A lot of equity, hardly any income. Investment cost approx. 370,000 euros

Hello dear friends, I have finally decided to register to tell you about my parents' construction project. I think this case will be different from most other threads here in the forum and I would like to get your realistic assessment of this building project. My parents are immigrants and have lived their entire lives in a rather rundown apartment. Now, at the age of 55, they want to fulfill the dream of a (new) house and have, together with the kids (my brother and me), thought about whether the project is even feasible. Since my parents fled the war about 30 years ago, unfortunately, they did not learn proper professions and consequently earn relatively little (a total of about €2500 net). Through partly extreme frugality, however, they have still saved equity of at least €250,000. Initial talks with a regional general contractor resulted in an investment cost of about €370,000 (€100k land, €240k house, €30k additional construction costs). It is supposed to be a small but fine single-family house of about 130 sqm. Both my brother and I would support my parents monthly with €250 each. What do you think of this project?

Hello, do your parents pay rent for the apartment?

Since you support your parents, it would make sense for you to also co-sign the financing. The background is your parents' age and the proof of sustainability into retirement. A full repayment by retirement would otherwise be >1000€/month.

Otherwise, the conditions are of course excellent. Plan a bit of buffer (10-20k€).

One more idea. Your brother and you could also purchase the property 50/50 and "lease" it to your parents.

Interesting approach from Bierkuhn. I also think there will be a problem due to the loan’s viability. Your 250€ will not be considered by the banks. Not even if you secure it under private law. It is more likely that the local Sparkasse will finance it. Please always keep in mind that a buffer is available during construction. You both brothers should also consider not signing anything as you might have problems later if you want to finance something. Otherwise, I cannot understand why your parents still want a house at their age when the apartment would have sufficed. My parents did the same in the Westerwald. Emigrants, 55, renovated an old building, dad became seriously ill after the renovation... good luck to you! The whole thing is very likeable

So, emotionally I understand that. The house would be a kind of reward for a lifetime of achievement. A feeling of, we worked hard, saved, sacrificed, now in old age we are doing well. And a house is also a status symbol, it always has been. In the past, even the right to vote was tied to land ownership; those who did not have it were not citizens, but proletarians. That is deeply ingrained. As repayment, the rent plus the 500 from you is certainly possible. So about 1000 a month for sure. That makes 120,000 in 10 years without interest. My tip would be to calmly discuss all this with the house bank. I hope your parents have something like that and the 250,000 are not stashed in the wardrobe, which also happens. Karsten

Hi, do your parents pay rent for the apartment?

Since you are supporting your parents, it would make sense if you also co-signed the financing.
The background is your parents' age and the proof of affordability into retirement age. A full repayment loan until retirement would otherwise be >1000€/month.

Otherwise, the conditions are of course excellent.
Plan a bit of a buffer as well (10-20k€)

Another idea. You and your brother could also purchase the property 50/50 and "lease" it to your parents.

Better not lease it. The income would be taxable.

So, emotionally I understand that. The house would be a kind of reward for a lifetime of achievement. A feeling of, that's what we have worked hard for, saved, sacrificed, now in old age we are doing well. And a house is also a piece of status symbol, it always has been. In the past, even the bourgeois voting rights were tied to property ownership; those who didn’t have it were not citizens, but proletarians. That runs deep. As repayment possible is certainly the rent plus your 500. So around 1000 a month for sure. That gives 120 thousand in 10 years without interest. My tip would be to calmly discuss all of this with the house bank. I hope your parents have something like that and the 250 thousand are not stored in the wardrobe, which also happens. Karsten

Very cool history lesson