ᐅ Multi-family Building with 6 Residential Units – Current Status and Next Steps
Created on: 14 May 2020 07:23
N
nevermore
Hello everyone,
I have been an active reader here for some time and am really impressed with this forum. Now I’m starting to participate myself.
We (family) are planning to build a multi-family house with 6 residential units in Hamburg, in a very good location. The plot with an old single-family house is already owned and will be replaced by a new building. All three of us work full time and have neither much experience nor much time to manage everything. After initial talks with general contractors and architects, we are still unsure about the best way to proceed.
Our goals:
- Simple handling of the construction and financing
- Cost-effective building and renting
- Reduced maintenance effort and fees
Basic information:
- 6 residential units
- Approx. 200m² (2,150 sq ft) floor area – 2.5 stories
- KFW 55 energy standard
- Basement as a waterproof concrete shell (“white tank”) required (if possible, a small living area in the basement of the ground floor apartments should be realized)
General questions:
- What is the best setup for construction? Options are A) architect with open tendering, B) architect for design and execution by general contractor, C) all through a general contractor or prefabricated building company
- What cost per square meter can be expected?
- What building services/heating systems are commonly used?
- What else should we pay attention to?
Thank you in advance!
Best regards
I have been an active reader here for some time and am really impressed with this forum. Now I’m starting to participate myself.
We (family) are planning to build a multi-family house with 6 residential units in Hamburg, in a very good location. The plot with an old single-family house is already owned and will be replaced by a new building. All three of us work full time and have neither much experience nor much time to manage everything. After initial talks with general contractors and architects, we are still unsure about the best way to proceed.
Our goals:
- Simple handling of the construction and financing
- Cost-effective building and renting
- Reduced maintenance effort and fees
Basic information:
- 6 residential units
- Approx. 200m² (2,150 sq ft) floor area – 2.5 stories
- KFW 55 energy standard
- Basement as a waterproof concrete shell (“white tank”) required (if possible, a small living area in the basement of the ground floor apartments should be realized)
General questions:
- What is the best setup for construction? Options are A) architect with open tendering, B) architect for design and execution by general contractor, C) all through a general contractor or prefabricated building company
- What cost per square meter can be expected?
- What building services/heating systems are commonly used?
- What else should we pay attention to?
Thank you in advance!
Best regards
N
nevermore15 May 2020 22:09Hello everyone,
Thanks first of all to @nordanney. I have recalculated conservatively (I can no longer edit the comment above):
- We have a buildable area of approximately 210m² (2260 sq ft) and are allowed to build 2.5 storeys. There is no floor area ratio. According to the architect, this results in about 144m² (1550 sq ft) of rentable living space on the ground floor and first floor each, plus an additional 110m² (1180 sq ft) on the second floor, with around 24m² (260 sq ft) of credited space, totalling approximately 412m² (4430 sq ft). In the basement, it would be possible to realize another 65-75m² (700-810 sq ft), resulting in a total of 482m² (5190 sq ft).
According to the table, we are looking at additional construction costs plus planning of about €3,000-3,100 per m² (approximately €1.2-1.3 million) without the basement, and €3,300-3,400 per m² (approximately €1.6-1.7 million) with the basement and lower ground floor.
Net annual rental income (including 3% assumed vacancy) / land value (approx. €900k) + total construction costs
Total capital: = 78,000 / (900k + 1,700k) = 3.0%
Equity capital: = 78,000 / 900k = 8.6%
Question: When does such a project “pay off”? What total capital and equity returns should we realistically expect?
What financing terms are you assuming here? We are considering €720k through KfW at 0.75%, including 1.4% (fixed interest for 15 years) for the remaining loan balance. Is this realistic?
@11ant: I don’t fully understand the point about the land-owning company / partnership. Could you please explain that again for a layperson?
I’m happy that we can start a discussion here and will keep you updated on further developments.
Thanks first of all to @nordanney. I have recalculated conservatively (I can no longer edit the comment above):
- We have a buildable area of approximately 210m² (2260 sq ft) and are allowed to build 2.5 storeys. There is no floor area ratio. According to the architect, this results in about 144m² (1550 sq ft) of rentable living space on the ground floor and first floor each, plus an additional 110m² (1180 sq ft) on the second floor, with around 24m² (260 sq ft) of credited space, totalling approximately 412m² (4430 sq ft). In the basement, it would be possible to realize another 65-75m² (700-810 sq ft), resulting in a total of 482m² (5190 sq ft).
nordanney schrieb:
Including secondary construction costs, architect, etc.?
According to the table, we are looking at additional construction costs plus planning of about €3,000-3,100 per m² (approximately €1.2-1.3 million) without the basement, and €3,300-3,400 per m² (approximately €1.6-1.7 million) with the basement and lower ground floor.
nordanney schrieb:
How is this calculated? (8% equity return is too low for a project like this)
Net annual rental income (including 3% assumed vacancy) / land value (approx. €900k) + total construction costs
Total capital: = 78,000 / (900k + 1,700k) = 3.0%
Equity capital: = 78,000 / 900k = 8.6%
Question: When does such a project “pay off”? What total capital and equity returns should we realistically expect?
nordanney schrieb:
Please keep in mind that there will be proper conditions for external financing. The loan-to-value will only be around €1.4 million (for the version with a basement).
What financing terms are you assuming here? We are considering €720k through KfW at 0.75%, including 1.4% (fixed interest for 15 years) for the remaining loan balance. Is this realistic?
@11ant: I don’t fully understand the point about the land-owning company / partnership. Could you please explain that again for a layperson?
I’m happy that we can start a discussion here and will keep you updated on further developments.
nevermore schrieb:
@11ant: I’m not quite clear on the point about the property company/GbR. Could you explain it again for a layperson?What exactly don’t you understand? A GbR is a partnership, and in a way, together with the potential testator, it’s also a kind of construct for fans of Schrödinger. Why a GbR, not a limited partnership (KG), general partnership (oHG), limited liability company (GmbH), or foundation?
(Feel free to write me an email as well; I have the same address at gmx de).
https://www.instagram.com/11antgmxde/
https://www.linkedin.com/company/bauen-jetzt/
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