Realistic financing project?

Hello community,

Until now, I have only been a silent reader of the forum, but now I do have a question or rather would like to hear a different opinion on it.

Situation:
Complete renovation of the parents' house, built in 1984. Currently 155m².

I would like to take over the house and "convert" it into a two-family house. Ground floor for the parents, first floor and attic for my wife and me. Living space after renovation is ~230m².

We have now spent 1 year obtaining various offers and are currently at ~280,000 EUR for everything. Now the "big" calculations have started for us.

Net income:
4500 € / monthly excluding 13th/14th/15th monthly salary from me, excluding 300€ monthly from her because she helps out in her parents' inn.

The bank installment would be 1,250 EUR / monthly. This is currently only an offer from the house bank; we will get more offers, but I needed a reference value.

Equity:
Unfortunately only 40,000 EUR.

I have now created a monthly liquidity plan and have played through various scenarios (unemployment, child + parental leave).

The plan includes, among other things, the following expenses considered by me:
- Additional costs for the house (including insurances like natural hazard etc., electricity (160€/monthly), water, property tax, chimney sweep, heating oil, maintenance costs (0.50 cents/m²), etc.) ~816 €
- Living expenses ~1,300 €
- Basic fixed costs (including telephone, broadcasting fee, vehicle tax/insurance, vehicle maintenance, private insurances etc.) ~1100 €

Since I will completely relieve my parents by taking over, and they will have 0€ costs for the house from then on, they would be willing to pay me a kind of "rent" monthly. Currently they have talked about 500-800 €. I calculated with 500 EUR and with 0 EUR.

In the liquidity plan, including the rent, I come out above zero in almost all scenarios. Only in the scenario that I become unemployed, or she does not work at all after parental leave with a child, would we be below zero. Children are planned, but only in 3-4 years.

At first, my gut said "yes". Then you read and read and read... at some point, you get confused and now you have doubts. My banker said "no problem at all", but my liquidity plan says it could be rather shaky. What do you think – quite non-bindingly – about this?

If you have any questions, just ask.

Regards

Flo

€280,000 for the renovation of a 30-year-old house? Has a bomb gone off there? What else will be added with extensions / additional floors? Apart from that, I clearly see it financially in the green zone with your income. Unemployment is a hardly absorbable risk for everyone, otherwise no one would be allowed to acquire property anymore. Is the house paid off and can it be used as collateral?

I think - just as a casual remark - that you did your homework well and one cannot secure or avoid every eventuality in life.

Remember that rental income is subject to income tax and generates a certain amount of effort.

I see absolutely no financial problems there *thumbsup*

€280,000 for the renovation of a 30-year-old house? Has a bomb gone off there? What else is going to be added in terms of extensions/raising the building? Aside from that, I clearly see the finances in the green with your income. Unemployment is a risk that is hardly cushionable for anyone, otherwise no one would be allowed to acquire property. Is the house paid off and can it be used as collateral?

So all the windows will be renewed – currently they are single-glazed only. In addition, the windows on the upper floor (OG) will be floor-level. The house will get three new front doors (2 for the interior, since there are supposed to be separate apartments, and a new main entrance door). The current hallway will be renewed because the staircase from the upper floor (OG) will be extended into the attic (DG). On the upper floor, 3 walls will be removed; one also needs to be supported with a steel beam. The attic will be completely newly developed. The current boarding can fortunately be used for insulation. Additionally, a bathroom and plumbing connections will be added on the upper floor. Since there will now be more water usage on the upper floor, the current downpipe is no longer sufficient and must be enlarged. A new dry screed will be laid in the attic, as there are currently only wooden boards there. Lightweight construction methods will be used in the attic; behind the drywall panels there will also be wooden boards so that nails will hold properly :)

Back then, the water circuit was designed (for whatever reason) in reverse. That means the hot water first flowed upward. It takes 2-3 minutes until it reaches downstairs. That will now be separated, with minimal new piping on the ground floor (EG). The electricity meter (which would be in the lower apartment) will be moved into the boiler room and split (ground floor & upper floor + attic) so that billing can be done cleanly. Since the old screed on the upper floor is completely uneven, it will be renewed as well.

The €280,000 also included the interior finishing costs. That means floors, tiles, both including labor costs. Although we will cut corners on the floors and lay them ourselves. Also included are 2 pallet stoves including connection and the addition of a balcony terrace from the upper floor. For all measures we had offers ranging from the moon (600,000 euros) to the current one, which we think is the most feasible.

Calculated per square meter, we are at €1,217 renovation costs.

I just think – completely without obligation – that you have done your homework well and that you can’t cover or avoid every eventuality in life.

Keep in mind that rental income is subject to income tax and generates a certain amount of effort.

Ok, I will inform myself about that. Well, whether I have done "all" the homework, I don’t know. I tried to bring it somehow to a point. After information from dozens of forums, opinions, and specialist literature, I was eventually "full." At the beginning you think "yeah, it’s okay," but meanwhile it really has become a lot, and whether I was able to assess everything 100% correctly, I do not know. But I gave and give my best. You don’t want to just “wing it.”

My further plan is also that I put the additional income from the (13th/14th/15th month salary) and secondary employment, which I have not yet calculated, aside at the beginning. As it were a "rainy day fund." About €20,000. After that I would then use the additional income for special repayments.

Yes, the house has already been paid for by my parents and they would transfer it to me completely. We would have the mortgage re-registered. This has now been recommended to me by several parties in order to make a clean "cut" there.