Financial planning for a condominium

Good evening, I am looking forward to an assessment of our plans. We are considering buying a condominium to rent out and live in later in retirement:

Person 1: 43 years old, income 3500 EUR net on 13.5 salaries plus a bonus of 8000 euros annually, secondary income: 450 euros per month

Person 2: 36 years old, pension of 600 euros unlimited

Person 3: 5 years old, 200 euros child benefit

We rent with heating costs of 1500 euros in a rental building including other expenses with insurance, car & co amount to 3000 euros. So about 1500 euros remain monthly. Equity is 35000 euros.

We are thinking of an apartment for about 150000 and possibly a renovation. Is this feasible? At Person 1's retirement age, the apartment should be paid off.

Best regards Jessica

Hello yes it is feasible if the renovation does not become too expensive. What do you estimate? If you pay 1,500 warm and ownership is supposed to cost 150k, the apartment is rather category very in need of renovation

I calculate equity at 0 for acquisition costs, kitchen, lamps, renovation. So 100% financing. Then you end up at 15 years with 1.5% currently. With a €1100 rate, the apartment is paid off after 14 years. That is the safe option, you could also do only 10 years fixed interest, the remaining debt should not be gigantic. Are you sure that €150,000 purchase price is realistic? Compared to your current rent, that sounds more like a downgrade. Edit: Sorry, overlooked rental intention.

Hello Jessica, how much would the rent for the apartment be? Is the apartment on the ground floor or with an elevator? Otherwise, it is rather unsuitable for old age. Are all the other expenses (food, vacation, etc.) already included in the other costs? If so, financing would be possible. But reserves must also be built up for an apartment, and the income must be taxed. If the [WEG] decides, for example, on a major repair that is not covered by the existing reserves, the owners have to contribute money... Renovations also cost a considerable amount of money depending on the effort. You want to rent out the apartment first. For that, it must offer a certain standard. If you move in yourself, you can renovate gradually. That would not be the case here. You probably do not have the time to renovate yourselves. Thus, you have to rely on currently very expensive craftsmen.

I am a layperson in the field of investment properties, but I always had the feeling that you need to have a bit more money in reserve than a monthly surplus of €1500, right? Especially if you have rent defaults or tenant troublemakers, that surplus probably won’t be enough.

You didn’t write anywhere under living expenses and so on that there is any savings rate included. If I don’t assume that and have to deduct a savings rate for unforeseen expenses (like consumption, personal matters, own repairs, etc.), then it is actually even less. On the other hand, you have a bonus that could cover something like that.

But then you are also a landlord and have to deal with every little thing.

Good morning, thank you very much for your answers. We live in the Ruhr area in Duisburg. Here, you can get apartments on paper around 70 sqm already from 100,000 euros. The intended property is really only for the two of us, once our daughter has moved out.

The 3000 expenses include everything like groceries, vacation, and 150 euros savings.

A particularly interesting property is a house in need of renovation of 76 sqm. The house costs 150,000 euros. Renovation will certainly be another 50,000.
The house consists of 2.5 rooms. I am thinking of a cold rent with shed, garage, and garden of 750 euros cold rent. Rental houses are very much in demand here.

Looking forward to further assessments.