Financing through subtenant

Hello.

In my hometown, there is currently an interesting offer available. I would like to get initial assessments from people with expertise to find out whether my project is feasible or rather characterized by some kind of madness :)

On offer are a two-family house and a single-family house on a total of 3000sqm of land.
Both units in the two-family house are rented out, the single-family house would be owner-occupied.

The purchase price is stated as €520,000 from a private seller, so there is no commission to be paid.
Monthly rental income from the two rented units currently amounts to about €1600.

I bring approximately €22,000 in equity (checking account), €10,000 (ongoing building savings contract) and currently about €6000 (housing Riester contract).

My monthly income from a permanent position at a university hospital is currently about €1900, my girlfriend contributes a net income of €1400 in a current temporary position.

Is the financing feasible? How high would our recommended equity participation be, or can the financing be covered solely by the rental income?

As an absolute layman, I appreciate any serious advice, and if further information is missing, just let me know, then I will try to answer it as best as possible.

Best regards, Baufi82

Even if no broker commission is due, additional costs still arise (real estate transfer tax, notary, ...). 7-7.5%, so 39,000 €. You might just be able to cover that with your equity, but then you probably wouldn’t have any reserves left?!

You cannot use the rental income entirely for financing because you should build reserves, have to pay taxes, and non-allocable costs may occur ...

Then there is the question of whether there is even a bank willing to finance this property. It doesn’t have to be a problem, but it can be. Tax-related questions would also need to be clarified.

It will be difficult to make a statement here ... it is not a "simple" home financing. If I were you, I would first seek a conversation with the house bank and a tax advisor.

As a thought-provoking example: With a loan of 520,000 €, an interest rate of 3% at 10 years fixed interest, and a minimum repayment of 1%, the rate amounts to 1,740 €. However, this would have to be paid even in case of rental default. After ten years, hardly anything is repaid, and then with higher interest rates, the rate can quickly "explode" and become unaffordable for you.

No words....

1. Missing the information whether the rental income is net or gross.

2. With so much house and land, some reserves need to be formed.

3. Book that as a crackpot idea. Such an amount with that equity and income.

@backbone and are right.

The idea is generally not bad, but you need significantly more equity and income. Because - as @backbone has already written, you must be able to afford the installment even if the tenants default (move out or, even worse, rent nomads).

Consider it a "would be nice" scenario. Imagine the above-mentioned worst-case scenario happens and you are left with the ruins of your existence.

Keep your hands off it. This will hardly be feasible because of too little equity and too low income in relation to the purchase price or installment.

Hello,
a financing of this size with little equity will not be offered to you by any bank. In the case of partial rentals, 10-20% equity on the purchase price is sometimes required. Especially since you are here in a structurally weak region (3 houses for 500k).