Finance a 1 million Euro house without equity?

Dear Sir or Madam,

I have a problem: I would like to buy a house for about 1 million euros. I really need your advice on how to deal with this or which steps I should take. What would you do?

I currently earn 2000 euros net, she currently earns 1800 euros (parental allowance), and we have 1 child.

We have no loans and no rental burden since the apartment we live in belongs to me. We only pay service charges.

Current unbearable living situation:

We currently live in a 1-room apartment of 25 sqm. It is bursting at the seams.

We want to buy a house in the Stuttgart district which costs exactly 1 million euros but we have no equity in the form of money.

A building loan for 1 million euros was rejected.

But there is one special circumstance.

I have previously bought 1-room apartments as an investment (cheap back then in 2005) and have always rented them out. I currently own 10 so-called 1-room apartments, and including my own apartment, there are even 11.

These are not "financed by loan."

The idea would be to sell all or as many of the apartments as needed to raise the 1 million euros.

The problem, according to the tax office, is the 3-property rule; they would classify me as commercial according to their statements if I were to sell them all within a short period.

Although with a holding period of over 10 years, it does not count as a sales object.

The financing banks reject a house construction loan over 1 million euros and do not consider the 1-room apartments as collateral, which I do not understand.

The banks would be secured in first priority; they would receive the full proceeds.

How do I proceed? I somehow have the impression that these 10 mini apartments somehow scare off the bank advisors.

The problem, according to the tax office, is the 3 property rule; according to their statements, they would classify me as commercial if I sold them all within a short period.

Yep. It is a complex tax situation. But it can be handled and optimized with a suitable tax advisor and possibly by contributing the properties into companies. Maybe even elegantly solve a complete sale within the framework of a share deal.

I used to buy one-room apartments for capital investment (cheap back then in 2005) and always rented them out. I currently own 10 so-called one-room apartments; with my own apartment, it's even 11.

Those are 11 individual properties, each of which must be valued based on asset value. It may be that the cash flow is good but the asset value appraisal turns out terrible. Plus the elevenfold effort. Nobody wants that.

The banks would be secured in first position; they would get the full proceeds.

Speculating about that with a layperson makes no sense. Don't get me wrong.

How do I proceed? I somehow get the impression that these 10 mini apartments somehow scare off the bank advisors...

- Pray and hope you find some "stupid" bank somewhere that will provide financing (we wouldn't do it either). - Sell the apartments and bite the sour tax apple - Give us some information about the apartments and rents

I see the income rather than the security as the problem and of course the effort for 11x collateralization of a loan. Did you only declare the €3,800 as income at the bank or also the rental income?

Were you at a bank or a broker? From the commercial sector, I know that some banks have a "blacklist" for certain industries, for example, and do not finance these properties or recognize them as valuable. It could be that this is the case with these mini-apartments.

What do the 10 apartments bring in monthly rent and what value do you estimate for the apartments?

Would the sale of the apartments even generate a profit?

Just sell 3 apartments and use the proceeds as equity. Maybe you can find a bank that will finance the rest? You can still sell one or the other apartment bit by bit and, for example, make special repayments or take out a lower follow-up loan after the fixed interest period expires.

Just briefly, I am from Stuttgart

I don't understand it.

I have 11 fully paid-off 1-room condominiums in Stuttgart, each brings at least 100,000 euros, corresponding to a value of about 1.1 million.

The bank has 0 risk ....

It looks like I will have to sell the apartments "rented" and then buy the house which will probably already be gone by then.

In Stuttgart, the apartment would be sold immediately within a few weeks for 100,000 euros.

Sell 3 apartments and use the proceeds as equity. Maybe you'll find a bank that finances the rest? You can still sell one or another apartment gradually and, for example, make special repayments or take out a lower follow-up loan after the fixed interest period expires.

I think unfortunately I will have to go that route, I will now sell 3 properties so that I am "financeable" for the banks.

The banks seem to rate the 11 properties and the income negatively, one agent said that many are deterred by the effort.

11 times land registry is not so great