ᐅ Residential construction on an existing building – parents’ property
Created on: 6 Jan 2020 14:43
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Dear Forum,
My plan for this year is to gather preliminary information to carry out the following project. I would like to build two apartments on an existing building (approximately 300m³ (10,600 ft³) of floor space) on my parents’ property. These apartments are intended to be rented out upon completion, with the rental income contributing to or largely covering the repayment of the loan.
The location is between Düsseldorf and Cologne in an attractive residential area with stable or increasing demand. I am 31 years old and have a permanent employment contract, but I do not have significant savings that could be used. If there are considerable advantages, a joint family project might make sense.
The property belongs to my parents, and the building offers the possibility that the land and foundation are already serviced. I assume this significantly reduces costs compared to building a new house. Regarding the loan, it is likely beneficial to already have the land as collateral. However, the question arises of how best to proceed with using land owned by my parents. What options or concepts exist in this regard?
I still have significant gaps in knowledge related to residential construction, financing plans, inheritance planning, and similar topics. I have planned this year for solid preparation, including consultations, planning, and networking.
Perhaps someone can already offer an assessment or keywords that could be helpful for my research. As I have not yet conducted extensive research, I do not expect lengthy responses, but I would greatly appreciate a friendly, critical, or inquisitive reply.
Thank you very much,
Fabian
My plan for this year is to gather preliminary information to carry out the following project. I would like to build two apartments on an existing building (approximately 300m³ (10,600 ft³) of floor space) on my parents’ property. These apartments are intended to be rented out upon completion, with the rental income contributing to or largely covering the repayment of the loan.
The location is between Düsseldorf and Cologne in an attractive residential area with stable or increasing demand. I am 31 years old and have a permanent employment contract, but I do not have significant savings that could be used. If there are considerable advantages, a joint family project might make sense.
The property belongs to my parents, and the building offers the possibility that the land and foundation are already serviced. I assume this significantly reduces costs compared to building a new house. Regarding the loan, it is likely beneficial to already have the land as collateral. However, the question arises of how best to proceed with using land owned by my parents. What options or concepts exist in this regard?
I still have significant gaps in knowledge related to residential construction, financing plans, inheritance planning, and similar topics. I have planned this year for solid preparation, including consultations, planning, and networking.
Perhaps someone can already offer an assessment or keywords that could be helpful for my research. As I have not yet conducted extensive research, I do not expect lengthy responses, but I would greatly appreciate a friendly, critical, or inquisitive reply.
Thank you very much,
Fabian
For this project, you will need an architect to prepare a preliminary design and cost estimate. There is a good website from MMST Architekten Hamburg with an e-book on the topic of rental apartment buildings. It is also important to understand the market situation. Are rental apartments in demand in the area? What is the rent per square meter (analyzing real estate portals can help with this)? Once you have the construction costs and rental yield, the yield calculator from Stiftung Warentest can be useful. It also takes into account tax effects (depreciation) and vacancy rates. This will give you an idea of the potential return on a multi-family house. You also need to consider whether you want to handle the work involved in "renting out." With four apartments, you can expect regular inquiries or requests from tenants, as well as new lettings.
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