Building a house without equity with a lot of self-effort

Hello everyone,

since we are not making any progress with our considerations to build a house, I would like to ask for your advice here. Sorry in advance for the confusion, but I (female, 35 years old) don’t know where to start

Our current situation: We (35 and 29 years old) live as three with my almost 17-year-old son in a small attic apartment in my parents' house in the countryside.

We have little space and not even a living room, which makes the situation unbearable for me in the long run. We only pay 200 euros to my parents, nothing else.

We are both employed full-time, earn 3500 euros net together, and would like to have another child and the biological clock is ticking That means the income would be about 2800 to max. 3000 euros monthly if the child works out.

In addition, I currently have a total of 440 euros rental income from an old rented house with 2 tenants (roof renewed in 2011, rest completely in need of renovation).
I would rather not sell the old rented house because I am very attached to it. I hope that at some point I could renovate at least one apartment so that I could ask for 300 euros cold rent (an apartment is about 80 m²). Selling the house would only bring me 70,000 to 80,000 euros and the rental income seems to be at least equivalent in the long term.

Since a beautiful building plot (1,400 m²) is already available (owned), we are considering whether we can afford to build a house. We had thought of a single-story bungalow without a basement with a living area of about 180 m².
If I calculate as a layperson, the costs come to about 300,000 euros and if I want to repay about 1000 euros monthly, then we still have 600 euros too little per month. That means it doesn’t work out. I would have to work full-time again after one year of parental leave for it to work out and I don’t like that. 30 hours would be okay, then we would have the income mentioned above.

In addition, I need to support my son at least minimally in the coming years when he starts studying next year.

One of our two cars still needs to be paid off (financing roughly 8000 euros left).

And since we live in the countryside, we have high monthly fuel costs.

That means: when I calculate, we are short about 600 euros monthly. And that doesn’t include vacation, clothing, or repairs.

With a house build we could probably contribute a lot of our own labor (construction company and many craftsmen in the family).

There is no equity because my savings were used up for the roof renewal. I still have 15,000 euros saved, but I want to use that for the renovation of an apartment in the old house (which will not be enough for one apartment, let alone the second).

Moving into the old house is not an option because we want to stay in the town where we are now living and where the building plot is located.

Everyone says that with our income and conditions it should be possible to build a house. My calculations say otherwise.

What do you think about it?

Thank you already for your help, please don’t be too critical of me

Kind regards
edelweiss82

Hello,
I can't make anything of the numbers you mentioned. How do you come to the conclusion that you are missing 600€?? The 1000€ for the 300k financing is actually already the lower limit (2% interest/2% repayment). There are still 1800€/month left for the remaining costs. That should actually be enough to support a family of 3(4).

Maybe you could provide a few more numbers so that it can be understood.

Regards
Tom

For me, for a bungalow with 180 sqm in Bavaria
1900x 180
342,000€

Plus incidental construction costs of 50,000
Plus painting and flooring in EL
Plus garage or carport
Plus outdoor areas, paving and some lawn 15,000
But I am quite uncertain about it. It's definitely not 300,000!!! Rather more than I calculate.
So we are moving around 400,000+

What kind of building plot is that? Is it really building land or just a piece of garden from that old house?

1. If building plot, then it counts as equity in financing.

However, if I wanted to start fresh again, i.e. family new with a nice house, I would break with the sentimentalities which are a bottomless pit. The house, according to your explanation, needs renovation, the cold rents apparently do not even cover the costs. You will be paying forever.

2. Therefore: sorry - get rid of it and increase the equity.

Why reach for unreachable stars when the good lies so close.
180 sqm is not even planned by the majority of a young family of four, bringing in 5,000€ net per month.

3. 120-135 sqm is enough. A guest-children’s room for the son who is about to fly the nest, a second for the future child.

Only then will it work. My opinion.

Regards, Yvonne

I would agree with Yvonne, but not build that small again. If money is tight, 150sqm should be enough. I would also sell the old house immediately. The rental income probably isn't even enough for maintenance, so why would anyone want to tie themselves to something like that?

Hello Tom1607,

first of all, thank you for your reply.

I will try to roughly outline our future financial situation (part-time 30 hours with child, only 1 apartment rented out):

Income:

3000 euros net salary (during 1 year of parental leave even only 2,700 euros)
220 euros rental income
192 euros child benefit
3,412 euros total income

deducted are:
250 euros savings (for next car, repairs, miscellaneous)
400 euros for insurances (including 2 car insurances)
650 euros for fuel (commute each 35 and 10 km one way), car tax, tires, ADAC, service contract
200 euros daycare fees
30 euros tax prepayment for rental income
75 euros additional costs rented house (insurances, etc.)
600 euros groceries (including diapers, toddler food)
80 euros for mobile phone
100 euros support for child in studies

then I estimated the additional costs of the new house as follows:

25 euros property tax
15 euros garbage collection
65 euros phone, internet, GEZ
100 euros electricity
150 euros for heating, chimney sweep
85 euros for water/sewage
50 euros for insurances

We are left with only 537 euros. We would need at least 1,000 euros.

I deliberately calculated the fuel costs so high because we live in the village and the nearest pediatrician is 35 km one way...

Dear Yvonne,

thank you too for your assessment.

The plot of land is indeed a building plot. It is located in the town where we currently live and want to stay. According to the district office, we are allowed to build on it. The old house is in another town. I am just very attached to it. I thought that the 250 to 300 euros monthly rental income would be better in the long run than a one-time 70,000 euros. And I can keep the house, it is not gone. Somehow it is a piece of security for me in the background. The emotional share here is unreasonably large, I know...

And of course we would also want to reduce the area a bit if that makes a big financial difference.

Best regards edelweiss82

You have to offset the monthly cold rents against the repair and renovation costs. And if you don’t have them, you have to pay taxes. But you do have them, so in the best case you break even. In reality, though, you will have to keep investing again and again. What do you renovate for 15,000? When will the next 15,000 be due? Let the heating break down... You are currently in the process of tying yourself up. At the moment, the old house may give you security because you have none otherwise. That is completely okay. But you want to acquire another kind of security now. Therefore, you should set priorities. Your salary is never never never enough for two construction sites. With the cold rents you mentioned, we are not talking about a house in the suburbs of Munich. On top of that: in your situation, you won’t exactly find open ears at the bank. They will first say that you can come back when a) no liabilities remain and b) you have saved more equity. How much is the plot worth? How much area is buildable? Regards, Yvonne