Massive house costs KFW 70 - Prefabricated house

2012-03-16 16:35:24

Either my brother builds next to us or it will be sold....not sure yet, but actually I don't really care, right?

sort of... I was just not sure if the part of the plot on which the other semi-detached house stands/will stand belongs to the property that then belongs to you...

Building on another plot would cost me at least 15,000 Eur for the slab. But since I would then have zero equity, that's also bad. So I have to calculate 336,000 Eur (land + house + incidental costs + slab). What is better now?? I've thought about it a lot as well?

I would think further in that direction... as far as I understand it, you basically don’t have a “real” advantage from the land... you have to pay your aunt directly and ultimately your mother too because you first have to finance the extra costs for the granny flat without having any income from it...

why not simply look for a cheaper plot then? Did I understand correctly that the plot is only 340 m² with a price per m² of 330€???? Is that a prime location right in the city center or how does that work? I mean, this is not Munich where you’re building...

is there nothing around 150€/m² in the nearby area? Then you could buy a 400 m² plot for about 60,000 + 200,000 house + 15,000 slab + 30,000 incidental costs = 305,000€!

Compared to the 360,000€ option, you’d save about 55,000€ that you wouldn’t have to finance, have no tenants in your house, and even more land! Then with the same monthly payment as the 360,000 option you could amortize at 2%, or if that’s not enough, go down to 1% and have more money available monthly...

Aside from all the numbers: I wouldn’t be sure that you’d even get a loan for 360,000 in this situation if your only equity is half of the land...

In general, it’s just bad that you have no “real” equity... that makes the interest significantly more expensive...

2012-03-16 16:36:04

Mathematically maybe possible, but without any margin. Every little hurdle will put your house up for auction. I would leave it. Just think about it. Put away €1000 every month. In two years you'll already have €24,000 in equity + interest and you’ll already know how it feels to live on less money monthly. I wouldn’t start the project without any equity in cash!

Yes, but in 2 years the interest rates definitely won’t be like they are now. Then the project will fail because of that... and you can forget a forward loan as well. Then I’d pay €600 every month in advance for it.

You also have to take risks to gain something. If it doesn’t work out, it will simply be sold... and there’s also inflation and salary increases.

2012-03-16 16:44:23

You have to take some risks to get something. If it doesn't work out, it just gets sold......

yes but that's the problem.... what do you actually get?

after 40 years you have then invested €700,000 in the house which in the end has no residual value... unless you keep putting more money into modernizations and repairs.. since you obviously don't have that in cash (it all goes into the loan) you have to take out another loan and also diligently pay interest on that....

you're not building any value/wealth with that!

You would do that if you have paid off the house in 20 years and then benefit from the fact that for the remaining time you neither have to pay rent nor interest and thus build capital.. the repairs then also come cheaper because you pay them out of the equity and not via credit!

2012-03-16 16:46:52

sort of... I just wasn't sure if the part of the property on which the other semi-detached house stands/is supposed to stand belongs to the property that would then be yours...

I would think further in this direction... as far as I understand, you ultimately don't have a "real" advantage from the property... you have to pay your aunt directly and your mother in the end as well because you first have to finance the additional costs for the granny flat without having any income from it...

so why not just look for a cheaper plot? Did I understand correctly that the plot is only 340 m² at a price of 330€ per m²???? Is that the prime location right in the city center or how does that work? I mean, this isn't Munich where you are building...

isn't there anything around 150€/m² nearby? Then you could buy a 400m² plot for about 60,000 + 200,000 house + 15,000 foundation slab + 30,000 incidental costs = 305,000€!

Compared to the 360,000€ option, you'd save 55,000€ you wouldn't have to finance, have no tenants in your house, and even more land area! You could then pay off at 2% with the same monthly rate as the 360,000 option or, if that’s not enough, go down to 1% and then have more money available monthly...

Regardless of all the numbers: I'd be not sure if you'd even get a loan of 360,000 in this situation if the only equity is half the plot...

In general, it's just bad that you have no "real" equity... that makes the interest significantly more expensive...

Yes, you're right... but plots cost a lot here. 330 euros is still cheap. And it's not a prime location. On the hill, outside of town, no train, no shops. Normally it's 480 euros where I live now. If I move 30 km further out to the countryside, I'll end up paying that money again in fuel and it evens out... that's difficult. And then I'd have to drive 2 hours a day if things go badly...

Maybe there will soon be a new development 5 villages away for 260 euros per m². We'll check that out then. But it definitely won't get any cheaper...

Yes, you're right. Actually, the basement and granny flat only benefit me after 22 years or so. But if I don't have a granny flat, I'd have to build 3 children's rooms. A bigger house probably costs only a little more compared to the granny flat with 60,000 euros.

Don't know either, that way I'd have an interest-free loan of 40,000 euros (although the official value is actually 56,000 euros).

2012-03-16 16:49:24

yeah but that's the problem.... what do you actually get?

after 40 years you have invested €700,000 into the house which ultimately has no residual value... unless you keep putting more money into modernizations and repairs.. since you obviously don't have that in cash (it all goes into the loan) you have to take out another loan and also pay interest diligently there....

you don't build any value/wealth with that!

You would do that if you have paid off the house in 20 years and then benefit from not having to pay rent or interest for the remaining time and thereby build capital.. repairs then also become cheaper because you pay for them from your equity and not by loan!

Yes and no, later I do pump in money through special repayments e.g. my inheritance or rental income from the granny flat and I also have a higher salary and inflation where I can adjust the repayment. Only the beginning is hard.... that's how I see it

2012-03-16 17:23:21

Yes and no, later I do repay extra installments, for example when my inheritance comes in or rental income from the granny flat, and I also have higher salary and inflation where I can adjust the repayment. Only the beginning is hard... that's how I see it

you could also simply rent a nice big apartment for €900 cold rent and put €600 aside every month instead of paying €1500 to the bank...

If then, thanks to higher salary and interest, you have saved €100k in 10 years and inherit another €50k, you have €150,000 equity

if you then build for €360,000 you still need €210k... assuming the interest rate has risen significantly, you will probably still get about ~5% for 15 years thanks to the high equity share...

in these 15 years you can then completely repay the €210,000 for €1660/month (this rate should not be a problem in 10 years) and so after 25 years have a fully paid-off house that is only 15 years old... you have paid the bank a total of €88,000 in interest! Your risk during the entire time was almost = 0

If you now build directly and finance €360,000 you have to pay about €1600 a month (1500 won’t be enough with such low equity and long term!) and after 25 years have paid €317,000 in interest and still have debts of almost €200,000! If we include the €50,000 inheritance then you possibly paid €300,000 interest and still have €150,000 debt...

so what looks better?

in 25 years: a)

house paid off that is 15 years old

b)

still €150,000 debt and the house is already 25 years old

A house can be a great investment/retirement provision! if you do it like in case a.. in case b the bank is happy...

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Massive house costs KFW 70 - Prefabricated house

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philipp1983

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philipp1983

philipp1983

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