ᐅ New Construction or Buying and Renovating a House in Bavaria
Created on: 26 Oct 2023 22:51
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Wo1z3rl
Hello everyone,
I have been a mostly silent reader in this forum for several years. About four years ago, my husband and I moved from the city to the Bavarian countryside, and for the past three years, we have been searching for a suitable property. Unfortunately, we never really found the right one—sometimes we were a day too late, other times the desired property was sold to a neighbor, and so on.
We are a family of four, with two children aged 2 1/2 and 5 years. I work full-time, while my husband is a stay-at-home dad. We have good savings and an additional net income of about 4,500 euros (including child and family allowances but excluding potential bonuses).
Here is the situation: My grandmother owns a plot of land in our town, about 1,200 m² (of which approximately 300 m² is a private road, so around 900 m² could be built on). About a year ago, she offered to transfer this land to us free of charge (to give some context, the standard land value in the new development area is about 135 euros per m²). After talking with my grandmother, I discussed this with the potential heirs—my father and three uncles—and initially, none of them seemed to have any objections. However, at least one uncle appears to have some underlying concerns, as he began discussing my grandmother’s possible will with her (there is none), which she did not appreciate at all.
The plot is located in the center of town and is not subject to a specific development plan but is designated as a mixed-use area in the land-use plan. The neighboring properties mostly consist of pitched-roof houses, ranging from single-family homes to multi-family buildings. In 2003, there was an approved building permit process for a house with a granny flat initiated by one of my uncles, but he eventually decided against building. The floor plans are no longer really up to date (pellet heating with a large tank in the basement, etc.); my uncle showed them to me. To make a long story short, my husband and I decided at that time, after the whole drama (and because I am quite picky and would prefer a south- or west-facing slope), to continue looking for renovation projects instead.
Currently, in our region, only run-down properties are available for at least 250,000 euros, while reasonably decent houses, mostly from the 1980s, cost around 450,000 euros. There have also been new semi-detached houses in the neighboring town priced at 430,000 euros, but these are too small for us (lack of a home office), and the neighboring town is remote with no shops within walking distance.
My father-in-law currently lives in the apartment next to us. If we can afford it, we would like to include him in a granny flat or separate apartment. Most of the older existing properties have very large living spaces of 220-300 m², so it seemed logical and sensible to us to somehow integrate him into the planning. We would of course try to do the same in a new build.
The big question now is whether we should continue looking for a renovation project or seize the opportunity to build on my grandmother’s land? We envision a house with about 160 m² of living space, a 40 m² (430 sq ft) granny flat, and a double carport—all within a budget of about 500,000 euros plus a 10% buffer. According to the rule of thumb of 3,000 euros per m², this seems very tight. :-(
My husband usually has some free time in the mornings, but in my opinion, he lacks significant practical skills, so I would try to subcontract all trades.
I have already compiled a list of construction companies within a radius of about 50 kilometers (30 miles). The issue that concerns me currently is the financial stability or liquidity of these companies: They are usually limited liability companies—how should one assess this as a potential future builder? Would it be better to avoid smaller firms and choose a larger one?
Thank you very much for reading!
I have been a mostly silent reader in this forum for several years. About four years ago, my husband and I moved from the city to the Bavarian countryside, and for the past three years, we have been searching for a suitable property. Unfortunately, we never really found the right one—sometimes we were a day too late, other times the desired property was sold to a neighbor, and so on.
We are a family of four, with two children aged 2 1/2 and 5 years. I work full-time, while my husband is a stay-at-home dad. We have good savings and an additional net income of about 4,500 euros (including child and family allowances but excluding potential bonuses).
Here is the situation: My grandmother owns a plot of land in our town, about 1,200 m² (of which approximately 300 m² is a private road, so around 900 m² could be built on). About a year ago, she offered to transfer this land to us free of charge (to give some context, the standard land value in the new development area is about 135 euros per m²). After talking with my grandmother, I discussed this with the potential heirs—my father and three uncles—and initially, none of them seemed to have any objections. However, at least one uncle appears to have some underlying concerns, as he began discussing my grandmother’s possible will with her (there is none), which she did not appreciate at all.
