Own contribution - how to present it to the financer?

Hello again :) my house project is progressing, I have learned a lot and received a raise :-)

Today I spoke with 2 prefabricated house providers who asked me how much my own contribution would be and what I could do myself. I said that I would fill the interior walls, could do the painting and wallpapering myself, and would lay the flooring and tiles on my own.

How can this be best formulated for the bank so that they consider it as own contribution / equity?
What material costs should I roughly expect and how much can I add to my "own equity"? It concerns a house of 70-90m², I want to buy low-maintenance linoleum and simple tiles.

You can kindly round up your own work. You simply take a realistic price per square meter, multiply it up, and round it up nicely (i.e. reasonably).

For example, we recorded the flooring as own work like this:

Laminate €15/m² + foil, baseboards €10/1m² * 55 sqm = €1600 (theoretically €1375)

(no idea what linoleum costs)

For wall work (since the wall area corresponds quite "exactly" to 2.5 times (because of the room height) the living area, we took house area * 2.5 = wall area to be treated.

For 90m², that's about ~230 sqm

At the hardware store and so on, you can check what wallpaper costs and the other stuff.

Reference points: cheap wallpaper €1.5 / nice fleece wallpaper with all sorts of extras €3/m²
The paste costs about €0.5/m² and paint costs (reasonable) also about €0.5/m². Plus some accessories like foil, brush, roller, etc... and you can calculate upwards

€4/m² * 230 = €1200

You round both costs up strongly again and say €3000 for material and feeding your helpers. No financer will say no because it’s realistic.

Own work is actually not real equity. Not what you want to do there. That is rather standard in house building/purchasing. "Real" own work would be bricklaying, roofing, or interior finishing or electrical work or similar...

PS: Don’t forget with own work that the material still costs money and that the time you spend working on the construction site is time you could be earning money in your company. If you add that you need about twice as long as a professional, with a good hourly wage in a company this eventually doesn’t really pay off :) (if you have to/can take unpaid leave)

could also earn money in the company

Everyone somehow says that, but for many employees it's nonsense because they don't earn more even with overtime (e.g., with trust-based working hours). But for the self-employed, it's true.

We did it like this: We had the general contractors offer turnkey and have the individual trades listed separately. Depending on the trade, we applied a percentage (e.g., 70% for plastering, 50% for electrical work, 50% for floor coverings, ...) as own contributions. That is only important for the bank regarding the loan-to-value ratio.

However, we partially increased the full amount a bit (e.g., electrical work by 50%) and included it in the financing. Because: On the one hand, you need materials (it is very important where you get them from) and usually you would upgrade anyway. So we took that as an additional buffer after all.

With all due love for this self-performance calculation, I must point out that very quickly a lack of motivation can set in, one might possibly get sick, and besides materials, tools are also needed. In my opinion, sometimes a simplistic calculation is made way too quickly. To be honest, one very quickly reaches psychological and physical limits that were not considered beforehand. I definitely don’t want to talk it down and for some it all goes well, but I want to encourage considering this as well.

Best regards, Sigi

Good point, that is absolutely right. When I think about everything we do ourselves (sanitary rough installation, ventilation, electricity, wall and floor coverings), I could tell a thing or two. And I also know some stories from the neighbors.

Basically, there are two options for self-performed work:

1. You have an exact plan that actually works afterwards and enough time to implement it. One neighbor did it that way and has been in interior construction including interior walls and everything for almost a year. He planned exactly beforehand and got through it well. Still, about 2 months behind schedule.
2. You haven’t planned that precisely, but have enough time buffer to avoid financial or timing problems.

For us, it became option 2. We have no financial double burden until moving in and don’t have to be done somewhere by a certain deadline. For me, that was the only viable way. The only alternative would have been to build move-in ready, as I couldn’t accurately estimate the time due to professional reasons. But for me, it’s a personal challenge :)

And it’s also turning out as I suspected: I underestimated it too, and we need longer than originally thought for various reasons. But that’s not bad.

To anyone with a tight budget or who cannot handle a double financial burden over a longer time, I would strongly advise against too much self-performed work. Here, two neighbors will probably move in with just screed... and that with family....

That it won't be easy is already clear to me :-) I also want to have it built turnkey, so not a shell house. Just the wallpaper, possibly filling the walls, floors and maybe some tiling work done with the help of the family myself. Maybe you can get 2-3000 euros more credited to your equity that way. For a decent financing, I am missing 10,000 in equity. I save 400 every month.. that makes two and a half years, but I am so impatient .. ;D