Buy and renovate a semi-detached house from 1959? Suggestions/tips welcome

Thema Erbpacht dringend klären, denn 38 Jahre sind nicht viel.

I also see the extension as difficult, but a lawyer can clarify this: because after 100 years customary law applies, ground lease contracts are limited to 99 years. Perhaps now cancellation and a new agreement should be considered (?)

I have now looked at the pictures on the laptop. I think the house gives a solid impression. Apparently, "decent" people lived there. Of course, it is worn out, and I would redo everything right away if your budget allows it. For the electricity, you have to tear up all the walls anyway, so you might as well do the bathrooms at the same time (which, for my taste, are already in a condition I wouldn’t want to take over like that). The roof still looks quite decent in the picture. You can’t see much in the picture of the roof truss, but the chimney catches my eye (is that the chimney at the top left in the picture?), it seems to have old water damage or be rotten (I mean the stripes on it)? I would have a specialist look at that as well. Depending on the condition, you might have to renovate something like that too.

Have you already viewed it? With a professional or without? When was that? How long has it been listed? You wrote that it once rained inside. What is the condition of the roof?

Thank you very much in advance. We viewed it last week, not with an expert, but ONLY with my father who is an electrical engineer. So he has some knowledge, but of course is not trained to spot all defects. We knew that the interest was high and can't order an inspector for 1000€ for every viewing. However, we would consider having an expert inspect it before closing the purchase if we get the bid. Do you think it is worth it? Especially now with the chimney and mold problems. The basement and such are all dry.

There was exactly one viewing for everyone for the house, so it has probably been listed for 2 weeks now. There was apparently a lot of demand. Upstairs in the attic, there was mold in one corner, not much, maybe 5cm x 1cm. We couldn’t climb on the roof, so only one photo from below. There was no ladder... :-( But it really could have been the chimney. The roof is only tiles, not insulated. Otherwise, it looked OK; my father said he can't quickly say where the mold is coming from, either a tile is leaking or it’s the chimney.

Regarding the leasehold, the contract currently runs until 2058 with only 900€ per year. We just called the orphanage (owner of the land) and asked how it works. The lady said the interest will definitely increase upon sale. The seller, son and heir of the house, said it was already raised last year and will stay that way. We don’t yet know if he is in direct contact with the orphanage and naturally fear that the orphanage might demand a 4000€ annual fee, because those are numbers you find when you search for houses that are leasehold.

We believe that if the fee goes from 900€ to 4000€, the house and price are no longer worth it. What do you think? If we want and have to renovate another 150,000€, plus 610,000€ purchase price, plus 4000€ annually, the calculation somehow doesn’t make sense for us. Would like to hear your opinion. Thank you.

Here are better pictures of the chimney. What exactly do you mean by stripes. There are two chimneys!? No idea why, also in the floor plan two such squares are marked. Regarding the ground lease, we believe that in any case, whether extension or takeover until 2058, an increase will occur. We are then unsure whether our calculation still makes sense at all. Because then we assume we pay €4000 annually for the land and then €61,000 for the house, plus everything that comes with renovation costing €150,000-200,000. What do you think about that. As already said, location and location..

1. What is the house worth? Answer: Whatever the market pays for it. I currently don’t see room for negotiations if the house has already been viewed by other interested parties. So buy and close your eyes, otherwise someone else will. More than a quick look hardly works these days.

2. Increase of the ground lease interest? The ground lease issuer cannot simply increase it when selling. There are agreements in the ground lease contract for this. For example, adjustments to the household cost index. Look into the contract and you will know what to expect. However, the remaining term is concerning. Maybe not for the time you live in the house, but if you want to sell the (then renovated/refurbished) house in 15 years, for example. If only a short remaining term is left then, hardly anyone will want to buy the house or only at a low price. Who has the option to extend the ground lease? What about the compensation payment at expiration? etc.

Commonly, an interest rate of 4-6% on the land value applies. So, if the location in Frankfurt is that good, I simply take €600 per sqm (588 sqm is by the way a manageable plot size for most parts of the country). Thus, a ground value interest between €14,000 and €21,000 p.a. would be a normal price for the ground lease (calculated from the past). Currently more around €14,000 or slightly less. In other words, the plot would still be a bargain even with a contractual adjustment. So calculate for yourself since you know the prices (according to Boris in your area it is rather €800 per sqm).

The hereditary building rights issuer cannot simply increase it upon a sale

Nothing is stated about this in the hereditary lease contract. However, I have researched online and it seems the foundation takes a middle way. The foundation must approve the sale and the new buyer must agree to an amendment of the contract with the increase of the interest. The woman on the phone also quickly showed a different calculation and immediately said that it will increase. Unfortunately, we do not know by how much and I believe the heir of the house does not know either. The woman mentioned the land value times 25%, and then times 2.5%. I only know that I have seen comparable plots also from the orphanage online and there the interest was €450 per month. Attached are excerpts from the contract.