Our construction project - Please give your honest opinion about it

Hello dear Bauforum team,

after days of research, I came across this competent Bauforum and it also seems like you really get honest answers here. So, the following situation, I'll give a little background: My life partner (30) and I (24) are thinking about building. We have a wonderful plot of land (800m2 rural area, Niederbayern region, southeast and a fantastic panoramic view) in sight for 60,000€ (this cost would also include all incidental costs such as notary, land registry entry, taxes, and everything else that might arise). We would imagine a small nice Mediterranean house with a hip roof, basement, garage, and about 150 - 160m2. Solid construction, of course, NO prefabricated house. For heating, we would prefer a water-to-water heat pump. We have already tried to calculate everything, and after deducting the sweat equity (tiling, painting, installing interior doors, etc.), we would come to 230,000€ for the house. So, my first question to the experienced building experts among you is: is this amount realistic? Then number two, the money. Without going into too much detail, we would have to take out a loan of about 350,000€. Without everyone hysterically shouting "for God’s sake that's a lot, you're heading for ruin": We have cash assets (checking/savings account + inheritance approx. 30,000€ plus a capital life insurance policy from my life partner that was taken out before 2000 (payout tax-free) with 20,000€ plus our sweat equity of about 25,000€, so we can show a total value of 75,000€. I have already made a cost breakdown of what expenses will come with additional incidental costs, insurance, taxes. We have a monthly net income of 4,300€ and could repay the loan with 1,600 - 1,700€ over 30 years. I should add that our jobs are very secure and we also have no problem paying off the debt for 30 years. We would even still have about 900€ free each month (at the present time) to put aside further savings. Our current cold rent is 600€. And I am slowly starting to refuse to finance other people’s lives... So that was a bit much, but it means a lot to me because this dream plot is exactly where we always wanted to be... I would be very happy to receive your answers as we have to make a decision by October...

Best regards and thanks in advance

PanCakeBunny66

Hello PanCakeBunny,

do you already have a concrete offer for the house? The 230 TEUR including the basement seems clearly too low to me.

For comparison: we are planning a city villa with 2 full floors, approx. 160 sqm living space, with a hip roof. We currently have 3 offers. These are in the range of 250 TEUR. However, without basement and garage. For a basement, of course strongly depending on the ground conditions, you can count on at least 50 TEUR!
In addition, there are the usual incidental construction costs of approx. 35 TEUR (see statement by construction expert, posted frequently).

That means, personally I come to the following with you:
60 TEUR land
250 TEUR house
35 TEUR incidental construction costs
10 TEUR garage
50 TEUR basement (just assumed as an example)
= 405 TEUR
- 25 TEUR muscle mortgage
- 50 TEUR equity (be careful with the life insurance, if concluded before 2005 it is tax-free on payout but the question is still when it will be repaid?)
= 335 TEUR financing requirement

The 350 TEUR you mentioned therefore seems realistic to me personally. The rate would probably also fit with the current income. (Assuming 2% repayment). Just ask yourselves the question whether children might be planned at some point and thus a part of the income might temporarily be lost!

I hope my personal assessment helps you a bit further.

Hello Nilo,

thank you for your quick and detailed response. We already have the first offer with €250,000 including the basement and garage. I still have to say that we would calculate a maximum of €270,000 for the house (the muscle mortgage is already deducted here). We would set the loan this high because 1. we would have to pay off our loan for our new car, which is still €26,000, and the rest as a buffer in a savings account so that in case of emergency we really have a small cushion that will continue to be "fed".

Your planning doesn’t fit at all. Nilo has already mentioned quite a bit. But what the hell is a muscle mortgage? Own services are often overrated... because by doing the work yourself you might save the craftsman’s labor costs, but on the other hand, you have to add many costs that you wouldn’t have with a craftsman. That means tools, waste, longer rental periods.... in my opinion just a way to make things look better on paper. You usually have to buy materials anyway, and if you buy them yourself and cannot get them through wholesale, it usually gets more expensive. 160 sqm is also quite a big deal, you will probably have to calculate with 250,000. Unfortunately, house + additional costs + land is not everything yet. Parking spaces usually have to be created, a terrace has to be built, the driveway paved, possible retaining walls, slopes supported, foundation work for the garage and so on and so forth. I roughly estimate your construction project will consume the entire 350,000. There will be no room for maneuver. Your net income is okay... but in Bavaria just average. How is the net income divided between you two? 50:50 if yes, you will be under considerable pressure if a child is planned. And with 160 sqm of living space, I assume 1-2 children. As a small example: my wife now earns 2,000 net, during the 12-month parental leave 1,400. Afterwards, at most half-time 1,000 €. In addition, there will be daycare fees of 300-500 € + fuel costs. If we plan a second child, not too far apart, the parental allowance will surely be around 700 €. You have to plan for that, and a house should be fully financed by one income. And 1,700 € monthly from one salary is already not so easy. Low interest rates are tempting, but you always have to calculate with what will happen in 2 or 5 years. Calculate that your construction project will have cost almost 450,000 € by the time everything is done. You have to think that over carefully.

At our prefabricated house provider, the differences between the individual size categories are between 10,000 and 20,000....

Surely, you have to decide in the end what you want. But in any case, calculate the worst-case scenario.

Regarding salary development: I am a software developer and I could easily get a job with 70,000 and more per year. The price for that: a 6-day week... 100 hours of work and constantly on the road. Such people who are exploited are desperately sought after by large consulting firms. Of course, they also receive between 1000 and 3000 for the deployment of an employee per DAY. What I want to say with that: don’t count on money you don’t have. And talk about the financial future. My wife and I have agreed that we will both earn, she will work 50% and I 80-90%, which means I stay in a job that guarantees me family life and that I can handle with normal effort without burnout. That’s why we have also restricted ourselves financially in the construction project. More would have been possible than what we are doing now, but you simply have to make decisions about what you want.

We are building a prefabricated house with 145 sqm on a 7 ar plot without a basement in the Palatinate and will have certainly paid 400,000 when everything is finished in the end. We saved ourselves the basement, which would have cost us nearly 50,000.

Greetings... (from someone who, of course, lives in a prefabricated house, NOT a solid house

What is that supposed to mean?

So a lot has already been mentioned, and everything is correct so far.
Again about the muscle mortgage: 25000/40=625 hours. Now double that (because you are slower and do many things twice) = 1300 hours. So you want to do 78 days straight of own work together?

Greetings from someone who, of course, lives in a solid house, not a prefabricated house. HAHA