Purchase opportunity for a "too small" single-family house at a "too high" price 120 sqm / 550K

How certain is the 150k for the renovation? Is that your budget or is there already a cost estimate? I assume the heating itself and the roof rather not, but how is the latter insulated? What do you want to do in terms of energy efficiency and what about electrical and water? Which region? The house doesn't sound very cheap, so I suspect that new bathrooms will also cost quite a bit (and kitchen?)

For us, it is the preferred location and also one of the best locations in our city,

Sounds like a high land price and a low price proportion of the house.

You are downsizing and initially living on a construction site at a proud price just to live in a good location.

What is the good location? The best neighborhood in the city where Professor von Pups and Graf Hochnase live?

I would think twice about it.

Unfortunately, information about the rent to be paid at this point in time is missing. An old house remains an old house. At that purchase price, I would hire an architect to break down the renovation costs. We renovated a house from 1958 (standard, not luxury) and did not come anywhere near €150,000, and all that was long before Corona and the extremely increased material prices.

I would not consider a 30-year-old renovation; you might as well start from scratch. But one thing is also true: with your net income, you are already among the high earners, and it would be feasible.

If you feel comfortable in the property in the long term with the thought of having paid €700,000 for it, you can go ahead.

At these prices, in the real estate bubble I perceive, I would not do it.

It is as always in life: Whether this price is worth it to YOU is something you have to decide for yourselves. Personally, I see too many compromises in the floor plan here. The staircase alone is a no-go by today's standards and can hardly be changed. Besides that, 150 K for a really extensive renovation does not seem like a lot to me (for such an old house). On the other hand, the location simply cannot be changed, so a great new house somewhere else wouldn’t help you much either.

We currently live in about 130 sqm (one area - unfortunately no garden)

Plot about 300 sqm

We also renovated an old house and slightly downsized, similar to what you plan, even a bit less space. For us too, the lack of a garden was one of the main factors.

But: that’s why we moved to the countryside and now have almost 2,000 sqm of land.
Are you aware that 300 sqm does not bring much gain in the garden area?

Sometimes, from a compromise (location/green), you only get both disadvantages (price/size)...