A journey to buy a property in the most expensive zip code around Lake Zurich

Real Estate
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We are on a journey to buy a property to live in, and I would like to get your feedback on my real estate perception to evaluate it and improve it.

We live in a tax-friendly gemeinde around Lake Zurich. We definitely want to stay here and raise our family here. The proximity to the lake, to Zurich city, a good education system, public transportation, our community, and convenient access to the mountains make it a place to stay long-term, even as a base for retirement.

These days we are renting a 150sqm duplex garden apartment with a lake view for 5300 CHF/month for more than 3 years without any increase. The owner lives next to us, and we have a good relationship with him.

The reasons we decided to buy a property to live in:

  • We want to stay in this area.
  • Reducing risk: if for any reason we need to find a similar apartment right away, the market rate will be 7000-7500 CHF, and the buying price almost 3.5-4 million CHF.
  • We are looking to invest in our apartment (tailored upgrades)
  • We want exposure to the Swiss real estate market.
  • Leverage the 2nd pillar (buy-ins) and low and fixed interest rate options.
  • There is no more land, and old farmer families are selling their last land to developers.
  • Any available house that can be torn down will be bought by real estate developers who will buiild 3-4 apartments, increase the standard and the price to more than 35,000 CHF per sqm.
  • There is a lot of money in Switzerland (local and expats), and this money is still pouring into real estate.
  • International schools and the low tax attract wealthy people.
  • A severe crisis in the housing market would mean a local & global crisis. So, in any case, alternative investments (even pension) will go down.
  • We are in a printed money environment that keeps pushing inflation. 3 years ago, I had an offer for a garden apartment for 2.7m that is now worth almost 4m.

Our options:

1. Buying the property that we live in.

We have a good relationship with the owner, but we are not sure how to approach this. He is very Swiss. We don’t want to trigger something that can impact the rent, as we are paying way less than the real market. Any ideas?

2. Buying a new development that will be ready in 3-4 years.

I have met real estate agents, developers, lawyers, mortgage brokers, and bankers with the idea of being the first to learn about any new development and buy it when it’s still in planning.

  • But, Not really a discount, even if you know the owner, maybe 10% in some circumstances (very at the beginning or very late). Maybe more options to choose from, which theoretically gives some advantage. Also, the apartment will be worth more when ready. But in any case, no discount for being a friend, only if you are part of the investment.
    Anyone have other experience?

3. Online/Public market.

It’s a regular market when it’s either a huge premium for a final-stage apartment at the highest level, market price standard apartments with a bidding war, or meh apartments/houses.

From time to time, there are opportunity buys, but they are rare. For example, a Swiss old man who wants to sell the house in asking price to the family that suits the house more than who bids more, but that’s very rare. Also, inherited apartments that are being sold at market prices from a few months ago. Another case: a family that divorced and needs to sell it right away.

Anyone with good experience finding great opportunities in the online market?

4. Off-market. (This is our main approach these days)

We are connecting with locals within the Gemeinde, trying to activate the network to see who is selling, why, and when. Trying to get on the waiting list, maybe to give a good offer before it goes to market.
One of the opportunities we encountered is that our elderly Swiss neighbor, with whom we have a good relationship, may want to sell her house after she moves to an elderly home, to a family that won’t tear it down.

Has anyone seen a case like this, of an elderly Swiss person selling a property way below the market?

Again, what leads us is that we want this decision to also make financial sense.
I would be glad for some input on my perspective.

Thank you!

1 Like
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Very good idea to look at numbers first.

Whatever you buy will be more expensive than your actual renting situation. I would try to stay as long as possible. Maybe even try to get more close to the owner, invite him to a “fondue” if he likes that. Mention in joke language that you like it that much there that you would even consider to buy it if needed.

I don’t think you can get real estate way under market value. Actually you may be able to get it cheaper in the future but that means only that the market value goes down. That can happen for a lot of reasons and most of those reasons are still completely unknown.

Prices may continue to go up, there are strong cases for that scenario. I think we just have to accept that nobody knows the future.

