Renting out a condominium, second loan, financeable over €450,000?

Hello everyone,

after purchasing a condominium last year, we are still looking for a single-family house or a semi-detached house, because the apartment is only intended as a temporary solution for 3-5 years (see other thread). However, prices in this region are now rising more strongly than expected, so we are slowly wondering whether our original plan can still work out. We would like to rent out the condominium. After deducting all costs, the apartment should cost us a maximum of €100 per month; currently, we have a remaining debt of €125,000 with a value of about €195,000. We had actually set our limit for the house purchase at €450,000, but we realize that we will unfortunately get nothing under €500,000 (plus incidental costs) and might also want to build new. Thus, we need a loan of at least €400,000-450,000.

Maybe some data about us:
Who are you?
Married couple from Lower Saxony
How old are you?
Both 30
Are there children?
2 children (4 and 1), third child planned in 3–5 years.
What do you do professionally?
Employee in IT at a large corporation and "housewife"
How many hours do you work?
35h/week
Income and asset situation:
What income do you have (gross/net)?
Sole earner with €6200 gross (€4200 net with tax class 3), plus €10,000 gross (about €6000 net spread over several months) from contractual bonuses, allowances, etc.
How much child benefit do you receive?
€438
How much equity do you have?
€130,000, emergency fund of €15,000 not included.
Expense situation:
We kept a household budget book for over 3 years. Our monthly surplus was €1000-1200; the parameters have not changed significantly since then.

With a €1400 installment, we could repay a €450,000 loan over 30 years. The installment plus reserves (€400) would be manageable for us, so we would have everything paid off by age 60. In the current phase as sole earner, there are of course no huge leaps possible, but salary-wise, it should slowly but steadily go up, and my wife could probably earn a small part again at some point.

How do you assess the situation? Am I being too optimistic or is it quite realistic?

After deducting all costs, the apartment should cost us a maximum of 100€ per month,

How do you come to that assessment?

What is the annuity of the condominium at which annual repayment rate?

How much rent can realistically be achieved for the condominium?

After deducting all costs, the apartment should cost us a maximum of €100 per month; currently, we have an outstanding debt of €125k with a value of approximately €195k.

Please also note that the repayment portion must be taxed from the rental income. That can get quite expensive.

So the calculation is annualized and, to my knowledge, takes all parameters into account. I have simplified the calculation for the tax payment:

Achievable annual cold rent	8400
Annuity	-6000
Non-allocable costs including WEG maintenance	-1560
Interior maintenance (estimated)	-1200
Tax payment (2300 taxable after depreciation and maintenance deduction)	-850
Total	-1210

The annual cold rent corresponds to what we ourselves paid until a year ago. Surely, the issue of vacancy is still missing from the calculation. However, a longer vacancy is not to be expected; the property is well located, has a good floor plan, a terrace, large cellar rooms, etc. For unforeseen events, of course, we would need to build in a certain buffer.

Reduce the repayment rate to a maximum of 1.5% p.a. Just have a talk with the financing institution.

The taxes should not weigh quite as heavily. But better to calculate conservatively. That’s fine.

I would structure the single-family house financing to end at retirement age 67 (without [SoTil]). If you want to finish earlier, you can make special repayments if it fits.

Then you’ll have a little more breathing room.

Please also note that the repayment portion must be taxed from the rental income. That can get quite expensive.

You can still deduct the depreciation and other costs.