cheechoo
2022-09-17 18:20:39
- #1
Hello everyone
I am reaching out to you experienced people, experts, and idea holders about my current state of mind :)
After a very long search, we as a family (2 adults + 2 children) have found a really nice plot of land in a proper small town and secured its buildability through a building inquiry (it had not been built on for a long time). We have been talking and negotiating with the current owner for almost two years to now have a final offer.
The notary appointment is scheduled for November – until then I of course need to clarify the financing.
In my opinion, the purchase price (without taking into account the current geopolitical situation) is fair. We are at just over €120k for 3900 sqm – a very large piece of land, I know, about 1000 sqm of which is building land. Until recently, I thought: "you can’t go wrong", just buy first and let the situation recover and especially watch that construction and material costs normalize again – we basically have no time pressure, it could also take 2 or 3 years, so I have plenty of time to plan. Until now, I was also convinced for a long time that even if we do not build on this piece (because we find something else or eventually decide against a house of our own), we could at least get back the same price (plus the costs I have now (notary etc.) for sure.
However, I am now unfortunately doubting this "security" – what if the market for "building" remains so catastrophic and suffers such severe damage for years/decades that nobody wants or can build anymore? After all, it became clear even before the energy crisis, yes even before the war started, that new buildings in Germany are politically no longer wanted. Then we would be stuck with the plot, unable to sell it or even make a heavy loss.
Mutual logic: the additional costs for "normal" rental arrangements remain so extreme that energy-efficient building does indeed pay off (the location is very well suited for this), and so this property would become an absolute prime piece for people who want to leave the city and at the same time no longer want exploding incidental costs – I assume that the many old buildings and renovated old buildings in the big cities near us (especially Dresden 30km away) will need decades to become at least somewhat energy efficient. Rents will not get cheaper either. Therefore, new construction in this region could very well still be worthwhile (provided politics "calm down" again).
Or the economic system takes even more damage so that in the future only a fraction will be able to afford building at all. Will we then find a new buyer for our plot? But in inflation or a weakening Euro, a hard asset is always better than cash....
The currently offered installments (just under €600 monthly, 4.8% interest, 5 years fixed) we can afford very well, we are both in relatively "secure" positions/jobs. The 5 years are especially good for us because then, if we haven’t built by then, we will seriously discuss whether we even want to build at all or change direction. Then we could at least manage the plot well from a credit perspective....
To be honest, I am actually totally unsettled....Does anyone have a helpful thought? :)
Many thanks
Toni
I am reaching out to you experienced people, experts, and idea holders about my current state of mind :)
After a very long search, we as a family (2 adults + 2 children) have found a really nice plot of land in a proper small town and secured its buildability through a building inquiry (it had not been built on for a long time). We have been talking and negotiating with the current owner for almost two years to now have a final offer.
The notary appointment is scheduled for November – until then I of course need to clarify the financing.
In my opinion, the purchase price (without taking into account the current geopolitical situation) is fair. We are at just over €120k for 3900 sqm – a very large piece of land, I know, about 1000 sqm of which is building land. Until recently, I thought: "you can’t go wrong", just buy first and let the situation recover and especially watch that construction and material costs normalize again – we basically have no time pressure, it could also take 2 or 3 years, so I have plenty of time to plan. Until now, I was also convinced for a long time that even if we do not build on this piece (because we find something else or eventually decide against a house of our own), we could at least get back the same price (plus the costs I have now (notary etc.) for sure.
However, I am now unfortunately doubting this "security" – what if the market for "building" remains so catastrophic and suffers such severe damage for years/decades that nobody wants or can build anymore? After all, it became clear even before the energy crisis, yes even before the war started, that new buildings in Germany are politically no longer wanted. Then we would be stuck with the plot, unable to sell it or even make a heavy loss.
Mutual logic: the additional costs for "normal" rental arrangements remain so extreme that energy-efficient building does indeed pay off (the location is very well suited for this), and so this property would become an absolute prime piece for people who want to leave the city and at the same time no longer want exploding incidental costs – I assume that the many old buildings and renovated old buildings in the big cities near us (especially Dresden 30km away) will need decades to become at least somewhat energy efficient. Rents will not get cheaper either. Therefore, new construction in this region could very well still be worthwhile (provided politics "calm down" again).
Or the economic system takes even more damage so that in the future only a fraction will be able to afford building at all. Will we then find a new buyer for our plot? But in inflation or a weakening Euro, a hard asset is always better than cash....
The currently offered installments (just under €600 monthly, 4.8% interest, 5 years fixed) we can afford very well, we are both in relatively "secure" positions/jobs. The 5 years are especially good for us because then, if we haven’t built by then, we will seriously discuss whether we even want to build at all or change direction. Then we could at least manage the plot well from a credit perspective....
To be honest, I am actually totally unsettled....Does anyone have a helpful thought? :)
Many thanks
Toni