The plot is located in the center of town and is not subject to a specific development plan but is designated as a mixed-use area in the land-use plan. The neighboring properties mostly consist of pitched-roof houses, ranging from single-family homes to multi-family buildings. In 2003, there was an approved building permit process for a house with a granny flat initiated by one of my uncles, but he eventually decided against building. The floor plans are no longer really up to date (pellet heating with a large tank in the basement, etc.); my uncle showed them to me. To make a long story short, my husband and I decided at that time, after the whole drama (and because I am quite picky and would prefer a south- or west-facing slope), to continue looking for renovation projects instead.
Currently, in our region, only run-down properties are available for at least 250,000 euros, while reasonably decent houses, mostly from the 1980s, cost around 450,000 euros. There have also been new semi-detached houses in the neighboring town priced at 430,000 euros, but these are too small for us (lack of a home office), and the neighboring town is remote with no shops within walking distance.
My father-in-law currently lives in the apartment next to us. If we can afford it, we would like to include him in a granny flat or separate apartment. Most of the older existing properties have very large living spaces of 220-300 m², so it seemed logical and sensible to us to somehow integrate him into the planning. We would of course try to do the same in a new build.
The big question now is whether we should continue looking for a renovation project or seize the opportunity to build on my grandmother’s land? We envision a house with about 160 m² of living space, a 40 m² (430 sq ft) granny flat, and a double carport—all within a budget of about 500,000 euros plus a 10% buffer. According to the rule of thumb of 3,000 euros per m², this seems very tight. :-(
My husband usually has some free time in the mornings, but in my opinion, he lacks significant practical skills, so I would try to subcontract all trades.
I have already compiled a list of construction companies within a radius of about 50 kilometers (30 miles). The issue that concerns me currently is the financial stability or liquidity of these companies: They are usually limited liability companies—how should one assess this as a potential future builder? Would it be better to avoid smaller firms and choose a larger one?
Thank you very much for reading!
Wo1z3rl schrieb:
Thank you for your answers. Unfortunately, my husband is very opposed to taking out a loan, so I will need to discuss this with him again. The best argument in financial discussions is money. Without a loan, you also lose the opportunity for repayment subsidies – even a man can understand this logic. In your enviable situation (550,000 without having to ask anyone, easily manageable, building plot for free) only your own foolishness could harm your financial strength.
Wo1z3rl schrieb:
The lady is an architect (FH), I’m not sure if I’m allowed to name her? I liked her website and references, but how the chemistry works out in a direct conversation is, of course, open. You can definitely name her for me now, you know the way. “FH” is a good thing: it means she probably did a technical secondary school diploma (Fachabitur), so before her studies she likely completed a non-academic vocational training. Practitioners usually have more practical knowledge about “what it really costs” in Hamburg.
Wo1z3rl schrieb:
I can of course also name the construction companies on my list, even if they are probably not known outside the region. Feel free to put their names into the forum search to see if they have already been mentioned in the “experiences with construction companies” section.
WilderSueden schrieb:
Of course, new construction is initially more expensive, but everything is new and it meets current standards. Bringing an old house up to a roughly comparable standard usually leaves you with a stripped-down shell, and then there’s not much left for owner participation like with a superficial renovation. That sounds like a contradiction to what you said earlier in the same post...
WilderSueden schrieb:
I believe there are hardly any home constructions that stay within budget. Renovations rarely do either. And from my impression, homebuilders often bear some responsibility themselves – whether through inadequate preparations (poor soil, underestimated slope, low construction standards by the general contractor, etc.), lack of discipline when choosing specifications, or spontaneous upgrades (like our terrace roof, for example). Whether you end up with a faceless shoebox or a beautiful house mainly depends on the builder. … and in practice this is indeed the case:
Renovations especially go off track in the old building part, where unlike an extension there are no shell construction trades anymore – the party basically starts with the finishing trades and everything has to be connected or patched to the existing structure. Here, “budget-conscious” does not apply; instead, it’s more a matter of luck. Everything depends on the quality of the tendering, quantity surveying, and time documentation – “time recording is king.” As architects, you need veterans for this, otherwise you can switch the Gerddieter warning light to permanent. My old master was such a person – that’s why I know that old buildings and budget compliance are not mutually exclusive. By the way, we have one here on the forum too, although located in NRW, which is quite far from Bavaria.
