Multi-family house with 6 residential units - Current status and next steps

- Is it worth it? From when is something like this worthwhile, or what would the key figures have to be for it? We think so, but it also depends on several factors, e.g. sqm/cost and basement/ground level.
- What sqm/cost can we roughly expect with standard equipment?
- Is the concept of the basement rooms, which requires a basement (white tank), profitable or would it be better to build only ground level? The HT room would then be on the ground floor and instead of the storage rooms in the basement, there would be a storage room + technical room in the apartments? This loses some rentable living space but saves a lot in construction costs.

This can only be said if you roughly know the costs and at the same time know what revenues you can generate. Otherwise, no statement can be made.

In normal cities, the rent must be at least €10 + x for it to be worthwhile. Therefore, in the Ruhr area there is hardly any new construction activity (on the one hand, lots of vacant apartments that are in poor condition, on the other hand, a big housing shortage for decent housing – but only low rents achievable).

Find your concept or approach a bit strange: You have no idea about the costs, but you already know that it will/must be worth it, otherwise you wouldn’t build it. You are planning very precisely (e.g. how many residential units there will be, which KfW class), but you don’t even know how you are going to implement it.

We (family) are planning to build a multi-family house with 6 residential units in Hamburg, in a very good location. The plot with an old single-family house is already available and is to be replaced by a new one. All three of us work full-time and have neither much experience nor much time to take care of everything. After we have already spoken with the first general contractors and architects, we are still unsure how to proceed best here.

Then you talked to the wrong ones. How can one decide to have 6 residential units without any knowledge? – because that should be determined by the expert, how many units can actually make sense. Look at how does it, that’s the right way: you absolutely must take an architect with experience; a multi-family house is not something for single-family house architects. The latter usually botch things conceptually in such cases and fiddle together symmetrical two-apartment buildings with uniform standard (which can almost be considered a sign of incompetence). One never takes a general contractor instead of an architect, but you should always leave it up to the architect to consider including GCs in the tender.

The project is run by my mother, sister, and me (son). All three of us are registered in the land register with equal shares. My mother’s share will later be transferred to both of us.
The multi-family house is not intended for owner-occupation but merely to be rented out. We had considered founding a GbR. Is this disadvantageous?

If the ownership community already consists of this constellation “Person 1 and their potential common heirs 1A and 1B,” one would have to be crazy not to bring the shares into a property company with the identical shareholders. However, a GbR is a partnership under civil law. You should also seek inheritance tax advice about this.

Thanks first of all for the answers

The project is operated by my mother, sister and me (son). All three of us are registered in the land register with equal shares. My mother’s share will later be transferred to both of us.

The multi-family house is not intended for own use but only to be rented out. We were thinking of founding a GBR. Is this disadvantageous?

Some questions again, since brought up the issue of profitability:
- Is it worth it? From when is something like this worthwhile, or how would the key figures have to be for this? We think it is, but this also depends on some factors, e.g. sqm/costs and cellar/ground level.
- What sqm/costs can we roughly expect with normal equipment?
- Is the concept of basement rooms, which require a cellar (white tank), profitable or would it be better to build only ground level? The utility room would then be on the ground floor, and instead of storage rooms in the cellar there would be one storage room + technical room in the apartments? This means some rentable living space is lost, but huge construction costs are saved.

well you are funny you come here into the forum, pick up arguments and you want us to plan everything for you

I would have liked to hear from you whether it’s worth it

Otherwise there are specialists who charge for this.

Hello everyone,

first of all, thanks for the many responses. I will try to shed some light on the matter...

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- We have already had consultation appointments with the building authority, and since we are building on a street where previously only single-family houses stood and now slowly multi-family houses with 5-6 units are emerging, we were assured that 6 residential units is the absolute limit. This brings me to the second point...
- We have a buildable area of about 210m² and are allowed to build 2.5 stories. No floor area ratio. According to the architect, this results in about 144m² of rentable living space each on the ground floor and 1st floor, and another 110m² on the 2nd floor = 450m² (including creditable area). In the basement, one could realize an additional 65-75m² = 520m² (excluding creditable area such as terrace, balcony).
- The previous offers for KFW 55 were approximately between €2,400-2,600/m² without basement, with basement in a white tank & basement living area rather €3,100-3,400/m².
- From similar plots/objects in the neighborhood, we know that rental costs of at least €14/m² can be realized.
- Support from the tax advisor will be obtained shortly.

Profitability:
- The calculated total capital return is about 3% without basement, return on equity about 8%. With basement, the total capital return is slightly lower and return on equity slightly higher (without appreciation).
From what value would one say that it is worth it here?

The previous offers for KfW 55 were approximately between €2,400-2,600/m2 without a basement, with a basement in a white tank and a basement living area rather at €3,100-3,400/m².

Including construction incidental costs, architect, etc.?

The calculated total capital return is about 3% without a basement, equity return about 8%. With a basement, the total capital return is slightly lower and the equity return slightly higher (without appreciation).

How was this calculated? (8% equity return is too low for such a project)

Please keep in mind that there will be a decent condition for external financing. The lending value will be only about €1.4 million (for the variant with a basement).