How much reserve in addition to equity?

Hello,

I (29) have been seriously saving equity for a condominium or a small terraced house for about a year. I am single and earn around 4k net per month, which is quite okay. Currently, with a cold rent of 750 EUR, I can save about 1.5-2k per month.

The question now is what target amount I need to set before I can first talk to a bank about the financial scope. 3-room apartments cost around 400k including additional costs in my area. Since the kitchen is relatively important to me, I would plan an additional 25k for it.

As an emergency fund, I would keep back 20k. Overall, I plan to seriously start searching and take care of financing from a total wealth of 150k. How much would you additionally plan for special requests, etc.? Have you started retirement planning in parallel with building equity? I know this is very individual, but I am interested in experience values.

A few questions from me in advance:

How much is your current equity?
What types of investments are you currently saving in?
Do the 400 k refer to a new build or an existing apartment?
Are all incidental costs (notary, land register, tax) already included in the 400 k?
When do you think you will have reached your self-chosen target value of 150 k?

Here are a few thoughts/experiences from me:

20 k emergency fund sounds good at first glance. It depends a lot on your standard of living and your individual need for security. We also have a corresponding "emergency fund/security buffer," which simply makes it easier to sleep more relaxed.

I do not consider retirement provision as equity in this case. For me, it runs in a different category mentally and is not money that I count somewhere else, as it is intended for retirement in 35 years. Parallel to our real estate financing, we continue to build up our retirement provision, which we have diversified in terms of types of investments.

How much equity do you have so far? What types of investments are you currently saving in?

I have saved about 100k equity + 20k emergency fund so far. About 20k of that is in ETFs, the rest is in overnight money accounts. If everything goes smoothly, I should have reached 150k by 2022. Finding the right apartment will probably take another year. If a new car is due during this time, it will certainly be a nearly new car in the small car segment. Thanks for the follow-up questions, here are my answers:

New build or existing apartment? Are all additional costs (notary, land register, tax) already included in the 400k?

I am looking for a relatively new apartment up to 15 years old. New build or existing apartment doesn’t really matter; the advertised prices of 350k including all additional costs like taxes and underground parking amount to about 400k.

Regarding retirement provision, I am still a bit unsure how much of my net income I should invest in it while accumulating equity. I work abroad, most colleagues rely on the company pension plan into which around 1k is paid monthly. However, the money is only taxed upon payout, so I do not expect it to be sufficient for an adequate standard of living. The statutory pension is very low.

Regarding retirement provision, I am still a bit undecided about how much of my net income I should invest in it while I save up equity. I work abroad, most colleagues rely on the occupational pension scheme into which around 1k is paid monthly. However, the money is only taxed upon payout, so I do not assume that it will be sufficient for an adequate standard of living. The statutory pension is very low.

1k is paid in? What comes out of it? For me, it is almost five times what I receive later as a payout. That would be about 5k for you. Honestly. With 100k equity and 400k-450k volume, you can already start searching now. If something suitable comes up, then take it. If not – no worries. With repayment etc., you can still easily save a thousand a month, but you are already paying off. The end of the line is not reached at your age of 29 anyway.

How much would you additionally budget for special requests, etc.? Did you start retirement provision in parallel with building equity? I know this is very individual, but I am interested in experiences.

That depends entirely on the apartment and on you. Also whether furniture is included or not. For our house, we had about 50k budgeted for selections. However, almost half of that went to a converted attic. You can spend a lot of money everywhere... But for most things, the standard was sufficient. White doors, normal handles, etc. It is easier to name prices if you tell me what you want. Personally, retirement provision has been running for me since the start of the job and is a percentage of my salary. I had a few hundred euros less immediately and didn’t even notice it because of that. I do not account for the missing money anywhere either. It appears on my payslip but nowhere else. We had little equity and found a property relatively quickly. We had actually planned the whole search for the long term, and as a result we have almost 100% financing. Not a big deal nowadays either. Repayment is over 3% at the moment.

1k will be deposited? What comes out of it? For me, it’s almost five times what I receive later on

That is also what is forecasted for me, but there are still 35 years of inflation in between You’re right though, even if the whole amount has to be taxed upon payout, at least it’s a basis.

It’s easier to give you prices if you say what you want.

Unfortunately, I would describe my taste as not cheap, but a lot has to do with the living standard I’m looking for. Underfloor heating, oversized shower, heated towel racks, electronic roller shutters, large terrace with appropriate furniture, and high-quality parquet are part of it for me. However, I don’t need things like flush doors or designer tiles for 90 EUR per sqm. You can tell I have already been to a few sample selections at friends’ places...

I mostly have furniture and these can be replaced continuously.

We had little equity and found a property relatively quickly. We had actually planned the whole search for the long term and as a result we have almost 100% financing.

That could happen to me too About half a year ago I was almost tempted by a flat advertisement and was already about to schedule a bank appointment. However, the flat was already sold the next day.