Financing a farm for a young couple

Hello everyone,

I hope you can give me a realistic assessment and hopefully some positive encouragement for my project.

I will try to keep it brief and provide you with all the important information.

What am I planning?

To buy an old farmhouse / farmstead / cottage and use it for my upcoming self-employment and as a home. I want to become self-employed in the trade of vintage cars, American cars, and exotics. I have sufficient experience and training in this field.

The farm is also intended to be used for keeping some animals (cats, dog(s) and possibly two horses).

Background:

I want to implement this plan together with my partner (unmarried).
She is 25 years old, currently employed on a fixed-term contract in the public sector with a net salary of about €1600.
I am 26 years old and currently work only irregularly. I do not have a steady monthly income as I am working towards self-employment.

I have €30,000 in equity.
She has a building savings contract of €12,000 with the option to increase it to €24,000.

Thus, about €54,000 of equity would be available.

The purchase and renovation costs are expected to be in the range of €200,000-250,000.

How likely is it to get a loan with this starting position? Would guarantees from both parents (unfortunately only moderately wealthy) improve our chances? Is there anything special to consider for our plans?

I would be very grateful for any answers and help.

Best regards
David

Hello

rather unlikely. There is a fixed income (of your partner) which would not be sufficient to handle such a loan amount.

Especially since within the 200-250 (which is a large range) certainly a large portion is renovation.

Your situation is the sticking point. Are you already self-employed? Or occasionally unemployed?

That is the problem, banks want fixed salary payments and/or proof of good self-employment for 3 years. Renting would be the better option as a first step.

Also, the property [Bauernhof] hardly any bank would want to put on their books. The best chance I see is with your/your joint house bank.

This will end up like an application for child benefits, even though one does not have children yet but might have some.

Thanks first of all for the answers!

We currently rent but can't find a suitable property for my business. Unfortunately, the prices here (outside) are well over €1000 excluding additional costs. On top of that is the rent for the apartment at about €800 warm, so you quickly end up paying around €2000 just for rent.

Accordingly, the payments to the bank, which would presumably be only about half the costs, are not a big problem.

I was and am not registered as unemployed. I have an income of around €1000 from side jobs and maintenance. But of course nothing the bank could firmly rely on...

How would the chances improve if my better half had a permanent contract and I had a fixed-term permanent position? Her contract is expected to become permanent at the beginning of next year, and I could of course also look for a permanent job in my old apprenticeship profession (or similar) during this time.

I think then one could talk about a net income of about €3000.

The purchase price of the property will probably be around €100,000-150,000, the rest are renovation costs. Of course, the building could be renovated bit by bit and thus significantly reduce the loan amount. The renovation will be done entirely by ourselves with the help of family. Almost all craftsmen are available within the family and circle of friends.

It would simply be our dream to own property as soon as possible....

The bank will not give you a loan. You cannot offer any collateral. A fixed-term employment contract is never considered 100% secure. 3000€ net but half of that fixed-term – hardly any bank will lend money for that either. With what money do you want to invest in your self-employment?

The biggest cost items for self-employment have already been taken care of (workshop equipment, towing vehicle, trailer, tools, lift, advertising, etc.) and I still have separate equity for self-employment, which, however, has been calculated quite tightly.

Are there other options besides financing through the bank?
What would it look like, for example, to have the house purchased by one of the parents and then somehow have it transferred to us?

I'm just brainstorming right now...
The monthly costs for double rent would simply be hardly manageable.