House purchase, house construction - fundamental questions and considerations about them

Hello, since I have already read a lot in the forum and also seen how some people were advised, I would like to try to present our situation and get your opinion on our plans.

My fiancée and I want to buy a house. Both the option of buying an existing house and building a new one are under consideration. I personally prefer the new build, even though it will be associated with significantly higher costs, but then you really have everything as you imagine and wish. My fiancée is still a bit hesitant about all the work, the stress, and of course the costs. Therefore, I wanted to ask here which option you would recommend to us.

Briefly about us: I (26), she (24), we are getting married in April '19.
Current income: together approx. €3,500 net (both permanently employed in the public sector)
Rent: approx. €700 warm (including additional costs) for an 80m² maisonette with 3 rooms.
Currently, we are both still paying off our cars, which will be finished in October '19.
There are of course other fixed costs such as internet, mobile phone, insurance, other small expenses (Netflix, fitness, underground parking...), so at the moment we can save about €600 per month, which will probably be spent entirely on the wedding at first.

The apartment is currently just right, but if we grow, it will clearly be too small, so we are thinking about home ownership. Larger apartments in the village are not available and in the nearest cities not affordable. Therefore, the consideration that one can also build right away for these monthly expenses.

Equity: currently, a house with land and arable, as well as grassland and forest areas from an inheritance are for sale. It is calculated that there will be a yield of about €100,000 - 120,000.

My plan: First finalize the sale of the inherited properties to then see how much cash is available. At the moment, we have an offer for a plot of land for €40,000, about 2,000 m² (dimensions 20m*104m)
If it is a new build, my idea would be to buy the land in cash and then use about half of the remaining equity as equity for the construction financing. Is it advisable to buy the land in cash?
After the cars are paid off in Oct. '19, the financing of the construction should then be taken care of.

It suits us that the land seller only wants to sell next year, as he first wants to let his realtor contract, which he naïvely signed, expire so that he does not have to pay him. He has done nothing more than put up a sign.

The plot is currently a sheep and goat pasture. An earth embankment would also have to be removed there, as well as vegetation (contact with the environmental office already exists). Connections are available at the street (I believe this is called partially developed, so only the development to the actual building site is missing). The question here is, of course, what can you do with 20m width? A building setback of 3m already sets a buildable width of 14 m.

Since it is a district on the outskirts of the city and therefore the integration requirement applies, a originally planned city villa will not be feasible. Since we do not want any sloping roofs, we have already made friends with a bungalow. A size of about 130-140 m² with 5 rooms is what we have in mind (1 child planned) and possibly moving in a parent at some point.

Buying an existing house is also an option, but it will be very difficult to find something that really meets our expectations. Of course, it is cheaper overall but probably less suitable for our preferences and probably less stressful.

In short: 1. Should we think about buying a house or a new build, or is it realistic for us?
2. Is it advisable to buy the land in cash if you decide on a new build?
3. Can you build something decent on 20m width?

I hope you can help us advance our considerations or give good tips on how we should approach the matter.

Best regards Tom

Three times yes. :-)

Tips:
- Clarify the buildability before purchasing the property ([Bauvoranfrage], talk to an architect).
- Develop a room concept and roughly plan the house (have it done).
- Save diligently; works very well if there are no children yet.

Those are quite a lot of questions for one thread. Unfortunately, I cannot answer the financing story, others are better at that.

Regarding the plot: I would buy the land immediately if you like the location. I would even push the owner into some sort of preliminary contract or agreement. A small down payment or something similar, so it's not gone in half a year.

With 20m width, I see absolutely no problem building a bungalow. It would, of course, be important to know how deep the building window of the plot is. With 14m width, you need about 12m depth for 140m². The more, the better. Also, you should inquire about possibilities for edge development for outbuildings.

What I don't see: an apartment or similar on 140m² – that will be a mess.

Hello,

so far you have not saved anything with 3,500 e and have only consumed. You basically have negative equity because of the cars. So, as a company, insolvent.

The good thing is, you expect equity. Are you entitled to everything from the inheritance or only 10k?

Basically, you have to look at what the all-in cost of the new build is, including all this earthwork, etc., and what you ultimately need as a loan. Because you have saved 0, had 700 € warm rent. If in the end there is a 1300 € rate for the loan + incidental costs that you have to bear completely alone, you then have to decide whether you want to take the risk.

Thanks in advance for the answers.

So the building preliminary inquiry for a single-family house has already been approved positively. Since there is already a huge bungalow next door, there should be no problems there. On Friday we will already sit down with a construction company (from acquaintances) and see what would be feasible on the plot. The further interest in the land will also depend on that. The location of the plot is perfect and we would only have to commit, but we want to do that only once the money from the sale is really there and we are sure that the construction that fits there would also meet our expectations. The agreement that we are number 1 on the list has also been made. We will be informed as soon as there are other interested parties. It should also not become a granny flat, just a "guest room" then. For the possible case, though. But it is not firmly planned.

We have already saved up, but this will most likely first go towards the wedding (dress, suit, celebration). Then we will essentially start again from scratch. A little starting capital should then be available from gifts and the inheritance sale. The €100,000 is already calculated as what we will really have. So about €250,000 is expected, which will then be divided by two. Minus already incurred expenses etc., then around €100,000. With luck, all this will be completed by the end of the year.

So the plot would be €40,000 plus taxes, development, earthworks. I calculate around €55,000. Just for that. About €20,000 would remain as equity for the construction. A standard bungalow from the company's catalog is around €150,000. Plus any special requests and somewhat larger and plus garage. These are my thoughts and rough calculations at about €220,000. Plus exterior work another €20,000. Better to estimate somewhat higher than too low then.

Thanks already for the answers.

So, the building preliminary request for a single-family house has already been approved. Since there is already a huge bungalow next door, there should be no problems there.
On Friday, we will sit down with a construction company (from acquaintances) and see what would be possible on the plot. The further interest in the land depends on that.
The location of the plot is perfect and we would only have to commit, but only want to do so when the money from the sale is really there and we are sure that the construction that would fit on it also meets our expectations.
Agreement that we are number 1 on the list has also been made. We will be notified as soon as there are other interested parties.
It should also not become a granny flat, just a "guest room" then. For the eventual case, though not firmly planned.

We have already saved up, but that will most likely be used first for the wedding (dress, suit, celebration). Then we basically start again from zero. There should be a bit of a start from gifts and of course the inheritance sale.
The €100,000 is already calculated from what we really have. So about €250,000 is expected, which is then divided by two. Minus already incurred expenses etc., then about €100,000. With luck, this will all be done by the end of the year.

So the plot would be €40,000 plus taxes, development, earthworks. I estimate about €55,000 just for that. That would leave about €20,000 as equity for the construction. A standard bungalow from the company’s catalog is just under €150,000. Plus any special requests and somewhat larger and plus garage. These are my thoughts and rough calculations at about €220,000. Plus outdoor facilities another €20,000. Better to calculate a bit higher than too low.

A bungalow is enough (even later when there are kids).

What do you have to worst case finance? There are various calculators on the internet here.

Never count on money you don’t have yet, meaning, only start something once cash is in the account and everything is settled (tax office etc.).

My personal advice, never build with acquaintances/friends. Unless you factor in that it could become an ex-friend.