Buy property despite an existing apartment?

Hello,

we are a family of three, aged 34, 31, and 2 years, and are possibly looking to buy a plot of land due to an inheritance.
We already bought a 114 sqm apartment with 4.5 rooms three years ago, but the long-term goal is a house. My wife has just completed her teaching trainee program and will start working part-time. If she gets a job nearby, buying the plot would be interesting. We would like to keep the apartment and rent it out. The repayment is 1100 €, monthly charges 350 €. A cold rent of 1550 € could be achieved.
Information about us:
Apartment loan, still about 350,000 € financed at 1.2 %
Income: He 4400 € net, she part-time 2000-2500 € net.
Child benefit: about 200 €
Equity: 20,000 €
The reason for the low equity was the purchase of a new larger family car a year ago.

Information about the plot:
550 sqm
Cost 185,000 €
Demolition costs 20-25 k

Planned house:
140-150 sqm
5 rooms
Solid construction
No basement
Standard: medium 3000-3500 €/sqm

The idea would be to first buy the plot and later build on it. The goal is to rent out the apartment; is this goal even possible, or would a sale be better?

The 13.3th salary was not included in the base salary above.

From an accounting perspective, this doesn't look like a Triple A now.

With the house construction project, you would be overindebted from the start.

The land + house will be recorded at at least 650,000 euros. More likely more. Then there’s the loan for the condominium of maybe 150,000 euros.

That puts us at 800,000 liabilities and equity of 20,000 euros.

As a landlord, you are subject to a certain risk. I wouldn’t count on that money for sure. There’s also the tax aspect.
You can offset the interest and depreciation against the cold rent, but the rest must be fully taxed. I estimate that you have to deduct about 400 euros income tax from the net cold rent. Is it worth it? Always remember, Germany is very landlord-unfriendly. You’re pretty much rightless and lawless as a private small-scale landlord. Always the enemy of the left-green faction.

But even if you sell the condominium, it won’t significantly increase your equity, since you have to repay the financing.

so then rather a deposit exchange. The condominium has a value of about 500k against a loan of 350k. We can also initially just buy the land.

It feels like our income is not doing badly, or what do you think?