What can we finance?

I knew exactly that something like this would come now. I find it funny.

You are mixing two things here. First, the decision whether to acquire the asset house at all. It has a 6.8 percent secure return and costs 300,000.

Completely independent of that is the financing of the asset. That is a second financial decision, which by itself can have a positive or negative net present value. So, I pay 2 percent interest to get 6.8 percent secure return. So, what do I do? Hmm..

You can mathematically almost save on maintenance for 10-15 years. The first 5 years are anyway under warranty, after that it normally continues at about 2.50 - 3.00 euros per sqm per year. Was it 125 sqm? Accordingly then 350 euros per year.

To my knowledge, it is then about 1.50€/sqm/month and not per year. Not a small difference...

Now one can argue about which amount per sqm is correct, but it is definitely not 350€/year

I have calculated with conservative 2€/m²/month from construction.

I have also found recommendations of 1€/m² or sometimes even less. But what are 45000€ (1€/m²x125m²x12Mx30Y) worth in 30 years, especially when you also take inflation into account. If after 30 years you might have to do the roof, bathrooms, electricity, heating, etc., in my opinion, that won’t be enough.

And because this is the case, the returns for owner-occupied single-family homes are savings on rent and these are not dependent on the value of the house, but on the rent level. All these calculations with increases in the value of houses and plots of land are totally worthless for retirement properties in which you want to live yourself.

I deliberately did not calculate either the increase in value or the increase in rent, because you can argue about every percentage point there. Regardless of whether you base it on the value of the house or the increase in rent, both would only influence in my favor.

You are mixing two things here. First, the decision whether to acquire the asset house at all. It has a 6.8 percent secure return and costs 300,000.

Completely independently of that is the financing of the asset. That is a second financial decision, which on its own can have a positive or negative net present value. So, I pay 2 percent interest to get 6.8 percent secure return. So, what do I do? Hmm...

You can practically save on maintenance calculations for 10-15 years. The first 5 years are anyway under warranty, afterwards the standard opinion is about 2.50 - 3.00 euros per sqm and year. Was it 125 sqm? Accordingly then 350 euros per year.

That is, sorry, wrong from start to finish.

The only meaningful comparative calculation was already made by himself in #70. My criticism of it was that you can only calculate that way if you were going to sell the house. Moreover, I found the chosen sales time arbitrary because it lies, among other things, before the following:

But what are 45,000€ (1€/m²x125m²x12Mx30Y) worth in 30 years when you also consider inflation?
If after 30 years you may have to redo the roof, bathrooms, electricity, heating, etc., in my opinion you won’t get by with that.

You misjudge all these capital expenditures. Furthermore, the maintenance reserve is incorrectly applied.

The real savings through the house are quite simply to be seen. Tenant savings from the time of the last installment. Until then, you have been building assets and paying interest. The return on the assets until then has flowed into asset building.

The savings in %/year do not derive from paying 300k, but from the 300k + all interest + all maintenance incurred until then. It is further reduced by the maintenance reserves, which you apply completely wrongly and which, as has already been correctly said, are insufficient even with a conservative reserve at the first proper renovation.

The big difference compared to, for example, stocks is that in the - let’s say fifteen - years in which you use the tenant savings to build assets by repaying the loan, you do not generate compound interest effects, which run from the first euro and the first day on stock portfolios. This difference, which concerns the repayment period (which in the specific example with 15 years is already short), you have to additionally calculate. But you don’t.

If you seriously wanted to compare house and stock market, you would also not take the return on the equity invested, but on the asset value. Meaning effectively: The greater the value increase of the house, the smaller(!) your return, which you can use for comparison. (Why selling and moving into an age-appropriate rental apartment can ultimately also be so attractive if the house really holds its value well).

From these arguments, it can be logically deduced that you are engaging in window dressing.

The fact that processes are semantically separated here because it is useful for accounting does not change the reality behind the numbers. For these reasons I consider your post factually wrong.

According to Paragraph 28 II. BV, the maintenance reserve may amount to a maximum of 7.10 euros per sqm in the first 22 years.

Vonovia, which really has a building stock ranging from bad to very bad, spent 11.30 euros/sqm in 2016.

These are cases where the user and owner are not the same person, meaning the user doesn’t care at all about the wear and tear.

Maintenance costs can then be drastically reduced by performing tasks yourself. Instead of having a plumber come, for example, ordering a new faucet online and installing it yourself. I can’t really think of anything else that might come up in the first 10 years. But yes, with a tenant the plumber obviously has to replace the faucet.

If after 30 years you maybe have to do the roof, bathrooms, electricity, heating, etc., in my opinion you won't get by with that.

How do people come up with such numbers? Redoing electricity after 30 years. There are still houses where the wires inside were laid in the times of Kaiser Wilhelm. Friends of ours bought a 23-year-old prefab house, they just painted and that was it. And they don't intend to do anything more. The apartment we moved out of was renovated 22 years before we moved out. It was rented out again as is, without any measures. The gas boiler is the only thing from the above list that realistically needs attention within the first 30 years.