Feasibility financing new construction (land + semi-detached house or semi-detached half)

Hello everyone,

we applied for a plot of land in the middle of last year and actually received an approval last week. Now we still have some time to decide. We come from Stuttgart, so a construction project here is generally quite expensive. Plots of land in the Stuttgart surrounding area (i.e. +20KM) cost around 1,000 to 1,200 EUR/m². We have a subsidized plot from a municipality (16 KM away from Stuttgart city center) for 702 EUR/m². For us, it means "either this plot or initially none at all."

I would like to ask you to take a look at our finances and give an assessment regarding feasibility or whether we should rather let it go.

General information about you:

[*
How old are you? He 29, She 28, married,
[*]Do you have children? Yes, 3 (ages 6, 3 and 1)
[*]Are more children planned? No
[*]What do you do professionally?
[LIST]
[*]He, employed, team leader private pension provision
[*]She, saleswoman/cashier, currently unemployed, part-time work planned in about 2 years at 50%


[*]How many hours do you work? He 37.5, She -

Income and asset situation:

[*
What income do you have (gross/net)?
[LIST]
[*]He: 3450€ net per month (plus fixed bonuses of about 4500,- EUR net per year)
[*]She: - (parental allowance ends this month, 300,- EUR)


[*]How much child benefit do you receive? 663,- EUR
[*]Other transfer payments such as parental allowance, sick pay, etc.? -
[*]How much equity do you have? Together 80,000,- EUR

Expense situation:

Housing costs: per month 768,- EUR (employer apartment, our big advantage)

[*]current cold rent: 440,- EUR
[*]current warm rent: 588,- EUR
[*]electricity: 72,- EUR
[*]gas: -
[*]water, sewage, garbage fees, street cleaning: -
[*]telephone, internet, mobile phone: 90,- EUR
[*]GEZ (broadcasting fee): 18,- EUR

Mobility costs (car) per month 252,- EUR:

[*]car loan (or savings rate for a new car): - (paid off)
[*]insurance: 650,- EUR per year
[*]taxes: 130,- EUR per year
[*]fuel: 1,800,- EUR per year
[*]repairs/maintenance 444,- EUR per year
[*]other: -

Insurance costs: 63,- EUR per month

[*]liability insurance
[*]disability insurance:

Living expenses: 1,100,- EUR per month

[*]groceries: 700,- EUR
[*]care/drugstore: 100,- EUR
[*]clothing: 100,- EUR
[*]vacation: 100€ per month
[*]club fees/gym: 12€ per month
[*]fun and leisure: 80€
[*]other

Savings:

[*]retirement provision -
[*]hobbies/gifts -
[*]other -

Other expenses: 400,- EUR

[*]maintenance payments? -
[*]loans? -
[*]other? One-time costs such as furniture, kitchen, etc. I now simply deduct a flat rate of 400,- EUR, although we have just bought everything new.
[*]Was anything forgotten? I hope not, at least nothing comes to mind.

Income and expense totals:

[*]Total income: Currently 4,113,- EUR
[*]Total expenses: 2,583,- EUR
[*]Balance:
[*]Rent would then fall away (e.g. savings for house): 440€

General information about the property:

[*]How large is the plot? 377 sqm
[*]What are the dimensions?
[*]What is the standard land value? 702,- EUR/m²
[*]New build, old building (year of construction), house type? New build terraced house or semi-detached house, still under clarification
[*]Garages? Desired double garage,
[*]How large is the house? (living area / usable area): planned 130 m²
[*]What is the market value of land and house after completion? in my estimation 800,000,- EUR

Construction or purchase costs:

[*]plot costs: 265,000€
[*]development costs
[*]ancillary acquisition costs (notary, court, property transfer tax): 16,000,- EUR
[*]construction or purchase costs (incl. architect, structural engineer): no exact figures available yet. Have visited two providers so far who roughly said turnkey with cellar 270,000,- EUR. Appointment is set for tomorrow. I will provide an update here. Our building community (4 parties) is also interested in awarding a general contractor to save costs. I am assuming about 300,000,- EUR, which I think is more realistic
[*]additional construction costs (e.g. house connections, soil surveyor, construction power etc.): 30,000€
[*]garage: still undecided due to feasibility of financing
[*]financing costs (e.g. fees or commitment interest)
[*]total costs: ~611,000€

Other costs:

[*]kitchen costs: included in the house

Cost summary:

[*]total costs: 611,000,- EUR
[*]deductible equity: 80,000,- EUR
[*]financing amount: 531,000€

Necessary loan details: (initial estimate from house bank, no official offer)

Of course, we do not feel obliged to accept here, but I think we will not get such an offer in our area anytime soon, especially with rising prices. However, the current bank conditions pose a major risk. Last year we hoped that interest rates would remain stable. Back then 1.3% (monthly rate ~1,500,- EUR would be very okay for us), today 2.39% (monthly rate ~2,000,- EUR). Of course, this greatly increases the monthly burden and we are very confused by all the mental calculations.

