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

What comes to my mind here, they are still very young, about 28+29 years old.

I assume that there haven't been any major "job changes" yet, where one makes good "salary jumps upwards"?
Usually, in the first job, one stays about 5-6 years, then switches to a competitor as a more "experienced" employee, and then accepts a good salary increase ;)

But what I would rather aim for here:
the author should inquire with his employer whether he can get a "salary adjustment" if he gives up the "subsidized apartment." The apartment would probably be worth 500-800€ more on the market; if he gets this as a salary increase, it would improve the situation.


They are 28+29 years old, so until retirement: 38 years duration.
It has to be done within this time!

The argumentation:
20 years of small repayments (then maybe 30% has been paid off!)
afterwards 15-18 years of high repayments, where the rest is paid off. That means after 20 years the monthly burden would probably run out at 2500€, but it would be manageable.

WHY?
In 20 years the children will be out of the house (then they are 21-26 years old) = no care, no kindergarten costs, etc.
The wife may go to work (even if she earns little then)
In 20 years, income will have increased alone due to inflation compensation (even if less), so the 2500€ in 20 years is not comparable to the 2500€ of today. (this must of course be secured with terms to avoid interest rate risk)
The author will probably have changed jobs once (very likely in 20 years) and thus there will be salary increases.
And the nice thing is, after 10-15-20 years they could also switch the bank here if interest rates remain so low, and also repay less if the rate is compatible with the pension.
(or they can sell the house in 30 years and buy a city apartment)

What is the alternative?
Hope that the employer finds a larger, subsidized apartment for them?
They may not change the employer (tied to the apartment) because with a change they would spend 1000€ more per month on rent (for a comparable apartment; if the apartment should be bigger, then more likely 1500€ more)

If they do nothing, what happens then:
- continue living with 5 people in 75 sqm?
(if they want something bigger and don't get it through the employer = they would pay 2,000€)
- if he changes the employer, the apartment change occurs at the latest = they would also pay 2,000€
And what will the housing market look like in 3-5 years here? When landlords adjust rents every 3 years?

One should assume that they will need a bigger apartment for 15-20 years, which currently costs 2,000€ on the market.
And if rents only rise slightly... then they will pay 450,000-550,000€ for it in 15-20 years. (that would probably be the repayment...)

But we are already too far off topic, back to house building ;)

in 20 years the children will be out of the house (they will then be 21-26 years old) = no childcare, no kindergarten costs, etc. the wife is allowed to work (even if she then earns little)

Or the 3 children go to study in 3 different cities and each needs an apartment. Financially, children are only fully independent by their mid/late 20s. How is a company apartment regarding taxes and social security contributions? 500€ more gross can sometimes be worth significantly less.

the author should ask his employer whether, when giving up the "subsidized apartment," he can receive that as a salary adjustment. The apartment is probably worth 500-800€ more on the market; if he gets that as a salary increase, it would improve the situation.

Indeed, an excellent idea for the next salary negotiation. With 75 m2 and 3 children, one should really have understanding.

Or the 3 children go to study in 3 different cities and each needs an apartment. Financially, children are only settled by their mid/late 20s.

How is a service apartment regarding taxes and social contributions? 500€ more gross can under certain circumstances be worth significantly less.

but they already have the problem with studying now (if they will study, and only fly in their mid-20s… but there is also BAFÖG etc.)… as I said, in 20 years with property they can build capital (the house would be it) if they have to move now because 75sqm is too small, they have similar costs but don’t build any wealth. what do they get from that in 20 years?

that would be a good question how it currently affects taxes. Because up to 1000€ per year non-cash benefits are tax-free, above that they are actually taxable...

as said, with 20 years of ownership they can build capital (the house would be it)

COULD - but the OP is not sustainably able to service capital today. Certainly not for a realistic house price. Therefore, building simply falls out

but they already have the problem with studying now (if they will study, and only mid-20s flights... but there is also BAFÖG etc.)... as I said, in 20 years with property they can build capital (the house would be it) if they have to move now because 75sqm is too small, they have similar costs but do not build wealth. what do they get from that in 20 years?

You assume that a cheaply built house on expensive land will be worth a lot in 20 years. I would put a big question mark on that. Especially the Stuttgart area with its dependence on the automotive industry has a high potential for problems due to structural change. The houses most affected will be those where living value and price diverge the most. We do not know what the future holds, but it is definitely wrong to make tight calculations fit by optimistic assumptions. The same applies to the issue of Bafög, by the way. On the one hand, it is not guaranteed that one will receive a relevant rate of funding. On the other hand, the problem is that the Bafög rates are sometimes far from reality. For €325 you definitely won't get a shared flat room outside of dormitories here in Konstanz. So parental subsidies are often required. The Bafög office is certainly not interested in whether the parents have overstretched themselves with the house construction.