Is renovating old buildings worthwhile?

So far, I have always read that a [Einliegerwohnung], which supposedly pays off the loan, is a naïve calculation. Why should it be different here?

Without going into too much detail, I would like to share my personal gut feeling.

1) The skeletons found after the purchase are not insignificant, but manageable with craftsmen who have the right expertise in wood, old, and especially half-timbered construction methods, especially considering that there is obviously a certain budget available.

2) Cellars of this age are considered dry if no flowing or standing water is visible. To bring cellars of this construction age up to the living standard of a newly built cellar requires so much money that, in my personal opinion, it is uneconomical. I would rather invest that money - if the cellar is dry according to the standards of its time of construction - in a generous extension or conversion. Old cellars often require significantly less renovation investment than initially thought if their use is adapted to the cellar’s originally intended use (storage cellar for coal / vegetables / potatoes vs. living cellar).

That brings me to my last point 3): I personally prefer to live on my property, my house, and my garden alone rather than with tenants of any kind. If there is a desire to rent apartments for retirement provision, I would not buy them where I myself live. If acting as a landlord is not a must, I would invest the money not in a run-of-the-mill multi-family house new build but in a really good, old-building-experienced, and innovative architect who would create for me a gem suited to my needs from the existing little house by incorporating the existing worth-preserving substance and/or structure (well, not conjure, but plan etc. pp). Depending on the scope and type of such a measure, the energy costs can be quite comfortably low after completion. But with such an approach, you naturally enter the realm of old-building enthusiasts, and the question on your part would first be whether you basically want to belong to this group or not.

I’m going to stay out of the subject of building fabric a bit. Others know better about that. Here are a few thoughts from my side on that
- 510 sqm plot is not particularly large for 300 sqm of living space
- hillside location does not exactly make a larger new building cheap
- if it is a boundary development, I would take another close look at whether you will really get approval for what is supposed to go on there regarding the new building
- do parking spaces have to be created on the plot or elsewhere? That makes the plot even smaller. With a larger new building, there really is no garden left
- from the stairwell picture, it looks to me as if the house already has several residential units. Is that so? If yes, that would open up some possibilities, e.g. first living on one floor and renovating the other. Possibly afterwards also renting out the existing residential unit temporarily as a granny flat until you need it yourself (children?). Such questions can only be answered when it is clear what you need for yourselves.
- you write that you effectively have a shell that needs renovation. At what price do you actually get the "shell" if you deduct the plot?
- some things do not necessarily have to be done (immediately). For example, an attic conversion is only necessary if you want to use it as living space. Some things can also be done quite well in DIY work once you live in the house and don’t have to commute.

Thanks for many entries! That unanimously sounds like renovation.

The downsides of the new-build option (tenant stress, shared garden, much more expensive) have all been correctly identified. Only, I think I haven’t yet been able to convey the downsides of the old building.

It is a clad half-timbered house that really needs a complete renovation. In addition, the skeletons in the basement came to light after the purchase, which have relativized our renovation plans:

[*]In the kitchen/bathroom area, some beams are rotten. Sill beams as well as support beams in at least a 3x3m area must be completely replaced, walls must be reframed.
[*]An old owner from around the ’60s came up with the brilliant idea to install windows 10cm wider and to taper all the support beams left and right of the windows to half their width so that the windows would fit in. Fortunately, the house hasn’t collapsed yet but we must replace all those support beams.
[*]Probably the same previous owner made two single windows into one large one by sawing off the side beams and sliding one down into the middle. (see pictures) So the structural framework and statics must be completely restored.
[*]The vaulted cellar is currently quite dry (surveyors didn’t find anything either) BUT: The neighbor recently told us by chance that the vaulted cellar used to be partly underwater and the house smelled musty. We don’t know why that was, why it isn’t anymore, or whether it could happen again in a few years. This probably requires forensic building analysis. The fact is that these old cellars are not built watertight and we (that’s my feeling) are sitting on a powder keg. If in 3 years the cellar has to be expensively sealed again, it will definitely blow the budget. That’s what worries us most about the renovation.

In addition, practically everything that is due after the shell construction in a new build needs to be done:

[*]Completely new electrical system
[*]Completely new plumbing (heating, hot/cold water, all bathrooms)
[*]Completely new windows
[*]New doors
[*]New insulation
[*]New exterior plaster
[*]New interior plaster
[*]Attic conversion
[*]Additional roof insulation
[*]New roof covering
[*]Dormers
[*]...and everything else I might have forgotten.

Therefore, we have to invest at least €200-250k – which is €50k more than we estimated before purchase. And practically, we only have a repair-needing shell on a basement that used to be damp...

Therefore, we are increasingly wavering between new build and renovation. Since we can’t manage it alone, we have to rent it out partially. As already correctly identified, that also carries many risks and is very expensive.

Renovation is definitely feasible. The house would certainly look good afterwards. But if after hundreds of thousands of euros the basement becomes wet again, the new beams also rot, and a new build becomes necessary, that would be catastrophic.

