"Corona" clause in the construction contract

Hi Rick, thanks! Our jobs are secure (as far as one can say that today) and I would describe our financial situation as "good." We want to invest long-term (+30 years) and have therefore decided on the project. The land belongs to us, the interest rate is acceptable at 1% for 20 years – but it’s about choosing the general contractor. Your opinion helps me here that it’s better to wait rather than rush. I will write to the provider again and see how he reacts. If necessary, we will just wait through the summer and see what happens. Oh yes, Hamburg outskirts with 10-11 EUR per m² rent Regards

I see the tenant as a risk factor. How do you want to get rid of him?

With 10 to 11 euros per m2, the return will not be very generous

Evicting the current tenant will be difficult to impossible until at least the end of the year. Or you could just pay a few bucks for a settlement. On what grounds are you even terminating the lease? It’s not for personal use.

Since the investment doesn’t exactly scream "make me happen right now," I would put the brakes on all binding signatures. Time is more on your side. First clear out, then pay for the demolition from ongoing income, then have another conversation with several GCs.

Regardless of whether such an investment project is currently feasible, this general contractor would be out without further discussion according to the proposal of such a one-sided clause that is disadvantageous to you.

Machine sheds do not sound like living space. There is no tenant protection for businesses. Maybe you could briefly clarify the tenancy?

As mentioned, thanks for the impressions.

We gave notice to the tenant of the machine shed in February. He has a storage there and was terminated with notice for October. If he refuses and we have to take steps, it will be delayed, yes.

Whether the investment makes sense due to possible falling construction costs, I am happy to discuss. In principle, it is designed for retirement and is supposed to pay for itself through rents. So we are not dependent on "months," but of course we want to realize it.

The clause of the general contractor states that both he and we can opt out by September if there is a price increase of +- 1.5%. My gut feeling and also your opinions reinforce that this is not common.

Best regards

If you sell the property, always set aside the fictitious interest and repayment, you will have more in retirement. Moreover, you would remain flexible if things get tight or something bigger comes up. You have to fully tax the rental income if you eventually turn a profit... especially since you also have to build up further reserves for maintenance and repairs. It’s not possible from equity anyway, and you also still pay for the loan. I consider it a project that is too risky or where you will only see a meager return. There are better alternatives that come with significantly less risk. The clause from your general contractor is one-sided and absolutely unusual.