House construction in the suburbs of Munich? What should we invest in?

  • Erstellt am 2016-01-08 13:09:45

Wastl

2016-05-10 08:13:50
  • #1

I’m keeping my fingers crossed for you. Unfortunately, there have been many stories lately in Munich where the seller didn’t show up at the notary appointment because they changed their mind,....
What I don’t understand: Everyone complains that it’s way too expensive here, yet people still go along? With €900k you can live worry-free renting for quite a long time – so why does it absolutely have to be your own house?
Munich is simply a growing city that no longer has land for single-family houses. How should it? If more and more people move here, you simply have to build upwards. We also can’t designate all the remaining green zones as building land, otherwise Munich wouldn’t be livable anymore. That’s why there’s no supply on the market and the last pieces of building land are pure luxury,....
 

Steffen80

2016-05-10 08:37:45
  • #2


That is also a funny argument. The more expensive a house is, the less sensible it is? We are also close to 900k but not in Bavaria and I have never considered how long I could pay rent with that.
 

Wastl

2016-05-10 08:45:45
  • #3

I never wrote anything about "sensible," but why it has to be an own house – this question the OP can answer for themselves. If he/she says: Because we will only be happy in our own home, then I accept that.
Dear Steffen, you can afford to spend 900k€. Others have to work long and hard for that,... Therefore the question whether renting a house at these prices wouldn’t be an acceptable alternative?
I don’t know how much houses cost for rent in Gilching. For us, the rent price is about 2000€ per month. That makes 960,000€ over 40 years. Then it’s almost worth putting the 900k€ into buying a home,...
 

Steffen80

2016-05-10 09:04:12
  • #4


I just thought that sounded a bit odd. In principle, I am also a fan of "renting."
 

sirhc

2016-05-10 09:48:09
  • #5
A former colleague and friend, who had lived in Munich before but not worked there, changed jobs and now works permanently in Munich, earning 50% more as a result. From renting in M-Perlach to now owning an apartment in the Munich suburb, for cost reasons. Still nearly half a million for 80 sqm.

With all the quality of life Munich offers, I wouldn’t want to trade places. I always wonder who can/wants to afford Munich. Building is only possible if land or a lot of money has been in the family for generations; as an individual, it’s hardly possible to earn that in a "normal" working life.
 

andimann

2016-05-10 09:49:31
  • #6
Hello,




No, it’s not worth it, especially not in high-price areas. Especially in regions like Munich, renting is much cheaper than buying because the rents are very low compared to purchase prices.

Example calculation:
Rent would be €24k per year. Roughly, you should calculate 20-30% of the rent as maintenance reserve, so the "real cold rent = landlord’s income" is only about €18k (at 25%). And he still has to pay taxes etc. so the landlord’s return is about 1%. You can get almost more on a savings account...

In other words, for such houses the rent should actually be at least €4k/month.

If you buy the house, it looks like this:
you have to finance the €900k completely, for which you’ll have to pay at least 1.5%, probably more. That gives €13.5k in interest per year, without any repayment. Plus a maintenance reserve like with the rent of about €6k. So you come to roughly €20k without having paid off a single cent. That means if you have the same "total rate" as the rent, you’ll only pay off about €4k per year. That would be a repayment period exceeding the lifespans of you, your children, and your grandchildren...

And if you just happen to have the €900k lying around and pay cash for the house, you are financially your own landlord with less than 1% return. You can get much more with a few DAX stocks...

In short, buying is actually not worth it, it’s more a question of lifestyle and above all a bet on the future. You only really make a return if you or your children can sell the house again in 20-30-40 years for multiple times the price. And that will probably be difficult in many areas. In metropolitan areas it will work, but whoever builds in the middle of nowhere must be aware that they take the risk that the house could later be a total loss.

Best regards,


Andreas
 

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