Financing single-family house with granny flat for parents

Hello dear community,

I wanted to share with you our current thoughts on the family home and ask for your opinions/comments. We are still very early in the planning phase, so it's mainly about the rough framework for now. With your tips, I would then like to start a more detailed planning and elaborate the whole project a bit more.

About the project:
- Young family (he/she both 30 years old with 2 children) is building a single-family house with a granny flat and renting it out to parents (please no discussion about the purpose and sense of multi-generational apartments)
- A single-family house (approx. 150 sqm) with a granny flat (approx. 70 sqm) is to be built, total approx. 220 sqm
- Granny flat is located on the ground floor
- Plot (still searching) with a size of approx. 800 sqm (600-1,000 sqm); the house must of course fit on it in terms of development and not be too big, otherwise it will be too expensive
- Land reference values in the south of Hamburg approx. €650/sqm
- Planned cost for the plot: €550,000
- Planned cost for the house (at €3000/sqm; is that realistic?): €660,000
- Additional construction costs + garden: approx. €150,000
- Total cost thus: approx. €1.36 million

Financing:
- Without going into detail about my expenses and income here (I keep a detailed household budget)
- We can afford a rate of approx. €2,500
- Parents would pay rent of approx. €1,100 (officially only 66% of that, the rest via gift in advance)
- Tax savings due to "losses" from renting approx. €150 per month
- Total possible rate thus: €3,650
- Equity capital of approx. €100k available (+ gift from parents of unknown amount)
- Roughly, with these conditions, we could take out a loan of €800k
- Of course, we would take out two separate loans: (1) single-family house with high equity contribution, high repayment, and (2) granny flat with 100% financing and no repayment (until the single-family house is paid off)
- Creates a financing gap of approx. €450k that would have to be compensated by (1) reducing our demands, (2) building up more equity, or (3) gift from parents (TBD); probably a combination of all three.

Questions:
- Does all this roughly make sense in principle and is it realistically calculated (on this very rough basis)?
- Is it actually possible to also deduct parts of the plot for the granny flat from taxes (i.e. through loan interest)? So far, only the share of the building is considered.
- Could it make sense to rent out the granny flat furnished? --> Parents gift us money so we can choose furniture and then rent it out?
- Are there any experiences/tips whether the utility room is only needed for the single-family house and the granny flat is "served" over it (without a separate access for the granny flat). This would save space and costs. As I understand it, the granny flat can no longer be sold separately, but we do not plan to do that anyway.
- Further cost savings I see in telephone/internet (only 1 contract), waste disposal and electricity/heating (only 1 connection but separate meters for granny flat). Overall probably rather peanuts.
- How does it work with parking and possibly photovoltaics? Are there any "tips and tricks" for the division between single-family house and granny flat?
- Do you have any other topics/tips you would like to share with us?

Looking forward to your assessments!

Sounds to me like it's "down to the wire" calculated, or at least that's what you have to assume. Has it been taken into account that children cost more the bigger they get (hobbies, school... or just because bigger children consume more calories than smaller ones...)? How much can you save after deducting all expenses? Who is supposed to move into the granny flat after the parents are gone? Do you want to rent it out to strangers then? That's something you should also consider, because eventually that will happen.

Next year, another 10% inflation is expected. Have you factored in this loss of purchasing power?

How secure are your jobs from the current perspective? Civil servants? Public sector? Private industry? Steel mill or glassworks? ;)

You are short 450k... that's more than I would have dared to take on as a total loan...

PS: I wouldn't unconditionally sign off on the "old" calculation "We'll definitely earn a lot more at 50 than we do today" anymore...

Thank you very much for the quick response. Regarding your questions: - We still have about €500 per month left for reserves - In addition, my wife's salary (currently on parental leave) is completely excluded, future additional costs should be covered by that alone - The parents are still relatively young and fit, and I hope for a 20-30 year tenancy, but in an emergency the apartment would have to be rented to strangers, you are right, or possibly to the children at some point (if they want) - The job is very secure due to IG Metall and medical technology - You are absolutely right about the numbers, €800k loan and €450k outstanding sound very daunting and I still don’t know exactly what to make of it

Don't know the construction prices in Hamburg exactly but in the south you haven't gotten by with 3000€/m2 for a long time. You have to pay tax on the rent. So you can't use it completely for the installment. I currently don't see it as realistic.

I am also a member of IG Metall, but I do not consider my job to be secure at all.

I don't know the construction prices in Hamburg exactly, but in the south you haven't been able to get by with €3000/m2 for quite some time. You have to pay taxes on the rent. So you can't use it entirely for the installment. I don't currently see that as realistic.

I am indeed unsure about the €3000/m2. I would appreciate competent estimates (rough estimates). The rent does not have to be taxed in this respect, as I deliberately incur losses with the rent and therefore get taxes refunded by the state. In other words, I only use 66% of the local comparable rent and have significantly more costs than income due to interest and depreciation.

I am also IG Metall, but I do not consider my job secure at all.

Of course, that's no guarantee, but I would say this: Before I lose my job, I either have to personally do something wrong or we have completely different problems in Germany or in the world. My company is currently going from one record year to another.