Build again in 7 years, what to consider today

I greet you,

I already went through the project of building a new house a few years ago and have some experience. After my ex-wife and I separated, we sold our house and ended up with zero from the sale.

I want to dare the project of buying a house again in about 6 - 7 years, but this time just for myself and without anyone else on the land register. After the house sale that took place a month ago and the divorce finalized in court, I can now reorganize my finances. Unfortunately, I put everything I ever saved into the house and am now basically starting over.

I have a net salary of €3000 every month, no bonuses, and not commission-dependent; it is €3000 every month and increases by about €50 net per year due to a collective agreement. It is a very secure job; I cannot be fired.

I have the following financial obligations every month:
Rent: €410
Electricity: €70
Child support: €700
Private health insurance: €175
Insurances (liability, accident, household, term life insurance, legal protection): €100
DSL and TV: €40
Mobile phone: €50
Riester pension: €120 (balance approx. €5000)
Rürup pension: €60
Groceries: €300

I save €850 per month and put this into a daily allowance account, currently at €10,000.

In about 10 years, part of the child support will cease, about €350, and after about 12 years, the other €350. Real estate costs here are about €150,000 and will remain so for the next few years; it is a very manageable rural area. I do not want to build new again and want either a single-family house or a two-family house, where I would rent out a part. I would also buy an apartment as a capital investment after 5 years and then rent it out (purchase approx. €30,000). These are my ideas running through my head.

Can you maybe give me tips on how I should "invest" in the next years and how I might secure the low interest rates now for a purchase in 6, 7, or 8 years? Oh yes, I am 35 years old and family planning is basically finished; anyway, I will not marry again and will not put anyone else on the land register.

Best regards

Hello, one should consider whether you really shouldn't buy a property now already. Question about the 6 to 7 years. Why wait so long? The savings are there. Question about the former house even if it is finished. Was there no chance to buy out the woman?

Hello Feeling,

somehow I had a déjà vu while reading your report. I was also 35 and just finished my first house build when 'we' separated. However, that was 17 years ago.

In my case, the situation was a little different because I don't have/had a predictable and secure income (see profession). I invested everything I could spare in apartments and thus created a self-financed pension system.

With the first apartment, I still placed a lot of value on 'quick payment', and since the rest of the capital world was already not really lucrative back then and has further deteriorated, I have continued to do that until today.

I think saving is currently the wrong approach. If you have money left over, buy a small apartment and rent it out. Push the whole thing and buy another, bigger apartment soon and rent that out as well. Eventually, the whole thing will become a self-runner.

Just as a small example. I bought a 1-room apartment in 2002. Back then 51,000€, cold rental income 3,200€/pa. Interest rate back then 4.2% -> profit about 700€/pa before taxes. I structured the repayment so that I paid 5,000€/pa. That would be like making a savings account where you get 700€ interest for 5,000€ (14%).

Today the costs for buying the same apartment have naturally risen significantly. But rents have also increased. Today I get around 5,000€/pa. The apartment would cost around 110,000€ today. You no longer get 14%, but 5-7% is still possible.

From my point of view, the important thing is not to fixate on one apartment but rather buy a few more and smaller apartments instead. This way you spread the risk, and the loss if one apartment is vacant won't bring you to the brink of ruin.

Of course, this is just my experience and certainly cannot be suggested as a general path. There are certainly people who have made money with stocks or other things, and it is not risk-free either.

It should just serve as a suggestion.

Ultimately, only you can decide.

Therefore inform yourself, calculate, weigh the risks, and invest.

just.my.2 Cent
Tom