Attached are some photos of the house and the problems. (Attached building style, footprint approx. 9x9m, ceiling height just under 2.6m, situated on a 510m² hillside plot.)

First of all, the house actually looks very well maintained, inside and outside. It’s just not new anymore. But there are still original floors and doors inside, which is very valuable. For example, I wouldn’t replace those but rather renovate them. Please give the doors to old building fans if you remove them. Half-timbered construction is also worth preserving, in my opinion. Done well, the house will simply look amazing afterwards.

A basement doesn’t have to be dry. That’s a myth of today. You should demand that from new builds. Our basement isn’t completely dry either and it wasn’t supposed to be back then. It’s unbeatable for storing potatoes and such. Nothing molds or rusts there, but it is not a new-build basement, completely normal for the time. Of course, if you want a party room or rehearsal room, etc. in the basement now, you need to spend a lot of money.

How old are the electrical system and such?

The misuse of the beams can be fixed again. A house doesn’t collapse just because of that; it would have happened a long time ago. But of course, it has to be fixed, either by replacement installation or whatever, depends on what you plan to do.
I would also put in dormers if you’re having the roof done anyway. Plumbing, windows, attic conversion, new roofing plus dormers – I agree with all that. How old are the interior and exterior plaster? Is the house freshly painted outside, or why does it still look so good?

The rotten beams are apparently due to a water problem (you write that it affects kitchen and bathroom areas, so that’s plausible). This can also be fixed.

I stand by this: with your princely budget, everything is easily doable from my point of view. Many would tackle it with half the money.

A basement doesn't have to be dry. That's a myth of today. This demand should be placed on new buildings. Our basement isn't completely dry either and it wasn't supposed to be back then. It is unbeatable for storing potatoes and the like. Nothing molds there and nothing rusts either, but it's simply not a new-build basement, perfectly normal for that time. Sure, if you want a party basement or a rehearsal room etc. in the basement now, you have to spend a lot of money.

To raise basements of this building age to the living standards of a newly built basement requires so much money that, in my personal opinion, it's uneconomical.

We don't want a basement as living space either. The basement should mainly serve as storage. My main concern is that it can be very complicated to completely separate the basement climate from the living climate. That is, if it should ever become wet and musty smelling in the basement, it will travel upwards into the living areas. (which is a catastrophic thought for me). Since I have little experience with such old basements, I find it very difficult to assess such things. Figuring out the original reason why the basement was wet seems difficult as well. The information is based solely on memories from the neighbor. It could be the (now drained) rainwater reservoir in front of the basement, or roof drains, or simply leaking walls.. Well, maybe this is worth a new thread.

If done well, the house looks simply amazing afterwards.

Before knocking off the plaster, the condition also made a pretty good impression. Nothing is crooked or anything like that. The house definitely has potential. Whether the found defects exceed what’s reasonable.. I'm just not quite so sure anymore. But well, such critical voices were not heard here recently. That encouraged me a bit more.

If being a landlord is not a must, I would invest the money not in a run-of-the-mill multi-family house new build but in a really good architect experienced with old buildings and innovative.

Everything is easily doable with your princely budget.

I think I came across wrong. It's not that we don't know what to do with the money, but for living alone we definitely can't afford any more expenses. The renovation budget was 150k + 50k backup. The above problems already exceed the budget now. If it comes down to new construction, WE rely on rental income. Because we are allowed to build bigger there, the idea is whether to build new and rent part of it. Of course, it would be desirable to live alone on one's property. With new construction, we simply cannot afford that.

So far I have always read that a granny flat supposedly paying off the mortgage is a naive calculation. Why should it be different here?

It's about two units of approx. 100m² + 45m² each. For these, the property would be virtually "free". Since this is worth a lot here and rents are high, we came to this consideration. (currently 12.5€/m² average for existing properties) Tenant risk and expensive new build costs also relativize this consideration, which is why we are vacillating back and forth.

So far, I have always read that a granny flat that supposedly pays off the loan is a naive calculation. Why should it be different here?

It’s about two units of approx. 100m² + 45m². For these, the land would be virtually "free". Since the land here is very valuable and rents are high, we came to this consideration. (currently €12.5/m² average for existing properties) The tenant risk and expensive new construction costs also relativize this consideration, which is why we are wavering back and forth.

How long do you plan until the additional costs for the demolition are earned back? According to my rough calculation, with €1700 rent (~€20k per year) and €600k rental costs, that’s 30 years. Interest and higher reserves for the bigger house probably roughly balance out with rent increases. So you have at least 25 years until the rental income actually benefits you in this case.

That is also the consideration. After 30 years, in the new build scenario, you have a larger, nearly new property. Then it may also be worth it, since it might be paid off later.

I would rather get a separate, small multi-family house or two-family house at some point; that spares your nerves.

Understandable consideration with tenants in the same house. Only here where I live, there is no new two-family house with 150m² for €600k. For that money, you only get the land.