Proactive financial planning

Hello everyone.

I have been reading here on and off for quite some time and you can learn an incredible amount. :)
But now I do have an individual question in order to plan my project as best as possible with foresight and would like to get opinions and tips on it.

I will turn 30 this year, am still studying (M.A.), but have been self-employed in various fields (new media) for many years. I have been with my girlfriend for 12 years now, which is probably also because we have similar ideas about the future, like children and a nice house. She would also really like to move into an old house and renovate it, but for me only a new build in a "modern" style comes into consideration, and from a rational point of view she also sees that this makes more sense. To be able to assess the financial aspect, we have both studied, she works as a civil servant teacher, I am self-employed in various fields. Combined income is around 3000 gross, rising. We have no children yet.

After an extended period of studying ;), I am now thinking more and more about the future and thus also about a possible house construction, if we can even afford it. I want to have a long-term financial/savings plan worked out in time for my 30th so that after 10-15 years, that is at age 40 or 45, we can also build.

Region
Since I actually come from Upper Bavaria, I would also like to return there - but that is actually not affordable. For this reason, we are still considering the Rhine/Main region/Rheinhessen in a broader sense, as it is very convenient for us, we consider the region quite livable as a wine region ;), the weather is good and prices are high but maybe still somehow manageable. Building a house in an unattractive area doesn’t make sense either. Living close to the city (for example near Mainz or Wiesbaden) is probably not possible, but it would be okay for us to live in the countryside up to a maximum of 50 km (ideally about 25 km) from these major cities.

Plot/House
It should be a single-family house, roughly 150-200 sqm on a plot of about 500 sqm, if possible also a bit bigger. After some superficial research, I am expecting 50,000-100,000 euros for the plot. A house estimate is incredibly difficult; people say between 1500-2000€/sqm, which for 200 sqm would be 300,000-400,000€. Since a basement is supposed to be quite expensive, we can easily do without it. What amount do you still consider financially manageable? I once read that the equity ratio should be at least 20%, preferably 25%. If we now assume 100,000 for the plot and 300,000 for the house, that is 400,000 and an equity share of 100,000, so 50,000 each. That is quite steep but also not unrealistic.

My first financial plan now looks as follows
- if I invest 100€ per month in ETFs at first, then in 10 years I will have saved 12,000 and thanks to hopefully the return the amount would be around 17,500-20,000 (based on the development of the last 10 years, which was very good at the stock market, I have to say)
- if I save 250€ every month, I will have saved 30,000 after 10 years and with the returns about 44,000 in the account, which already looks quite good
- not included are special saving rounds and income from other stock transactions, which of course cannot be planned with certainty

Conclusion: We should try to save 250€ every month from my 30th birthday, occasionally add special savings rounds, and in this way it would be quite possible to have the 100,000 together in 10 years, whereby with a total sum of 400,000 we would even be at an equity ratio of 25%. If we only build at age 45, an even higher equity ratio would be possible. Given our incomes, I definitely consider saving 250€ a month realistic, but so far it’s all theory.

I am fully aware that an answer is quite difficult, but maybe it is possible to take some tips away and in any case, I would be interested in your opinion about this plan. Do I have a serious flaw in my thinking somewhere? Am I crazy? Or does it not sound unrealistic?

P.S. on the side: Is it still that complicated to be allowed to build flat roofs? My subjective impression is that it is still quite problematic – I am a bit afraid of that because for functional as well as aesthetic reasons only a flat roof comes into question for me.

Thanks a lot to everyone still reading, and I look forward to some answers. :)

Hello,

in your precise calculation you forget that building a house in 15 years will no longer cost 1500-2000 euros per square meter and that building plots will not remain at the same price. Just start saving, then you will see how everything will develop in the coming time (children, salary). With a monthly savings rate of 250 euros, you won't even have the incidental building costs saved up in 10 years.

Regards
Sabine

Hello [hier könnte dein Name stehen], first of all, welcome to being active here in the forum. You should supplement your assumptions as follows:

[*]Additional construction costs (approx. 40,000 Euros) are missing [*]as a price per sqm you should rather assume 1600-1700 Euros (current rate) [*]then you should assume an increase in construction costs of at least 2-3% per year until the start of construction [*]you should consider something similar for the plot of land [*]if you want to have your financing done by retirement, you should finance only 20 to max. 25 years later => more than 25% equity would be sensible

Maybe can tell you more about construction costs. A forecast naturally also depends on how your income develops further. A gross income of 3000 Euros is not much for a house. You should definitely aim for a higher savings rate. For the later financing, a rate < cold rent + savings rate is recommended.

Just start, yes. :) Whether we actually build or not, no idea. Saving and investing is planned anyway. I am currently trying to estimate the approximate costs and derive the necessary monthly savings rate for that. The 250 euros refer to one person, so in my calculation, it's about 500€ per month.

So does the equity contribution refer to a value excluding construction costs? According to my calculation, about 100,000 + 40,000 would be necessary at a minimum? Due to the 20-25 year loan repayment, one would furthermore rather come to a 35%-40% equity ratio, in our example therefore 100,000 (25%) + 40,000 (additional 10%) + 40,000 construction costs * 180,000 equity, which we should save? That would roughly be more like 500€ or 1000€ together per month that we would have to invest at least. Quite intense.

And yes, 3000 gross is not much, especially since I read here about many with much, much higher incomes. However, I have to revise this (unfortunately I could no longer edit the post). My girlfriend earns 2700 net and I 2000 net, though that is still very fresh. For her as a civil servant this will increase in steps, with me I have a bit of control over how much energy I put into self-employed projects, and I currently can’t foresee how far that can rise. Ultimately, this again has something to do with how much I want/need to save, because actually I do not need much money to live right now.

You also write, “rate < cold rent + savings rate,” but shouldn’t one rather calculate that with a cold rent we would pay for an apartment/house to rent? Currently we live quite cheaply renting.

So basically, in this thread it’s about formulating target goals and deriving a realization savings plan from them.

I mean of course "Baunebenkosten" as well as "Eigenkapital".

Best regards,
Mil ;)

Without sounding pedantic, a property is not mobile, first look at where your working life will take you geographically! Especially at the beginning of your career!! Therefore, the advice of the previous writers is to save and build equity for later. However, it should be a mix; only ETFs and stocks are too risky, we are not talking about a 20-year horizon here. Good luck!!