leschaf
2021-11-23 10:10:37
- #1
Hello everyone,
we have now been looking for a house for 2 years. We actually have a pretty good starting position (7500€ household income, about 400,000€ equity plus two debt-free rental properties each worth 300-350K€), but due to lack of offers here (university town with a locally based fast-growing DAX corporation), we have looked at exactly 3 houses in these 2 years. We didn’t like one, one turned out to be at risk of collapse, and one was completely overpriced (and despite the market situation still hasn’t been sold). Meanwhile, prices have risen massively and since we are already looking in the upper segment, that really hits hard. In the long term, our equity will lose significant value (inflation + rising real estate prices). Since we want to buy a property soon, not much of it is profitably invested. Our savings rate is good (2-3,000€ per month), but can’t compensate for rising prices. Also, our rented apartment is slowly becoming too small with 2 children. Additionally, we live in a 4-unit house together with the owner (attic) and her mother (ground floor) - the other party was just given notice for personal use so that the son can move in with his girlfriend - she has more children...
Now we have looked at a semi-detached house that fits our current life situation quite well. Nothing needs to be done on the house itself (roof, facade, interior construction, bathrooms, heating, kitchen, garden... all done step by step over the last 10 years) and everything is very well maintained. So you could move in immediately in the next few months and spend next summer already in your own garden. However, there are also a few points that don’t suit us (e.g. living space – it’s still somehow enough, but not really comfortable from a long-term perspective; location – okay, but not where we actually want to be). Overall, though, it would be a significant (!) upgrade compared to the current situation in the apartment without a balcony ;)
Now the idea is to “just” buy it (if we are selected). We could pay off the required loan (about 250-300K€, depending on invested equity) in 10-15 years or alternatively, with long-term repayment, pay a rate below our current rent. The plan would then be to keep looking at a relaxed pace (for example, we have a promise from an older man that he will “soon” sell to us – but that could also take 5-10 years (or of course never happen), he is over 80 and still actively rides a motorcycle, cross-country skis, etc.) and when we have found something better for us, sell the semi-detached house again.
For me, this is actually quite a no-brainer:
- Yes, incidental costs would be lost, but inflation + saved rent + very likely further rising prices should basically cover that. And even if not, we might lose a few tens of thousands of euros, which would somehow be bearable. And you also get significantly increased quality of life for the time you live there.
- Yes, 2-year period before resale, but even if we found something else immediately now, you would probably have to factor in 1-1.5 years of renovation time. So that shouldn’t be a problem.
- Yes, prepayment penalty. But it’s limited thanks to the small loan amount.
Are we forgetting anything here or do you think this is a good plan?
we have now been looking for a house for 2 years. We actually have a pretty good starting position (7500€ household income, about 400,000€ equity plus two debt-free rental properties each worth 300-350K€), but due to lack of offers here (university town with a locally based fast-growing DAX corporation), we have looked at exactly 3 houses in these 2 years. We didn’t like one, one turned out to be at risk of collapse, and one was completely overpriced (and despite the market situation still hasn’t been sold). Meanwhile, prices have risen massively and since we are already looking in the upper segment, that really hits hard. In the long term, our equity will lose significant value (inflation + rising real estate prices). Since we want to buy a property soon, not much of it is profitably invested. Our savings rate is good (2-3,000€ per month), but can’t compensate for rising prices. Also, our rented apartment is slowly becoming too small with 2 children. Additionally, we live in a 4-unit house together with the owner (attic) and her mother (ground floor) - the other party was just given notice for personal use so that the son can move in with his girlfriend - she has more children...
Now we have looked at a semi-detached house that fits our current life situation quite well. Nothing needs to be done on the house itself (roof, facade, interior construction, bathrooms, heating, kitchen, garden... all done step by step over the last 10 years) and everything is very well maintained. So you could move in immediately in the next few months and spend next summer already in your own garden. However, there are also a few points that don’t suit us (e.g. living space – it’s still somehow enough, but not really comfortable from a long-term perspective; location – okay, but not where we actually want to be). Overall, though, it would be a significant (!) upgrade compared to the current situation in the apartment without a balcony ;)
Now the idea is to “just” buy it (if we are selected). We could pay off the required loan (about 250-300K€, depending on invested equity) in 10-15 years or alternatively, with long-term repayment, pay a rate below our current rent. The plan would then be to keep looking at a relaxed pace (for example, we have a promise from an older man that he will “soon” sell to us – but that could also take 5-10 years (or of course never happen), he is over 80 and still actively rides a motorcycle, cross-country skis, etc.) and when we have found something better for us, sell the semi-detached house again.
For me, this is actually quite a no-brainer:
- Yes, incidental costs would be lost, but inflation + saved rent + very likely further rising prices should basically cover that. And even if not, we might lose a few tens of thousands of euros, which would somehow be bearable. And you also get significantly increased quality of life for the time you live there.
- Yes, 2-year period before resale, but even if we found something else immediately now, you would probably have to factor in 1-1.5 years of renovation time. So that shouldn’t be a problem.
- Yes, prepayment penalty. But it’s limited thanks to the small loan amount.
Are we forgetting anything here or do you think this is a good plan?