We have several appointments next week with builders, architects, and a financial advisor.

This is meant to shed some light on the obstacles, how much income we can generate from the units, and so on.

We also understand that you can’t just contact a company and have them start next week ^^, so we are starting early now.
What do you think about starting to engage intensively now and being in touch with companies? When realistically could such a house be completed?
The current house can be demolished very quickly.

We are fairly new to this field, which is why we are now seeking advice from experts.
We would be grateful for any assessment and evaluation!
Are 2,000 euros per sqm realistic for a house of this size?

Best regards and a happy new year

Mika

Mika_66 schrieb:

Initially, our plans were based on our relatively large plot of land (46x16m (150x52 feet), close to the city – Münster land price around 10€/m² (1€/ft²))

LOL – what does "close to the city" mean to you at 10€/m² (1€/ft²) for building land? I’d expect that price for farmland or forest, but not for building land near Münster...

Mika_66 schrieb:

After some thought, we concluded that this project might not be the best idea, since it would mostly just tie up equity.

You can also take out loans…

Mika_66 schrieb:

Am I correct in thinking it would be good to build a single-family house around 350-400m² (3,770-4,305 ft²) with multiple dwelling units,

Then it’s a multi-family house, not a single-family house.

Mika_66 schrieb:

so that you can apply for KFW funding multiple times per dwelling unit?

You can claim it for each dwelling unit.

Mika_66 schrieb:

The budget is around 900,000 euros, which would be an acceptable equity ratio, right?

That depends on your creditworthiness. Even an unemployed person wouldn’t get 900,000 euros with just 250,000 euros equity.

Mika_66 schrieb:

This is meant to shed some light on the hurdles, how much money we can generate from the dwelling units, etc.

Hurdles include zoning/building permits, costs, architecture, number of dwelling units, parking spaces, energy efficiency, rental income, and so on.

Mika_66 schrieb:

What do you think about starting intensively now and being in contact with companies to find out when such a house can be completed?

Nothing at all. First, you should clarify exactly what you want—areas, number of dwelling units, etc.

Mika_66 schrieb:

We would appreciate and be grateful for an assessment and evaluation! Are 2,000€ per m² (186$/ft²) realistic for a house of this size?

As a minimum size, yes. Closer to Münster would probably be more expensive, and it strongly depends on your expectations and goals for construction. If it’s about investment return, that’s acceptable. If it should meet your personal requirements, it will most likely be more expensive. After all, you have to (want to) live with several tenants under one roof, which is not without challenges.

Hello, do you mean Münster with the postal code starting with 48XXX?
Please update the price per square meter again; €10/m² (about $1/ft²) is certainly not correct. In the city area, it's more like €1000/m² (about $93/ft²), but below €500/m² (about $46/ft²) is probably difficult. I’m from the area and roughly know the prices. 😎

A multi-family house with 6 residential units could probably fit there. Smaller units are in demand for both renting and buying in Münster. Prices are crazy.

But if you are moving in yourselves: a 6-unit building is quite different from a detached single-family home. You have to want that. From a subsidy perspective, a building with 6 small units is quite optimal due to repayment grants and tax advantages (special depreciation). However, you probably won’t finish it by the end of ’21. Still... or maybe all the more so... if you already have the land, it’s a great investment opportunity.

Be careful: if you only want to take out KFW funding, you might quickly become unattractive to a bank. Otherwise, the previous speakers have covered everything. No money, no progress.