An old building is only cheaper if you “take it with caution,” meaning you are content with rejuvenating a forty-year-old house to the standard of about twenty to fifteen years ago. This is basically known from Pareto: the last twenty percent of the age difference to new construction is where the cost parity is exceeded. If you allow more remaining difference after the renovation result, the old building is cheaper. In general—especially technically—each additional “year traveled back in time” becomes disproportionately more expensive. That is why investors often prefer to only visually update buildings to the modern age.
HeimatBauer schrieb:
I would say you first need to come to an agreement with your husband regarding the loan. A newly built house lasts many decades; if you take out a loan for anything, it should be for this. You two should agree on that.
Then the plot needs to be secured so that you can do whatever you want with it. Without any family clauses in the land register, just: your land. A round of applause for your entire post, but I had to fully quote this paragraph again ;-).
HeimatBauer schrieb:
Then follow 11ant’s plan. Aim to move in within two years – if it happens sooner, that’s great. By the way, in the next few weeks the “House Building Schedule Reloaded” will be published, especially on deviations from the standard process – thanks to everyone who requested this continuation!
Wo1z3rl schrieb:
Accordingly, we were only told horror stories, like costs spiraling out of control, the architect exploiting you, and for new builds you can only build a shoebox, and so on. I’m not sure where these stories without any experience come from. ;-) I have also explained in detail here—search my posts for the keyword Gerddieter—how you end up with architects who do not understand (or want to understand) budget compliance in new construction, but the situation is similar for renovations.
https://www.instagram.com/11antgmxde/
https://www.linkedin.com/company/bauen-jetzt/
R
Radfahrer28 Oct 2023 09:37You’re basically right, but I see the problem from a different perspective. Just put yourself in the shoes of the husband or partner. You are not contributing to the family’s financial support. You are unable to provide any personal work or effort. And you cannot contribute to paying off a loan either. Please don’t get me wrong—the work of a housewife/househusband cannot be praised highly enough.
H
HeimatBauer28 Oct 2023 10:50Yes, of course it feels unusual to take out a loan for a six-figure amount for the first time – and to be honest, I’m GLAD there are still people who think first and then spend money. I have always lived by the principle "I only buy things I want myself with money I have myself" – but when it comes to a house, it’s definitely different.
Then we were at the building society; interest rates had just started to rise again, and he said, "Since this week, our rates have gone up to 1.x%, but if you sign now, I can still apply last week’s rate of 0.9%." Even though we had already gone through a multi-year thought process and many bank meetings and everything was basically clear, it was still a huge step to say: Yes, I am taking out this loan now.
There’s a lot to explain, for example: a mortgage loan is a very privileged loan. It offers interest rates so low that it’s almost worth considering financing the entire house and investing your equity elsewhere. There are also many subsidies available for home construction; the repayment grants have already been mentioned. So: Even for people who (rightly!) generally dislike debt, a mortgage loan is absolutely reasonable.
It’s also important, and that’s why I mentioned the land so clearly as the first step: Sometimes gift givers suddenly add very odd but structure-destroying clauses at the last minute. For example, I once experienced a mother giving a piece of land as a gift who, the day before the notary appointment, insisted that a clause be added to the land registry stating that the land can only be sold with her consent. Her wish was for her daughter to live next to her forever – but the effect would have been that no bank in the world would grant a loan because such a property offers no security. So: Clause in the land registry, no security, no loan, no house, daughter moves to the other side of the world and breaks off all contact with the mother because she ruined her life.
