High equity, low income: to build or not?

Can you manage a savings rate of €500 per month? Then that is not unrealistic.

?..

Our starting point: me (36, employee, permanent employment contract in the public sector) and my wife (37, housewife) have two children (6 years and 7 months) and would like to build a (solid) house. It should not be a villa, we are planning about 120-130 m² without a basement and initially without a garage/outdoor facilities.


- approx. 15,000 freely available equity.

- and the best for last: we own a condominium worth about €300,000 (comparable apartments in our area go for this price). When selling the condo, tax will still be due because we only received the apartment as a gift at the beginning of the year. That leaves us about €285,000 from that. Results in at least €300,000 equity.

A few considerations I have for you:
Are you sure that the apartment will fetch 300,000 on the market?
It’s not uncommon that real estate is listed for, for example, 295,000, but what the seller actually accepts is rarely known.
And in the above example you can already see that 5,000 are missing from the asking price. Then comes the concession for 1 year rent-free, which may depend on the rent price, 8-10,000?
After deducting tax, etc., and a buffer, I would only count on 250,000.
The selling price thus remains a variable for a long time; then there is the time factor: land purchase, house construction...
-> bridge financing the land, finding lender and construction company. Selling the apartment when house construction starts... And praying that the schedule works and you don’t have to rent intermediate accommodation at high cost.
Turning the housewife into an employee.

I don’t want/can’t say anything about the house costs.
Who is registered in the land register? What do your parents say about the idea?

Can you manage a savings rate of 500 € per month? Then it’s not unrealistic.

Yes, definitely, we have been setting aside this amount since the beginning of the year and it has worked quite well so far.

: Of course, we can’t know 100% what the apartment will exactly bring in now. However, I contacted two apartment sellers from our district when I found their sales ads online, and they were kind enough to tell me the final sale price upon request. One apartment, which is almost identical to ours, was sold in our residential complex in an identical building. And even if it were "only" 250,000, you could already do quite a bit with that money.

I have already thought about the schedule; that wouldn’t really be a problem. If we first pay for the land with equity and a loan, it doesn’t look so bad anymore. Whether we get the loan would have to be decided by the bank.

Turn the housewife into an employee.

That will not happen in the short term for various reasons.

Who is registered in the land register? What do your parents say about the idea?

The apartment is registered in my name. How is my parents’ opinion relevant? I’m already a grown man and can decide independently.

The apartment is registered in my name. To what extent is my parents' opinion relevant? I am already a grown man and can decide independently

well, not entirely. they don’t give you the apartment out of boredom and gifts can be revoked for various reasons. a quick resale of a gifted (very expensive) item can quickly count as such a reason. you should definitely clarify this with the giver to see if they would agree. you already mentioned reasons, too small, etc... but why should a 100 sqm apartment be as expensive as a house with a complete plot of land? that makes no sense at all or are apples being compared to oranges here? premium apartment location with forest and meadow house plot? couldn’t you get a larger apartment further away from the city center without a loan for the price you plan to sell the apartment? do you actually want to have the construction registered only in your name? after all, you provide all the equity and are also the sole earner. then you would also be alone on the loan (she as a housewife wouldn’t be much of an advantage for the loan anyway...).

Hello,

I am also not sure if you can get a "bare" house without outdoor facilities around Cologne for 400k?

Of course, if additional financing were needed, it would be very tight with that income. However, I can very well understand the desire for size. Surely 15-20 square meters are missing here.

We ourselves have 100 living space + 20 terrace but also ground floor with garden use with 4 kids.

I'm also not sure if you can get a "naked" house without outdoor facilities around Cologne for 400k?

I don't think so either.
It will be tight.

The OP could consider buying an existing property or a semi-detached house or an end-of-terrace house. Even with a sale of the mentioned apartment for "only" 250k and the other mentioned means, it would be doable. In decent areas in C, apartments are currently selling like hotcakes. I am positive about that.

Cologne is simply great - I'm Bavarian and don't like NRW, even though I now live here permanently. However, Cologne fascinates, especially the flair, the humor of the people, and much more. No wonder that living there is expensive.

Basically, it might even work out for the OP without an additional loan. Maybe a few kilometers outside?