M, 26, making the mistake: land inheritance, new build or buy existing house?
Hi there guys!
I am a 26 y.o. male, living in Italy, currently on a 9to5 job, and I'd like to fix a big problem which is finding a place where to live, in my city, since I really would like to leave parents house. (Leaving parents house in Italy it's usually done at 30/35. Which age in your country?)
Given this, I own those RE propertyes with my brothers; I'll explain in numbers and shapes:
Lot"a" = 1 house 80m2 + 1 attic --- (I own 33%, the rest my 2 brothers) --- Actual Value = 200k --- Actual Rent Revenue = 6k/y.
Lot"b" = 1 house 110m2 on 400m2 land + 700m2 land (can still build residential of 300m2) --- (I own 33%, the rest my 2 brothers) --- Actual Value = 250k+100k = 350k --- Actual Rent Revenue = No rent.
This is a very important point: Me and my 2 brothers have a bad social relationship.
Given this, I've thought those to be the options to solve the need to find a place to live:
1)
[u]Project:[/u] We could build 3 residential houses on the 700m2 land of the Lot"b". This means "case a schiera" design, made of 3, 80m2 each. 1 for me, 2 for my brothers.
[u]Total cost:[/u] 80sqm*1800€/sqm=[i]€150.000[/i] round. (I will need a 30y mortgage)
2)
[u]Project:[/u] We could build 3 residential houses on the 700m2 land of the Lot"b". This means "case a schiera" design, made of 3, 80m2 each. 1 for me, 2 for my brothers. In this case, I would keep 50sqm for me, and 30sqm to make a studio apt with bathroom in order to do short term rent (plenty of tourists in my city which also have airport+port).
[u]Total cost:[/u] 80sqm*1800€/sqm=[i]€150.000[/i] round. (I will need a 30y mortgage, but in this case I am also be able to get some income from the building.)
3a)
[u]Project:[/u] Sell everything to my brothers for "x" amount of money (which should be around 100k), and look for a land where to build a house.
[u]Total cost:[/u] (500sqmLand*100€/sqm)+(80sqmHouse*1800€/sqm)-(soldLandMoney)=(50.000)+(150.000)-(100.000)=[i]€100.000[/i] (I will need a 20y mortgage. I could replicate the renting scheme done on 1st point and able to get some income from the building.)
3b)
[u]Project:[/u] Sell everything to my brothers for "x" amount of money (which should be around 100k), and look for an existing second hand house.
[u]Total cost:[/u] (80sqmHouse*1800€/sqm)+(80sqmHouseRenovation*600€/sqm)-(soldLandMoney)=(150.000)+(50.000)-(100.000)=[i]€100.000[/i] (I will need a 20y mortgage. I could replicate the renting scheme done on 1st point and able to get some income from the building.)
This is just what it comes to my mind, I'm sure there could be more options.
And point 1st seems to be really difficult for me to put in practice, give the bad social relationship we 3 brothers have.
Hey there! Canadian/Italian, and I think if you do not have aa good relationship with your brothers, it's always best to divest and look for another opportunity. (I've seen so many inherited properties get tied up in litigation for years.)
I think you could look for something used with the 100k, and potentially take advantage of 110%, or ecobonus.. There are a few federal and provincial programs to help with the cost of renovations if your property qualifies.
You could also likely find something a bit bigger, and renovate as you save the money to do so. I'd try to create as many short-term studio apartments as possible within the property, live in older parts of the building and rent out the renovated units as soon as they are finished.
Where are you located? (Just curious)