City or countryside, new construction or renovation – the agony of choice!?

Nail salon

a clear indication that former city dwellers have increasingly moved to the countryside.

Hello everyone.

I had already created a in the financing category to estimate a possible loan limit. Now we have roughly outlined it and are considering our options that this offers us.

The following luxury problem:

We currently own two plots with rented properties. One of them is right in the city (100 sqm terraced middle house with a small plot directly on a main street), the other is about 5 km outside the city (small detached single-family house, just under 1000 sqm plot, quiet location). Additionally, we have €300K in cash equity (including support from relatives) + about €50K buffer that we want to set aside (for unforeseen everyday expenses or for the houses), as well as a pretty decent income, with which we can easily manage a loan amount of about €500K (more details in the financing thread).

We have now considered two options for our own property (goal: ~180 sqm living space, 2 adults, 2 children, home office and regular visits):

Option A) We build the house 5 km outside the city by expanding/renovating/rebuilding. There is no development plan anymore, but the neighborhood is already quite heterogeneous; we are quite sure that we could create something there that we really like without time pressure. Another plus: with our equity, we would only have to take out a comparatively small loan (I think somewhere between 150 and max 300k) and would either be debt-free in 10-15 years (at the then beginning/mid 40s) or have a relatively low rate to pay for a relatively long time compared to our income. The village is quite sought after, so we would also be able to sell the house well if necessary.

The big disadvantage is the location. I don’t work in the nearby city but commute about 250 km per office day, of which 240 km is by ICE train. It’s not a big deal, because the time on the train is working time, I was already able to work 2, sometimes 3 days in a home office before Corona, and the station in the city is only 1.5 km away. However, if we moved to the village, the one-way way to the station would be 8 km, and the way back goes steeply uphill. Certainly doable (I am very fit regarding cycling and would even welcome a somewhat longer cycling route than at the moment), especially if I can permanently do 3 days of HO. But in everyday life with kids, it might not be so practical—for example, if my wife can’t leave work, I’d easily need 1.5 hours at best. Also, we would lose rental income here (including termination of a tenant with owner’s own need, who has lived there since 1975—we are under no time pressure, but it just feels bad...) and probably, in the end, we underestimated the investment required. Therefore...

Option B) We buy an existing property in the city and renovate/expand it. The big, big disadvantage here is the often completely inflated and still contested real estate market. It will probably take years to find something, and when you find something, you practically have to commit at the first viewing—which causes a lot of discomfort for us as cautious people. Due to the high purchase price (with incidental costs at least €550K, so new construction is off the table), we would probably have to make many compromises in the renovation if I look at other topics with similar plans.

But we could stay in the city, only need one car, no monthly tickets for the kids, etc.—which, of course, should not be underestimated as a counterbalance to the rate—and would probably have more free time overall since we wouldn’t constantly have to drive the kids to sports and so on.

At the same time, one could also argue as option C) that if one chooses A, one could also sell the plot with the house from A and then use the money for B. Then we could probably do everything again according to our wishes in the city—and the end situation would be the same: instead of 2 rented houses, you only have one, but instead, you have a valuable house in the city. That would “only leave” the problem of finding a plot without nasty surprises...

Of course, I know: in the end, it is purely our decision that we must make ourselves—but how would you do it? Has anyone maybe even been in the same situation? Neither of us has ever lived in the countryside; what hidden costs might be incurred here that you don’t have in the city?

Having to drive for every little fart again

For every bread roll etc. at least 6 km