dankosos
2020-08-02 16:25:12
- #1
Hello everyone.
I had already created a in the financing category to estimate a possible loan amount. Now we have roughly outlined that and are considering the options available to us.
The following luxury problem:
We currently own two plots of land with rented properties. One is in the middle of the city (100sqm terraced house with a small plot directly on a main street), the other is about 5km outside the city (small detached single-family house, just under 1000sqm plot, quiet location). In addition, we have €300k in cash equity (including support from relatives) + about €50k buffer that we want to set aside (for unforeseen everyday expenses or house-related costs), as well as a pretty decent income with which we can easily manage a loan amount of around €500k (more details in the financing thread).
We now have two options in mind for our own property (goal: ~180sqm living space, 2 adults, 2 children, home office, and regular visits) that we can envision:
Option A) We build the house 5km outside the city by expanding/renovating/rebuilding. There is no longer a development plan there, but the neighborhood is already quite heterogeneous, and we are quite sure that we could create something there without time pressure that we really like. Another plus: with our equity, we would only have to take out a comparatively small loan (somewhere between 150k and max 300k I think) and would be debt-free in 10-15 years (then in our early/mid 40s) or have a relatively low payment compared to income for quite a while. The village is quite popular, so we could also sell the house well again if necessary.
The big disadvantage is the location. I do not work in the nearby city but commute about 250km per office day, 240km of which is by ICE. It’s not a big deal as the time on the train is work time; even before Corona, I was able to work 2, sometimes 3 days from home, and the station in the city is only 1.5km away. If we moved to the village, however, the one-way trip to the station would be 8km, and on the way back it goes quite steeply uphill. Certainly doable (I'm very fit when it comes to cycling and would even welcome a slightly longer bike ride than currently), especially if I can permanently do 3 days of home office. But in everyday life with kids, it might not be so practical—for example, if my wife can’t leave work, I would then need about 1.5 hours at best. Also, we would of course lose rental income here (including termination for own use of a tenant who has been there since 1975—we are not under time pressure, but it just feels bad...) and probably we would have underestimated the investment in the end. Therefore...
Option B) We buy an existing property in the city and renovate/expand it. The big, big disadvantage here is the, as so often, completely inflated and still heavily contested market for real estate. It will probably take years to find something, and if you find something, you basically have to commit at the first viewing—which causes a lot of unease for both of us as cautious people. Due to the high purchase price (including ancillary costs at least €550k, so new construction is off the table), we would probably have to make many compromises in the renovation when I look at other issues with similar projects.
But we could stay in the city, would only need one car, no monthly tickets for the kids, etc.—which of course should not be underestimated as a counterbalance to the loan payment—and overall we would probably have more free time because we would not constantly have to drive the kids to sports and so on.
At the same time, one could argue an Option C), that if we decide on A, we could also sell the property with the house from A and then use that money for B. Then we could presumably do everything again according to our wishes in the city—and the end situation would be the same: instead of 2 rented houses, you would only have one, but then also an additional valuable house in the city. "Only" the problem with the plot remains without unpleasant surprises...
Of course, I know: in the end, it is purely our decision that we have to make ourselves—but how would you do it? Has anyone perhaps even been in the same situation? Neither of us has ever lived in the countryside—what hidden costs might arise here that you might not have in the city?
I had already created a in the financing category to estimate a possible loan amount. Now we have roughly outlined that and are considering the options available to us.
The following luxury problem:
We currently own two plots of land with rented properties. One is in the middle of the city (100sqm terraced house with a small plot directly on a main street), the other is about 5km outside the city (small detached single-family house, just under 1000sqm plot, quiet location). In addition, we have €300k in cash equity (including support from relatives) + about €50k buffer that we want to set aside (for unforeseen everyday expenses or house-related costs), as well as a pretty decent income with which we can easily manage a loan amount of around €500k (more details in the financing thread).
We now have two options in mind for our own property (goal: ~180sqm living space, 2 adults, 2 children, home office, and regular visits) that we can envision:
Option A) We build the house 5km outside the city by expanding/renovating/rebuilding. There is no longer a development plan there, but the neighborhood is already quite heterogeneous, and we are quite sure that we could create something there without time pressure that we really like. Another plus: with our equity, we would only have to take out a comparatively small loan (somewhere between 150k and max 300k I think) and would be debt-free in 10-15 years (then in our early/mid 40s) or have a relatively low payment compared to income for quite a while. The village is quite popular, so we could also sell the house well again if necessary.
The big disadvantage is the location. I do not work in the nearby city but commute about 250km per office day, 240km of which is by ICE. It’s not a big deal as the time on the train is work time; even before Corona, I was able to work 2, sometimes 3 days from home, and the station in the city is only 1.5km away. If we moved to the village, however, the one-way trip to the station would be 8km, and on the way back it goes quite steeply uphill. Certainly doable (I'm very fit when it comes to cycling and would even welcome a slightly longer bike ride than currently), especially if I can permanently do 3 days of home office. But in everyday life with kids, it might not be so practical—for example, if my wife can’t leave work, I would then need about 1.5 hours at best. Also, we would of course lose rental income here (including termination for own use of a tenant who has been there since 1975—we are not under time pressure, but it just feels bad...) and probably we would have underestimated the investment in the end. Therefore...
Option B) We buy an existing property in the city and renovate/expand it. The big, big disadvantage here is the, as so often, completely inflated and still heavily contested market for real estate. It will probably take years to find something, and if you find something, you basically have to commit at the first viewing—which causes a lot of unease for both of us as cautious people. Due to the high purchase price (including ancillary costs at least €550k, so new construction is off the table), we would probably have to make many compromises in the renovation when I look at other issues with similar projects.
But we could stay in the city, would only need one car, no monthly tickets for the kids, etc.—which of course should not be underestimated as a counterbalance to the loan payment—and overall we would probably have more free time because we would not constantly have to drive the kids to sports and so on.
At the same time, one could argue an Option C), that if we decide on A, we could also sell the property with the house from A and then use that money for B. Then we could presumably do everything again according to our wishes in the city—and the end situation would be the same: instead of 2 rented houses, you would only have one, but then also an additional valuable house in the city. "Only" the problem with the plot remains without unpleasant surprises...
Of course, I know: in the end, it is purely our decision that we have to make ourselves—but how would you do it? Has anyone perhaps even been in the same situation? Neither of us has ever lived in the countryside—what hidden costs might arise here that you might not have in the city?