House construction 2022 how to approach best?

The investments currently have a surplus of about €700 per month. Repayment between 2.5-3%.

All together €700 surplus? On €1.8 million?

I would today estimate 2200 EUR/sqm for the house with somewhat upscale amenities and without EL. I would calculate the price increase at 5% p.a. and then round up. The price for the double garage seems too low to me. If it is to be masonry, possibly with a flat roof maybe greened and perhaps with a storage room at the back for bicycles etc., I would expect 45k. 80k for incidental construction costs and outdoor facilities should be sufficient, unless the plot has a slope. I cannot say anything about the land costs. 150k seems not too generous to me in the Cologne outskirts.

All together 700€ surplus? With 1.8 million euros?

Yes, and where is the problem? There is a difference whether I am paying down 1%, or 3%, or 4%... The question is, do I only want a high cash flow without significantly reducing debt, which would be fatal, especially considering how banks continue to calculate the remaining debt, or do I want little surplus but reduce a lot of debt and thereby build capital.

Thank you for the assessment. Yes, the property is and remains the big unknown. It will not be in the Cologne surrounding area. Rather further north of Leverkusen. It cannot be done immediately and we don't want that either. Without a suitable property, it also makes no sense.

Have you already looked for plots of land and how much do they cost? It doesn't make any sense to do the calculations here if the land ends up costing three times as much. Regarding changing tax classes: I'm not an expert, but it would be new to me that you have more money by switching. The only difference is that instead of a refund, you then have to pay?

The plot north of Leverkusen for €150,000 will be quite small for a large house. You should expect €300 - 400 per sqm (Leichlingen, Burscheid..). So it’s possible – if one becomes available. You need a good search strategy.

The construction cost estimate for a high standard of €2,200 per sqm is already tight today. Rather assume €2,600 per sqm and be happy if it can be less.

I would definitely answer your question about planning more buffer with "yes."

You probably already have experience with construction financing – otherwise the property yield would be higher – and can certainly assess the possibilities well.

I wouldn’t worry about the assessment of the rental income.