I am getting a plot of land as a gift. How do I finance the construction?

Good day.

I am 24 years old and earn €1500 net per month. I basically own a condominium. I need additional income to continue living here in this apartment. It’s all completely irrelevant anyway, so I’ll get straight to the point:

My grandparents want to gift me a plot of land - 600 sqm (195€/m[SUP]2[/SUP]). Their wish is that I build my own home there. Nice... but I could never afford it on my own. My idea is to build a cozy, nice single-family house on it (144m[SUP]2[/SUP] house + garden + fence = €250,000... and YES, everything is already planned and calculated, even the waterproofing slab that I need because of the soil moisture!) and rent it out.

I have already been to the bank and was offered a rough financing model:
€50,000 Kfw loan at 1.4%
€50,000 building savings loan at 2.7%
€150,000 LBS loan at 2.28% (secured for 10 years)
I could get it at a rate of €800-1000. In theory.

I can show about €35,000 in equity.
On Friday, I have an appointment at the bank regarding the loan; then I will know more.

As I said, I can’t afford it myself because my monthly expenses are €900.
Now I want to finance the house with the rental income.

Land: €117,000
House + garden + garage + bathroom + fitted kitchen + geothermal: €250,000
Insurance: (rough estimate) €500/year
Additional costs: (according to the builder €3.50/m[SUP]2[/SUP]) €504/month

In the region, a house costs €800-1500 rent plus additional costs. The cheapest offer is €7.40/m[SUP]2[/SUP].
Based on this offer, I could charge a net rent of €1065.60. In theory, it is basically possible to pay off the loan with the net rent. I am currently not saving any capital reserves... After all, the construction will take at least 1 year, and if the rent doesn’t come in at some point, I have to keep afloat.

So far, my plan is to build in 2014, provided the bank doesn’t throw a wrench in the works on Friday.
My family, who supposedly has built so many houses so far, is annoying me at the moment; they say I have no idea, I am still so young and too dumb to deal with such things.

That is why I am looking here for contacts. People with experience who can tell me whether I can finance the house with the rental income.

Thank you very much.

If the cold rent brings in ~1000€ and the bank wants ~1000€, that sounds great at first. Problem: Your project must not become more expensive, but you have calculated everything, so I'll spare the rest. Problem 2: Nothing must break because you can't build up any reserves. Problem 3: Rental defaults, which does not necessarily mean that no one is currently living in the house. Sometimes it is not wrong to listen to your parents, even if they don't necessarily find the right words.

I would also advise against it, the financing sounds a bit adventurous. Besides, eventually the tax office will want to see money.

Listen to your parents. 250000 will not be enough.

You will build something new, and a stranger will buy it from you. Not a good deal. You will also have to declare your rental income to the tax office... can't you sell your condominium or rent it out??

So again in detail: With €1500 net, you cannot build. It doesn't matter whether you already have the land or not. €250,000 for 140 sqm, probably with a basement, does not work.

The condominium belongs to you, right? So it doesn’t belong to you? Or soon? Why do you need more money for that?

Regarding the gift. You have a tax exemption amount of €200,000 here. But your mother/father and their siblings can become a problem here. Because they have a compulsory share in the event of inheritance. If the inheritance then turns out to be smaller, claims can be made against you, since you have received a gift that partially may have belonged to your grandparents’ children.
It is not as uncomplicated as one might assume.