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

My tip would be to discuss all of this calmly with your house bank. I hope your parents have one and the 250k is not stored in the wardrobe, which does happen.

Not in the wardrobe, but in the [Bankschließfach]. The apartment they are currently living in is really run down and, for example, has a lot of mold on the walls. Additionally, my mother raves about having her own vegetable garden, and my father can finally set up a small hobby workshop in the garage. The rent is relatively cheap at 350 cold, but the landlord takes care of nothing.

hmm looking for another nice apartment that is age-appropriate and maybe a small garden plot nearby?

And from the remaining money perhaps a few nice trips or something similar?

I don’t want to talk you out of it and definitely acknowledge the wish!

I just want to put another alternative out there

I wrote, emotionally relatable. But there are also the brutal facts. 250 plus about 1000 repayment for 10 years, retirement at 65 approximately, gives 370 total construction sum all incl.
That means the plot must be somewhat smaller, the house somewhat cheaper or smaller, so that you have 50 for incidental costs, otherwise it doesn't add up.
Why 50?
Let's calculate together. 7 utilities, 10 for garden landscaping, 3 for wastewater and rainwater, 10 for earthworks, 10 for painter and floors, 5 for kitchen, 1 for electricity and water construction consumption, leaving 4 for small stuff. Then we only have standard, no more expensive tiles, no extra sockets, no garden shed, no satellite system. You see, the 50 are really basic.
Alternatively, you could do simpler work yourself, that saves. Ikea kitchen, self-assembly, laying tiles yourself, filling and painting yourself, paving the yard yourself, for example. That saves about 20. If someone can do it. Karsten

Isn't the house a bit too big for your parents? A small bungalow with 100sqm might be enough. Otherwise, it will become too much work over the years.

That would also be my thought. 100 ground level plus 35 degree roof pitch gives a spacious attic as storage space. Gives 30 living rooms, 15 bedrooms, 7 bathrooms, 3 guest WCs, 12 kitchens, 10 HAR, 10 guest or something else. There are still 13 left for the corridor. That fits. Karsten

how about a cheaper region where you can almost get by with €250,000?! here with us you can build a house for that money without a loan, including everything that goes with it.