Renovate the apartment and sell it later. Your assessment

Hello everyone!

I have read many interesting posts about financing here and would like to share my own case with you.

My wife and I want to buy an apartment in Hannover and/or the surrounding area. I am an engineer at Continental (4k gross, tax class 3), my wife will be a trainee at the hospital starting in April (1k gross, tax class 5). Due to my wife's training, about €500 less will come in than in her previous job.

Generally, we are moderately frugal; we save about €1000 - 1200 every month from our previous salaries. Since we have not been working for very long, we have about €13,000 in equity. We currently pay €640 warm rent.

We have looked at various apartments to "renovate" because we do not want to pay for the renovation service and thus the sometimes excessive value increases of real estate objects. These costs usually amount to €70-75k. With broker fees, ancillary purchase costs (together about €12k) and renovation costs (about €15k), I come to about €100,000 in loans that I would like to borrow from the bank.

By buying the property, we want to substitute the rent costs and expect a monthly burden of credit/household fees of about €800 - 900 with a loan term of 10 - 15 years.

Do you think this is realistic? Will we have enough to live on?

A very important point is that we want to move back to the Ruhr area in about 3 - 4 years and want to sell the apartment then. Is that worthwhile? Buy the apartment today with a loan for €100,000 and sell after 4 years renovated for €120,000 (net profit)?

Is it worthwhile?

Thanks for your advice/opinions/tips!

Honestly? Don’t put yourselves through the stress and rather live renting for 3 to 4 years and save equity. In 4 years you can still buy/build something in the new home.

In four years, the apartment will already be second-hand again. The increase in value is questionable (only TEUR 15 renovation is just sprucing up, but not a proper renovation). The positive thing is that you are forced to save = repay.

excessive appreciation of real estate properties

through renovation of the apartment or renovation of the building? I would not buy an apartment where renovation is imminent: either you have to contribute to the costs or the selling price will be drastically reduced later because of the upcoming renovation. Don’t forget the reserves you have to build up monthly.

If you want to gamble or speculate: always only with existing money! My opinion!

Hello,

in terms of income, I would say it fits. Why so little equity? (I assume you just started the job).

I also say don't put yourselves through the stress of renovating. In the end, you'll face selling vs. renting if you go back home.

I would do it, repay €100,000 with €850 per month and you will be finished in 10 years. If you stay in the current apartment for 4 years, you pay (assumed) €500 cold for the middle, which makes €24,000 in 4 years that are then gone. With 2% interest, it is about €12,000 (only interest that you pay for €100,000 to the bank, (with a repayment of 8.5% = duration approx. 10 years)), that means you have already "saved" the €12,000 (24,000-12,000). After 4 years I would rent it out and let the tenants "pay it off", and then you can still see what you want to do with it, sell or continue renting. That is a good capital investment that is relatively future-proof, in my opinion.