Build and rent a 3-family house?

: I think I read about 1,400 EUR per m² for medium equipment in the BKI about a year ago. However, I might be mistaken, unfortunately I no longer have access to the BKI. But , maybe other forum members can give you a more specific number (possibly a construction expert) or you could simply call an architect. Or you could get access to the current BKI

Do you want to answer questions?

Not so impatient, some people have to work too and when the OP checked in yesterday at 5 pm, there was no question yet.

Hello, Hans!

I can hardly find any information on the entire internet about private individuals who have completely newly built a multi-family house and subsequently rented it out. Is that really that rare?

No, it happens every day, but why would anyone spread that on the internet?

How common it is, you will notice when you offer the land for suitable properties – architects and developers will be knocking down your door.

I would also recommend this route to you based on the described situation. First, because you have – sorry – zero knowledge about building and secondly because it minimizes your risk. Basically, I would roughly say (the land value and rental price are still unclear to me as far as I have read) that you could also handle the project on your own or just backed by a bank, but I would offer the land to a general contractor/general developer or architect who pulls similar projects out of the drawer – the investor ultimately gets two apartments, you keep one and might (depending on the size and value of the land) even have an additional cash income (tax-free after 10 years – if you haven’t held the land that long yet, talk to your tax advisor first).

In any case, you could do it without tying up your 50,000€ equity, but you would basically exchange the land for the finished apartment. It would be optimal if the individual apartment is managed by a property management company, so you wouldn’t have any hassle, and after another 10 years, you could possibly sell the apartment tax-free to minimize the rental default risk and then be rid of the residual risk that rental defaults affect a single property.

In any case, I definitely cannot agree with the statement that you should stay away from such a property – this is a location that everyone would probably like, practically a 6 on the lottery (without the additional number), and there is a solution for that, even if you otherwise live on Hartz IV.

Another alternative would be, for example, to have the architect plan the property and sell one apartment immediately after completion as a condominium to generate liquid equity. So you would only have to develop 3 apartments during the construction phase and use your equity or take out loans – but repay +250,000€ immediately after completion. However, this variant should also be discussed with a tax advisor in advance.

How do you live yourself? Would owner-occupancy be an option?

Best regards
Dirk Grafe

Good morning,

The idea has been around for some time now to develop this with a 3-family house (approx. 300m²)
and then rent it out completely.
House costs would be approx. €550,000

Whoever gave you this figure - it is not correct. Especially in multi-family house construction, many things must be considered that do not play a role in single-family house construction. With the above sum, I would estimate you can just about finish the multi-family house according to the applicable Energy Saving Ordinance and with simple architecture; the emphasis is on just about. However, then you have neither a ventilation system nor flooring in the living areas, nor paint on the walls; let alone the access ways or other must-haves in a multi-family house covered. A basement is also not included in this price; important if you do not want to accommodate the technical equipment per apartment.

Attached you will find an example of our most recent planning with 644 sqm floor area. The construction costs as a 40+ efficiency house currently amount to €1.5 million ready to move in, tendency rising, as the rear facade is still being changed. Although this multi-family house is being built in NRW and is also roughly twice as large as your idea. However - internalizing that construction costs in Bavaria are considerably higher, it can certainly give you a first indication of the expected costs. Multi-family houses in the size you want start in NRW at €550,000 and without a usable basement.

I can hardly find any information on the entire internet about private individuals who have completely newly built a multi-family house and then rented it out. Is that so rare?

Well – everyone started small at some point

Talk to a provider of your choice; one who also "can" do multi-family houses – not everyone can! Then have an offer created for you – if that is possible without a planning contract. Important: they should also give you a profitability calculation. With this data, you then go to your financing bank and present the project.

Edit: I also wanted to put forward Dirk’s suggestion of the condominium. Since he has already covered the topic, I don’t need to write anything more about it. You should definitely consider it!

Salary and equity capital are, of course, very expandable. Problems finding tenants should normally not be an issue in this location near
Munich.

I refrain from commenting on financing; our banking experts will surely be happy to answer that!

Just bear in mind – with your salary alone you cannot offset a rent default, nor build the necessary reserves. If it were that simple, you would have found much more information on the internet

Rhineland regards

Hello everyone,

thanks already for the many answers and suggestions.

A sale of the property value (150,000.-180,000€) is out of the question, as it is relatively close to my parents' house. Unfortunately, the property is not located directly in Munich, but about 30 km west of it, however with close train and highway connections.

If you look at the raw numbers (as a layman), the whole thing looks very tempting. Since the entire house construction should be paid off by the rental income after about 15 years. (Provided, of course, that there are no rental defaults, nomads, or similar), finding tenants should probably be the least problem, as the market currently looks.

Best regards