Is it feasible to build a two-family house with parents / parents-in-law?

General Information About You:

[*]27 and 28 years old
[*]Currently no children, 1-2 children planned
[*]She: full-time pharmacist in a hospital (public service), currently still temporary
[*]He: full-time IT auditor in the financial sector, permanent position

Income and Asset Situation:

[*]Income: currently a total of 5500 net (2700+2800) per month
[*]Self-saved equity of about €70,000 is available, €300,000 will be received from my parents.
[*]Equity deployment: definitely the €300,000 from the parents; due to the move (which also costs something), we will definitely need a second car (no high demands) and would like not to be completely broke in the end.

Expenditure Situation:


Housing Costs:

[*]current warm rent: €1,620
[*]electricity: €47
[*]phone, internet, mobile: total €42

Mobility Costs:

[*]1 car (without leasing or loan), whose costs are largely offset by the employer’s high mileage allowance; fuel costs for private trips are included in the household budget

Insurance Costs:

[*]Various insurances (incl. 2x disability insurance): €200

Living Expenses:

[*]Our household budget for food, cleaning and laundry products, but also going out (restaurant, cinema, etc.) is €600 per month. Sometimes we go slightly over, more often we spend less.
[*]Vacation: about €100 per month (generously estimated)
[*]Clothing: hard to say; if something is needed, it is purchased from the buffer on the respective account. I estimate about €50 per month.

Savings:

[*]Retirement provisions: €560 per month total
[*]Other savings amounts: €1100 per month

Income and Expense Totals:

[*]Total income: €5500
[*]Total expenses: €4619
[*]Balance: €881
[*]of which sum cold rent and dispensable savings: €1200 cold rent + €1100 savings = €2300

General Information About the Property:
We currently have a plot reserved with 778 m², moderate south-facing slope. According to the municipality, the price will be around €70/sqm developed.
We plan to build a two-family house on it in about 3 years, into which my parents will move. A prefabricated house in timber frame construction is desired/planned.
My parents need 85 sqm of living space, which we would like to plan accordingly age-appropriately (barrier-free, etc.). We are still somewhat undecided about the “required” comfortable living space; I guess about 150 sqm plus the basement, which would exist anyway because of the slope. Is that too high? Or much too little? We would like to use certain synergy effects, e.g., a shared utility room.
I have great respect for the costs that will come upon us and currently cannot assess the feasibility of the project. Especially regarding family planning, because parts of the income will be gone for some years. (Current plan is 2 years parental leave per child, followed by one full-time, one 50% part-time). And children are known to be an expensive hobby.
The question is: What amount is affordable for us? Not only in terms of what we would get from the bank but also what is realistically manageable. Is our plan basically feasible if one realistically considers the costs for house, groundwork, etc.?

We are still a bit undecided regarding the „required“ feel-good living area, I would guess about 150 sqm plus the basement, which would be created anyway because of the slope. Is that too high?

That is luxury (expensive). Today, it feels like 140-150 sqm is the starting point for a couple + child. Do you feel worse in 120 sqm? No.

85+150 sqm (in three years) at €2,750 each = €650K + basement €70-100K + earthworks/additional construction costs €70K (due to slope) + garage €25K + outdoor facilities €30K + kitchen = calculate roughly €900K just for the house.

Despite the parents' equity, that is too big a number. Smaller (also with a feel-good factor) is probably doable.

I will not provide any numerical figures regarding finances, as that is not my core competency. Therefore, only a few general points to consider: 1. when dealing with a building for two borrower parties, consider the options of Realteilung and WEG. 2. if the slope favors a basement, then it is probably not quite that moderate after all. 3. for ground-contact floors, forget timber construction.

That is luxury (expensive). Today, roughly 140-150sqm feels like the starting point for a couple + child. Do you feel worse in 120sqm? Nope.

85+150sqm (in three years) at €2,750 each = €650k + basement €70-100k + earthworks/construction incidentals €70k (due to slope) + garage €25k + outdoor facilities €30k + kitchen = calculate about €900k just for the house.

Despite the parents' equity, it’s a bit too much. Smaller (also with a feel-good factor) is probably doable.

If 900k is correct, about 800k needs to be financed (370k equity minus land purchase). You alone will not be able to finance it. The parents would have to act as co-borrowers.

Be careful, once children arrive, everything will get tight, even the panties.

The question is therefore: What amount is affordable for us? Not just in terms of what we would get from the bank, but also what is realistically manageable. Is our plan basically feasible when realistically considering the costs for the house, earthworks, etc.?

Roughly, you can say 100k loan for a 400€ installment with reasonable financing. If we assume a 2000€ installment (a house also has additional costs), that would be a 500k loan and 300k from the parents, so 800k. Depending on the land price (which you unfortunately did not mention), that is quite ambitious to almost impossible. But now comes the further problem: what does the calculation look like during parental leave? If 1500€/month is lost for one year, then the installment is too high. At the latest then, you will not get by without financial support from the parents-in-law.

Thank you all for the honest assessment, even though of course one would have preferred to read something else.

Which size would be "easily manageable" in your eyes? I totally agree with you that one can feel very comfortable even in less living space.

The slope definitely requires a basement. However, it is moderate compared to what else we have looked at. But probably the Fichtelgebirge is not the best comparison area for that :D We would like to build a prefabricated house in timber frame construction, as far as I know the basement will be masonry anyway.

I wouldn’t want to take a loan of over 500k either, the question now is what you get for an "overall budget" of 800k.

Since the question about the land price has come up a few times: I wrote "The price will be around 70€/sqm according to the municipality", which makes about 55,000€ for 778m².

In the end, when the time comes, you will probably have to see what you get for your money. Going over budget just isn’t an option,