Is financing a second property possible?

We are currently planning to purchase a second property for personal use. I already own a securely rented property; this post concerns the question of whether and to what extent additional financing is feasible.

Family:
2 people (34 + 30), no children or pets
Besides the property financing, we have no loans or debts. The credit bureau only shows positive entries for us. We live in NRW.

Property 1:
Remaining debt approx. 85,000 euros
Loan installment per month including a fairly high repayment: 480 euros
Rental income: 550 euros (excluding electricity and gas)
There is no backlog of renovations; extensive modernizations were carried out in 2013.

All additional costs such as waste disposal, property tax, sewage, chimney sweep or similar are fully covered by the rental income, including the loan installment.

The property is securely rented, and in case of vacancy, a new tenant can move in very quickly; demand for the property is present due to location and price.

In my own assessment, I see this property as soundly financed, and appropriate reserves are also being made (see financial plan below).

Property 2 (we want to buy):
House approx. 200,000 euros
Additional purchase costs: approx. 20,000 euros
Equity available: approx. 30,000 euros
(The reason for the low equity lies in very frequent, expensive worldwide travels in the last 10 years. We have lived quite well.)

The property is to be 100% financed; we will pay the additional purchase costs ourselves. The remaining 10,000 euros of equity will be used for small expenses or reserves.

About the property: built between 2000-2005, modern and renovated. There is no major need for renovation or acquisition costs for furniture or remodeling. It can be moved into practically immediately without additional costs.

Income:
Person 1: 2900 euros net (+ 13th salary)
Person 2: from end of 2014 approx. 1000 euros net per month (currently 0)

Financial plan:
2900 euros income
(Person 2 initially disregarded)

(Block Property 1)
- 480 property loan Property 1
+ 550 rental income Property 1
- 60 additional costs Property 1 converted monthly
- 200 tax on rental income Property 1
- 200 voluntary reserves for Property 1

(monthly fixed costs)
- 20 GEZ (broadcasting fee)
- 40 Pay-TV
- 20 Internet / telephone
- 35 mobile phone
- 50 liability/legal expense/accident insurance converted monthly
- 10 vehicle tax converted monthly
- 30 vehicle insurance converted monthly
- 200 gasoline / train ticket
- 600 miscellaneous (e.g. groceries)

= 1505 euros still available

I do not take into account the current rent we pay, as this will no longer apply once we own property. For the additional property, I assume:

Property 2:
- 1000 euros property loan Property 2
- 300 euros additional costs Property 2 (e.g. electricity, gas, water)
- 100 euros taxes etc. for Property 2 (e.g. property tax, waste, chimney sweep)

Is financing the 2nd property possible on this basis? According to my calculation, 105 euros would still be left plus the additional income of Person 2, expected from approximately October. I have set all positions quite high or to my disadvantage.

Alternatively, what options exist? For example:
- Reduction of the monthly installment for Property 2 to approx. 800 euros
- Reduction of reserves for Property 1 until Person 2 can show a corresponding 2nd income
- Reduction of "miscellaneous" (living costs by 100-200 euros)
- Inclusion of the 13th salary in the calculation, which would be approx. 250 euros more net per month

It's not about whether the financing stands on a sound footing or similar, but rather whether this can be accepted or implemented from the bank's perspective.

The suggestion "save for 2-3 years, build equity, then buy" is not an option for us. According to our plans, the purchase and move should still happen this year if it is financially feasible.

Basically, there should be no major problems with the financing. How high do you estimate the market or [Verkehrswert] of property 1? This could possibly help lower the interest rate of the new financing.

If you want to know whether a bank accepts that, just ask a bank. Or a financing broker/financial agent. They know a lot about that and give useful advice BEFORE a conditions inquiry by a bank stains the Schufa. Everything else is guessing. But: the income of person 2 must come from a permanent employment contract, which has also been out of the probation period for 2-3 years. If this is available, and only interrupted for example by parental leave, there should be no problems. But you don’t have children, so I assume the second income is "planned", which for the bank means: not existing and will not be counted in the future until hard facts (see above) are available. Regarding your list of expenses: the bank is not interested in that, they calculate with flat rates. Therefore, once again the advice: ask a bank/financial agent for a binding statement.

You have addressed a new "problem."

I myself voluntarily terminated my contract at the end of 2013 via a termination agreement and took up a new position. The probation period ends in 3 days, but I have already had a written assurance of permanent employment after the probation period for some time. The employer is extremely reputable and trustworthy, also from a banking perspective.

Could there be problems with the loan approval because I have only been with the company for 6 months? That would be ..... very annoying if I had to wait 2-x years because of that.

@ toxicmolotow: I would estimate about 150,000 euros

That may well be. The financial broker told us back then that 2-3 years after the probation period expires would be okay. It was apparently about not wanting to see too frequent changes of employer. Just as frequent changes of residence don't make a good impression either. But as I said, only the bank can tell you exactly. If they say no and you don't want to wait 2 years (plus x because of the second income): would a sale of the first property be an option? That would at least solve the equity problem. Rental income is rated worse than "normal income" because rent can sometimes be missing. The bank also has its own risk assessments here; they're relatively indifferent if you say your tenant is very reliable. If I may recommend my own financial broker: Baufinanzierung Nord. They are definitely reputable and provide the information you want straightforwardly and quickly. That is definitely more reliable than the crystal ball here.

Well, you can ask questions to get a first impression of the situation.

I have an appointment at the bank on Monday for the evaluation, but I need to make sure they don't start the Schufa check right away. I don't like all these checks and entries.

I used Google a bit, the probation period doesn't seem to be a problem. It has ended and I am now permanently employed. Before that, I was with the same company for 11 years. However – as part of the job change, we also moved, but that completes the picture and can be easily explained.