2 (dream) properties - financing unclear. Save equity?

Hello dear community,

my wife and I want to acquire a beautiful owner-occupied house in the Hamburg metropolitan area in the medium term.
Plots are scarce and correspondingly expensive, but we have two opportunities in our environment that will arise in the foreseeable future:

(1) Plot with existing house adjacent to my parents' property. An elderly lady lives there who has to move into a nursing home soon due to illness. Her children have no interest in the plot, so it will be sold sooner or later. Due to the neighborhood relationship, we have a good chance of obtaining a kind of "right of first refusal" here.

(2) Plot with existing house, current home of my wife's grandparents. Unfortunately, the grandparents are no longer very fit, and accordingly the plot will be inherited within the family soon (my wife's claim = 25%, provided it is passed directly from her parents).

I expect that both plots will be for sale within a period of 0-3 years. Both plots are beautiful, approx. 800-1000 m², existing buildings would have to be renovated and/or extended. I therefore expect costs > €500,000 (possibly even > €1 million?). Unfortunately, I have no feeling for the exact amount so far.

Now we are asking ourselves how to approach the whole thing. Is the prospect of acquiring one of the plots even realistic or is that not feasible with our financial situation?
Of course, we do not want to miss the chance, but we also know that we actually need more time to save up equity.
What amount could we realistically manage as of today (and possibly in 3 years) with a clear conscience?
An assessment from you would help us a lot so that we can evaluate the situation as soon as the "serious case" occurs.

General information about you:

[*
How old are you?
[LIST]
[*]Both 28 years old


[*]Do you have children?


[*]Yes, 1 child (14 months)


[*]Are more children planned?


[*]More children planned, total 2-4)


[*]What do you do professionally?


[*]She: currently on parental leave, otherwise employed architect
[*]He: employed product manager in medical technology


[*]How many hours do you work?


[*]He: full time (40h)
[*]She: initially not at all, then only part time

Income and asset situation:

[*
What income do you have (gross/net)?
[LIST]
[*]In the last 12 months we had net income of approx. €90,000 (all inclusive such as parental allowance, child benefit, bonus etc.)
[*]But I would calculate very conservatively and only consider my sole income currently €95,000 gross per year / ~ €5,000 net per month for the future


[*]How much equity do you have?


[*]approx. €75,000


[*]How much equity do you want to invest in the house project?


[*]At least €15,000 reserve --> €60,000

Expenditure situation:
Housing costs:

[*
current cold rent
[LIST]
[*]€1,565


[*]current warm rent


[*]€2,050

Mobility costs:

[*
2 cars
[LIST]
[*]Together approx. €450 per month ("all-in"), both cars were paid in cash

Insurance costs:

[*
All insurances (except motor vehicle)
[LIST]
[*]€60 per month

Living expenses:

[*
Groceries
[LIST]
[*]€400 per month

Income and expenditure totals:

[*]Income: €5,000
[*]Regular (non-avoidable) expenses total: approx. €3,000
[*]Other various expenses (shopping, leisure, vacation etc.): approx. €1,000
[*]Savings amount: approx. €1,000
[*]Savings amount + cold rent: €2,565

There are simply large gaps in there. When does your wife want to work again? How much could she potentially earn then? It doesn't depend so much on a lack of equity for you, but rather on the loss of your wife's salary.

Do not focus only on both plots - especially dream plots are sold faster than one can save up. Hamburg Speckgürtel sounds nice in terms of the market value of existing properties, i.e., sale or mortgage. But that is not the same as what the gutted shell still represents in value for a rebuild. Stone is just stone in Hamburg too, rubble is just rubble in Hamburg too.

So I am calculating costs > 500,000 € (possibly even > 1 million €?).

I don’t know what the Hamburg commuter belt costs, but you urgently need to specify this number, if necessary with very simple rules of thumb:
- land reference value * plot area
- 2000€/m² living space (divided into residual value of existing building + renovation)
- surcharge for commuter belt, basement, garage or others
Just ask your bank for the amount. Get non-binding advice on how much they would lend you at most.

[*
How much equity do you have?
[LIST]
[*]approx. 75,000 €


[*]How much equity of that do you want to invest in the house project?


[*]At least 15,000€ reserve --> 60,000€

When buying the neighboring plot, the 15,000€ and even more will be used up just for the incidental purchase costs alone. Thus a 100% financing. I don’t know how well you know the neighbors, but as soon as money is involved, they will also want to maximize the purchase price.

With your own family, the real estate transfer tax does not apply, but how much you get as a gift and how much you have to pay out to everyone else is still unclear to me. Above all, you can discuss the topic much more easily in advance with all relevant heirs. Here too, at some point it has to be said what the whole thing is worth, who inherited which shares, how much money you will pay out. This can be significantly cheaper than the “preemptive right” for the neighboring plot at the maximum bid. Anyway, if everyone agrees, this is the easiest and perhaps also cheaper way, but if the community of heirs is too large and quarrelsome, it will also become expensive to the point of impossible.

Now we ask ourselves how to approach the whole thing. Is the prospect of one of the plots even realistic or is it not feasible at all with our financial situation?

As I said, discuss it with your bank or a mortgage broker. I think financially it should fit.

Please also consider future daycare fees.
And €60 for all insurances? - Liability, disability, legal protection, household, accident? Just to name the important ones.
Otherwise, I see 500-650k as unproblematic.
Regards

I find two numbers somewhat worthy of verification:

1. Groceries 400 € (for 3 people)
2. But then shopping, vacation, leisure 1,000 €