Is the construction project for a single-family house realistic?

Hello,

I have been reading here for a while and now I have a question.

We want to build in the near future. However, we are still at the very beginning of our project and therefore I would like to ask for a realistic assessment.

The plan is a single-family house (approx. 120 m² including [Einliegerwohnung] approx. 70 m²). The whole thing will cost about €230,000 plus land about €38,000.

Briefly our data:

Age: 28 + 30 years + child 1 year.
Net income: together €3100
Income coming from the [Einliegerwohnung]: €450
Equity: €20,000

My question now is whether the whole thing is realistic in terms of costs and if we are not completely overreaching?

Thank you

Hi!

It would be doable. However, many have already miscalculated when it comes to rental income.

What clearly speaks against it, however, is the amount of equity. If you have so far not been willing or able to set aside larger sums - why should it work in the future with the much higher financing burden?

And building under financial pressure and involuntary sacrifice (for about 30 years!!) rarely works.

Regards, TomTom.

So your house price with a granny flat seems very low to me. You have not accounted for any additional costs. Equity is entirely used up by the additional costs. So you have 100% financing. Counting on rental income that is not guaranteed (rental scammers, vacancy) is risky. If the financing is based on one person/income, it is probably not feasible or very risky. Calculate it yourself with interest calculators, and don’t forget your additional costs and living expenses! Of the 3100 you have a maximum of 1500 available, right?!

Hello Mary 1225,

with the above stated costs (which I consider too low or not detailed enough) you would need to be able to permanently & securely provide at least 1,200 euros monthly for financing. And that already assumes a good interest rate of under 4%...

20,000 € equity is simply too little in my opinion for a house construction of this scale. With 70,000€ equity it would look quite different!

I consider the calculated rental income (given the low land price) to be too high. Unfortunately, the rent cannot be calculated with certainty either, moreover you have to make 2 apartments ready to move into as part of the house construction with EVERYTHING that goes with it (electricity, gas, water meters, telecommunications connection, etc.). Per se you also have to calculate that tenants treat the apartment significantly less carefully than you as an owner. After a few years, the first modernization work will certainly have to be carried out. As a rule of thumb, you can only realistically calculate with 7 out of 12 months rent. Is it really worth building and renting such a large property for you then? => Maybe better to have 140 sqm living space yourself with lower construction costs.

In the construction you proposed, everything could quite easily collapse if income decreases temporarily or the rent simply does not come in for some months... In short, figuratively speaking: You probably won’t be greatly overextending yourselves with the project, but you will have massive back pain all the way into retirement.

What I can well imagine given your financial situation, however, is the purchase of an affordable terraced house. You will also certainly receive subsidies through KFW programs 124 & 153 KfW.de possibly subsidies/discounted loans from the federal state or even the municipality.

Best regards

Hello,

The plan is a single-family house (approx. 120 m² including a granny flat approx. 70 m²). The whole thing will cost about €230,000 plus land approx. €38,000. My question now is whether the whole thing is realistic in terms of cost and if we are not completely overextending ourselves?

Honest answer: No, you won’t be able to manage this price — unless you provide a lot of own labor (EL). The problem with EL, however, is not only the necessary knowledge and time but also that the materials have to be bought and paid for. In the end, you won’t save most of the money this way.

As already correctly mentioned, you also fail to include the ancillary construction costs in your calculation. For a construction project of this size and assuming “normal soil conditions” of the plot, you have to reckon with ancillary construction costs in the range of €30,000-35,000. This amount does not allow for extras such as the often-chosen kitchen ;)

Regarding financing, the pros should answer here, but one thing is really important regardless of whether there is a financing model for you or not: You should be able to manage the financing _without_ including any potential rental income in the calculation.

Kind regards

Thank you for the answers.

The situation is that the granny flat is occupied by my mother, therefore this income is quite certain.

We have calculated it as follows:

Income: €3600 including 2 salaries, child benefits, rent

Costs: €230,000 house, €38,000 land, €30,000 incidental expenses = €298,000

We are now quite naively assuming that we have to cover €1,100 plus €300 incidental expenses monthly.

According to our calculation, it would be feasible, but we want to approach this matter quite realistically. What is your view?

Thank you.