Save more or buy???

We have 300k EUR equity and 500k loan. I should have rather bought a nice apartment with the equity and taken out an 800k loan :rolleyes:

What bothers me is the consistent generalization in these statements. The fact that you invest 800k€ in your own home is by no means a guarantee or a 100% calculable risk that it will pay off, but it is also subject to certain conditions that can change.

Seriously: I broadly claim... it is not a good idea to buy a rented apartment with a loan if I am planning to build a house myself!

The apartment has already been bought, therefore it is a completely different (valuation) situation. Apart from that, your general statement is easy to refute, see above. I also know people/properties where the "to borrow against" decision pays off, even with properties from 2014/2015. Whether you do that depends on the respective situation, the individual properties, and also personal preference. Here – and I repeat myself gladly – the decision in favor of the apartment was made long ago and it cannot be reversed on short notice, nor can one pretend the decision still has to be made.

Whether it pays off or not... it is in any case a completely incalculable risk.

That statement is utter nonsense, sorry. Honestly, I also lack the inclination to look for a kernel of argument in such statements.

Dirk Grafe

Here – and I gladly repeat myself – the decision for the apartment was made a long time ago and it can neither be reversed in the short term nor can one pretend that the decision still has to be made.

I agree with that. But my first statement was also "The purchase was a mistake"..not "the purchase is a mistake" ;)

Half of the money goes into land and additional costs. The house will be relatively normal without luxury..

At the Erfurt Anger. :D

I agree with that. But my first statement was also "The purchase was a mistake".. not "the purchase is a mistake" ;)

Again: You know far too little about the property to credibly support this statement. Your statements are not based on a review of the individual property, but on your personal experiences.

If we can believe the information from , he paid €42,000 plus incidental costs (my assumption 15%) in 2014 and currently generates rental income of €3,500 p.a. If I continue to understand him correctly, the income from the garage is added to this.

Just the ratio of annual rental income to purchase price is, to put it mildly... pretty good... it is €48,300/€3,500 = 13.8. If the garage is still included or the garage income is not yet part of the €3,500, then it gets even better, the value would fall to 12, maybe even to 11.5.

Assuming the above figures are correct, this is a (strong) indication that this was without exaggeration a good purchase decision. If one continues to assume that the statement about the comparable apartment for about €59,000 is plausible, then after 3 years over €10,000 net profit would have been made from the value increase alone (€59,000 - €48,300 = €10,700), hence a pre-tax profit/ROI of +22% in 3 years. Subtract the loan costs and (if sold before the 10-year period) the taxes... then there is still a figure left that can be seen.

My question therefore – what leads you to the statement that the purchase was a mistake based on these data? I believe the €59,000 for the comparable apartment is rather overestimated (although possible), but that the purchase – always assuming the figures mentioned are correct – cannot be generally considered a mistake and that the apartment should therefore be held at least until the end of the speculation period in 2024.

If you come to a different assessment, I would be interested in your detailed argumentation.

Regards
Dirk Grafe

then there is still a number left that can be impressive.

Exactly this number* should be compared to the costs of the additional financing over 42k. The difference is the profit/loss of the purchase. BUT: In the meantime, he bears the risk of the rental apartment (maintenance, laws, rental nomads, homeowners' association).

There are certainly scenarios where all this makes sense... but that is probably rather the exception.

* Costs for administration and reserves deducted?

Non-transferable ancillary costs including reserves amount to 53 euros. Garage is rented for 50.