Choose the right advisors! A retiree who personally would enjoy renovating a house over many years will always judge from their own perspective, never from that of a young family. Someone who does not know current construction techniques and does not want to learn them is not an advisor for the present and especially the future. Someone who (sorry, this is based on statistics) has a remaining life expectancy of 10–20 years is at best a biased advisor for a young family building a house for the next decades. A house seller who knows that the uninsulated old shack really should be torn down will always say you just need to redecorate and clean it up a bit.
Find advisors who a) are experts and truly understand current technology and b) have no personal interest in a specific solution.
Then we were at the building society; interest rates had just started to rise again, and he said, "Since this week, our rates have gone up to 1.x%, but if you sign now, I can still apply last week’s rate of 0.9%." Even though we had already gone through a multi-year thought process and many bank meetings and everything was basically clear, it was still a huge step to say: Yes, I am taking out this loan now.
There’s a lot to explain, for example: a mortgage loan is a very privileged loan. It offers interest rates so low that it’s almost worth considering financing the entire house and investing your equity elsewhere. There are also many subsidies available for home construction; the repayment grants have already been mentioned. So: Even for people who (rightly!) generally dislike debt, a mortgage loan is absolutely reasonable.
It’s also important, and that’s why I mentioned the land so clearly as the first step: Sometimes gift givers suddenly add very odd but structure-destroying clauses at the last minute. For example, I once experienced a mother giving a piece of land as a gift who, the day before the notary appointment, insisted that a clause be added to the land registry stating that the land can only be sold with her consent. Her wish was for her daughter to live next to her forever – but the effect would have been that no bank in the world would grant a loan because such a property offers no security. So: Clause in the land registry, no security, no loan, no house, daughter moves to the other side of the world and breaks off all contact with the mother because she ruined her life.
Choose the right advisors! A retiree who personally would enjoy renovating a house over many years will always judge from their own perspective, never from that of a young family. Someone who does not know current construction techniques and does not want to learn them is not an advisor for the present and especially the future. Someone who (sorry, this is based on statistics) has a remaining life expectancy of 10–20 years is at best a biased advisor for a young family building a house for the next decades. A house seller who knows that the uninsulated old shack really should be torn down will always say you just need to redecorate and clean it up a bit.
Find advisors who a) are experts and truly understand current technology and b) have no personal interest in a specific solution.
H
HeimatBauer28 Oct 2023 11:00And, very importantly: proceed step by step and develop the resilience to politely disregard well-meaning advice from non-experts. If I had done everything according to the suggestions of my entire extended family, I don’t even want to think about how that would have turned out. We often bring up those family tips again in the evening over a glass of wine, and it guarantees a good mood for hours.
So: do YOUR thing! First, secure the plot of land, and then you can — or rather, should — do that! Then start the thought process with your partner. After that, get professional advice and clearly communicate to the consultant WHAT (as a result!) you want and ideally WHY. They can then tell you HOW to achieve it. Never put the cart before the horse by starting with the finished solution (“I read an article about heating system XYZ, and I absolutely want that!”) and then try to fit the problem to the solution.
So: do YOUR thing! First, secure the plot of land, and then you can — or rather, should — do that! Then start the thought process with your partner. After that, get professional advice and clearly communicate to the consultant WHAT (as a result!) you want and ideally WHY. They can then tell you HOW to achieve it. Never put the cart before the horse by starting with the finished solution (“I read an article about heating system XYZ, and I absolutely want that!”) and then try to fit the problem to the solution.
@HeimatBauer
You wrote that very well.
I also sense that there is too much deference towards the family, even though it hasn’t been explicitly stated yet.
It’s okay to accept support (land). But you should follow a modern path that suits you. And part of that modern approach includes a healthy home financing plan that has nothing to do with consumer loans.
You wrote that very well.
I also sense that there is too much deference towards the family, even though it hasn’t been explicitly stated yet.
It’s okay to accept support (land). But you should follow a modern path that suits you. And part of that modern approach includes a healthy home financing plan that has nothing to do with consumer loans.
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