What do you think, is it feasible? I think the first years will be difficult, but since we have already completed family planning, financially it would get better in the foreseeable future.

We are really exceptionally frugal, hardly have demands like going out to eat, etc. because we fully focus on the children. But they also grow up and will want demands later, like every child.

We look forward to your suggestions, if anything was forgotten, please forgive us. We are laymen when it comes to building and maybe there are many things we are not yet aware of.

With a basement near Stuttgart, good 2000€/sqm? Something is definitely missing there. I don’t see the price as realistic for a final price, even if you only use a gas heating system and stay energetically at the minimum. For a house on a slab foundation (including painting, floors) in the area, you should rather expect at least 2500€, more likely 3000€/sqm. Your list also lacks the kitchen and the outdoor facilities (even if you don’t have such large areas there, you will still want to pave the terrace and driveway). That would put us at financing amounts well above 600k, and I think that is too much for 4000€/month and 5 people.

Hands off!!!

Why?
1.) Creditworthiness is too weak. For example, we calculate a living cost allowance of approx. €2,500 for you 5. The remaining income is not enough for the installment and other expenses.
2.) Construction costs of €300,000 for a 130 sqm house with a basement is pure utopia. Realistic is 130 sqm x €2,500 (basic standard, I think it will actually be more expensive) = €325,000 + €50,000 for the usable basement, let's just round up to €400,000. But then things like exterior facilities, garage/parking space, etc. are still missing. You already mentioned ancillary costs yourself; whether they are sufficient remains to be seen.

P.S. Turnkey does NOT mean the house is ready to move in. Usually, the final interior work is still missing regarding painting and flooring (except bathrooms). You will end up sinking the next tens of thousands of euros there.

Where do the construction costs come from?

Next to us, a duplex with 120sqm plus basement per half is currently being built for 460k per half.
In addition, there are 50k incidental costs, kitchen, outdoor facilities.....

If I were you, I probably wouldn't do it. If a bank even finances it.

Too expensive for you, unfortunately. I wouldn't commit to that amount given the income. We had planned with a similar loan amount, but with 2.5k more income...

First of all, thank you very much for your feedback. I will also answer the questions.

With a basement near Stuttgart, around 2000€/sqm? Something is definitely missing there. I don’t see the price as realistic for a final price, even if you only use a gas heating system and keep energy standards at the minimum. Just for a house on a slab (including painting, flooring) in the area, you would rather expect at least 2500€, more likely 3000€/sqm. Your list also lacks the kitchen and the outdoor areas (even if you don’t have that much space there, you will still want to pave the terrace and driveway).
That would then put financing sums well above 600k and I consider that too much for 4000€/month and 5 people.

We will only know for sure tomorrow, but we were at the model home park yesterday and there they said, after some details, that a semi-detached house with a basement (white tank) will cost us around 550k. They already guaranteed us the cheapest price for the basement in advance (which was a bit suspicious to us). The general contractor is Allkauf Haus, advertising 4,000 house builds per year.

The following discounts are factored in:
-15k EUR due to currently missing KFW subsidies
-Kitchen is free and
-If we (4 parties) decide on two semi-detached houses, there would also be another 10k EUR per person, as you can apparently save quite a bit when building and planning together.

To what extent this is true will be seen tomorrow. I can inform you gladly.

We will also get advice in the forum again on what is important during planning so that as few unplanned tasks/risks as possible arise afterwards.

Where do the construction costs come from?

Two houses next to us are currently building a semi-detached house with 120 sqm plus basement each for 460k per half.
Additional costs of 50k, kitchen, outdoor areas...

If I were you, I probably wouldn’t do it. If a bank finances it at all.

The costs came together through an initial consultation.

We all roughly have the same financial situation. If we had 1,500 € gross more per year or equity above 120,000 €, we would be excluded since the city has predefined exclusion criteria regarding income and capital in the allocation process.

If it depended on that, none of the applicants would actually have the financial means...

There are some banks that would finance my project; that would actually not be the biggest problem here. It is more about the fact that the banks do not want to grant me the loan at the current terms, but only at the time of development and start of construction, which would presumably be the end of this year. Until then, interest rates will certainly continue to rise and we would of course prefer to start repaying principal rather than just paying interest.

However, we tend more towards ‘no’ since, apart from the land price, everything else has shot up so much...

I will gladly provide an update tomorrow once exact house prices are determined.

Best regards