Financing single-family house purchase price 365k, additional construction costs 150k, renovation?

Let's put it this way, I've already seen higher prices for existing properties from the 70s here in the Lake Constance region. But that was 2 years ago when interest rates were below 1%. And with planned investments of 200k, I have trouble seeing it as a good deal. Basically, you are now paying over 400k including additional costs for a shell that you have to dismantle yourself first. You yourself say that basically only the timber frame remains. As for me, I was not willing to do that; renovation properties should also cost renovation prices.

Basically, I would split the whole thing into several installments. Then you can already start with the repayment before everything is fully paid out.

Sounds like a last-minute panic.

But especially with wood, highly toxic impregnating agents were used in the 70s. Formaldehyde in the chipboards and poisons in the wood paints. The house is 50 years old, costs as much as a new build with renovation, but is still basically an old house at its core.

The real estate market will collapse in the wake of the imminent liquidity crisis due to high interest rates and lack of successor borrowers. Baden-Württemberg is of course very difficult for single-family houses because of the green ideology. They are no longer desired.

In the final phase of a real estate boom, of course, every junk is still bought expensively. You don’t have to be the last dumb buyer.

And you should also consider how much money you are putting into this. For that, I’d buy a multi-family house with 10 apartments and never have to work again, while you will be the servant of your bank for the next 30 years.

How low real estate prices can fall was seen 15 years ago in East Germany. They tended towards zero because nobody could finance it and demand collapsed. And even the location was almost irrelevant there.

In Leipzig, back then, they gave away multi-family houses right in the middle of the city! I was personally at a fully government-renovated multi-family house in Halle. The house was completely renovated for 300,000 euros, had 6 apartments, and was sold for 22,000 euros.

Just a warning example of what can happen. Always be patient and wait for the right moment.

Wtf? And the world is going to end soon too, right? People...

As if there were no pollutants in the new building... For example, the commonly used polystyrene insulation has been strongly discredited in recent years because of possible emissions. No idea what the current state of knowledge is. Doesn't really matter.

Whether the purchase costs are justified or not depends on the standard land value. In my region, the plot alone would be worth 300k. That leaves 65k for the house + 200k renovation. A good deal.

Don't let yourself get crazy.

Regarding the actual question about financing: I would meet with various energy consultants and use the first meeting to check whether they think the house can be brought up to a reasonable energy standard. For me, it became clear very quickly just from the floor plan that the basement couldn't be outside the thermal envelope due to an open stairwell, and it was immediately clear that achieving a special standard would be uneconomical.

Nothing personal, but I wouldn't even take an asbestos-contaminated, non-solidly built house from the 70s as a gift.

Asbestos is only in the cladding on the exterior wall. You can easily leave it as is or remove it yourself. No specialist company is needed.

Nothing personal, but I wouldn't even take an asbestos-contaminated, non-solidly built house from the 70s as a gift. What do you want with a demolition object? It contains pollutants starting from particle boards, insulation materials, paints, varnishes, wood preservatives to asbestos. Something like that is close to financial suicide.

Then send your lab tests to the OP - because you must have them, right? Otherwise, it would just be empty talk without substance...

So, I will try to summarize:

The most important thing: Many heartfelt thanks to everyone who took the time to help us with our decision! I have incorporated some of your statements and assessments:

According to the appraisal, the house is worth €288,000 and costs €365,000 + additional purchase costs.

The modernizations would amount to €200,000 – 250,000, depending on the structural condition, which can only be reliably determined after gutting, possibly more.

The contaminant load should also be checked and could result in unpleasant surprises. An inspection also takes several weeks and months. Time that the realtor does not give us because houses here still go like hotcakes.

The reduction of renovation costs would only be possible through acquaintances on whom we would be 100% dependent. If something went wrong here, the financing would be at risk and possibly even lead to disputes. No house should be worth that.

Also, if at all, with the planned renovation amount, only one KfW level is achievable, which promises little support.

Whereby the insulation itself is also worrisome. If, as someone wrote, one realizes an additional insulation that does not fit the construction, one ends up with a self-composting house. The window replacement (common triple glazing) can already be a problem here. We have heard that repeatedly. A – as we believe – very experienced, 73-year-old building surveyor also warned that today's, let alone future insulation guidelines – to put it bluntly – are not compatible with a prefabricated house from '76.

The roof could also become a problem with regard to photovoltaics. On the one hand, apparently there is no permit for the 1986 conversion, on the other hand, the roof and ceiling might consist of nail plates and might not withstand the additional loads.

Even if we completely renovated the house for the price of a new build, we would have a 50-year-old prefabricated house with 15 cm walls and a comparatively limited useful life. After the planned duration of residence, we could quite certainly only sell a demolition property whose location only partially convinces buyers. The house would not be worth nearly €550,000 - 600,000 overall after renovation, which we would have to pay. Not a real investment for retirement.

Also because the financing would run for almost 37 years and nothing must go wrong. After 20 years of fixed interest, a serious residual debt of nearly €362,000 would remain. Depending on the interest rate situation, that could also quickly become difficult. Incidentally, even if everything goes well, we would pay almost €500,000 in interest in the end.

In our mid-30s, we have accumulated equity that hardly deserves the name. Without a doubt also due to the high rent but above all because of our high standard of living. To accept such financial restrictions from one day to the next is risky.

Our plan now is to save as much equity as possible over the next four years. The rate we would have paid serves as a benchmark. €110,000 + €30,000 would mean €140,000. If we can prove to ourselves that we have actually been able to adjust our standard of living by then, we want to try again at age 40. Should something arise in the meantime that could be realized with less risk, of course, we would react. We do not believe that prices will go down here in the Ostalb district. We also do not believe that in the next four years we will be offered a house that is cheaper and offers the same living space, the same plot size, and the same proximity to the children’s grandparents. Only God knows if that will happen in four years.

We worry about having to leave our townhouse soon, with three children and the landlord who is now finishing university. We worry then about not finding anything comparable anymore and even if, then at least we worry that we would pay €1,500 cold rent or more. If new builds continue to collapse and existing properties are actually no longer sold, we will very soon pay €2,000 monthly – but without any value in return.

And yet – risking our marriage for the single-family house dream because we have not saved any equity so far and therefore cannot play on the market is, at the end of the day, too risky for us.

Again: Thank you for your time!

Regards
Andreas