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I think owner’s decision to sell doesn’t really depend on your decision to buy. Most likely owner invested in the property for long term perspective and wouldn’t know what else to do with money if they suddenly sell their asset.

The only issue I see is that if you ask them about selling property, that might trigger them to think about selling. And they might start looking for options. They will definitely try to max out the value

Thus putting you at risk as tenant

-//

Regarding other points-: My recommendation would be to not think that you can get a prime property in lake side of Zurich at a discount. This is not normal in Switzerland. Think about such properties as luxury goods. You might get lucky but most likely discount would be fictional or just an offset of typical real estate agent commission (if you happened to buy off market directly)

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Sounds like a path worth pursuing, by e.g., asking the person. If (s)he agrees and potential heirs exist, maybe it makes sense to involve them to avoid problems later on (and/or get legal help).

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Thank you, I’m trying to do that.

I totally understand what you are saying, and it makes sense.
But my mindset is that luck is an outcome of opportunities, and laser focus can help in catching, and even creating opportunities. On the other hand, I don’t want to be delusional.

I wonder if anyone here has ever put that energy into real estate and gotten outstanding result.

The owner is a real estate developer who is still working past pension age. On one hand, he surely understands the market value of renting/selling the property. Regarding the rental, they (with his wife) ”accept a premium” to get a good neighbor next to them.

I wonder if anyone has had an experience with something similar to that, as I have heard this approach a couple of times.

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Sounds like your best source of information is actually your landlord. He should be able to guide you the best :slight_smile:

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Take what I write with a grain of salt as I have no close knowledge of the area (and people’s outlook and social habits can vary from an area to another, not to speak about the real estate market).

On top of what others have said, in my experience, Swiss towns are small worlds. Especially if your landlord is connected to the real estate business, if you are poking around to see if there are opportunities, chances are he’ll know it. If you let him in the dark, that may worry him, as he might fear loosing a good tenant.

As cubanpete wrote, I would invite my landlord over and play frankly with him, that I am considering buying, I really love the place I live in and maybe they would consider selling it? As a real estate developer, he should appreciate your intent.

I would also check if there are heirs or other family involved as that could influence what he is willing to do or not with the property. That’s a question I’d ask my landlord too while he’s sharing the meal I’ve invited him to: “what are your long term projects for the property?”

Regarding approaching potential heirs, my steps would be:

  1. invite the landlord alone (with his wife/partner if he has one), discuss your prospects and their intent, ask if there are people in their family that would have an interest in the duplex.

  2. if they are open to sell the property, have them probe their family/friends if they think it’s warranted (better let that decision to them).

  3. only in case they seem to show an oppenness to sell but are telling you they’ll keep it in the family and don’t want to move further on this, ask if you can get the phone number of the people involved and then invite them for dinner to see if you can convince them that you buying it is good for them. There can be an emotional aspect to it so I’d want to show that I am taking good care of it and that it will be best kept and used if in my hands than if sold blindly to strangers on the market or kept for financial value alone.

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You have summarized it very well and your objectives are very clear.

In reality, you have 2 options if you want to stay in the area, buy an old, needing desperate upgrade apartment and renovate it yourself. You should aim for prime location, ideally complete renovation so you can add a lot of value for “cheap”. From my experience not a lot of people are interested in these apartments and the money invested in the renovation return to you 2x, 2.5x at minimum in such desirable location.

If you have the cash for a new build, this is also an option where you have almost 0 hassle, but it will take some time before you start building equity as opposed to a renovation because you will be paying a premium even with the discount.

There are 2 ways to make a lot of equity quickly in RE in Switzerland, either you renovate or you build it yourself.

I personally know a few stories of people buying houses on the cheap because owners wanted to see another family living in their house, but these are rare and do you really have the time to wait around?

I wish you luck in your endeavor, you could as well take a look at life annuity properties but with small children you need your place sooner than lather.

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True, he holds a lot of insights and real estate opportunities. But, I decided at the beginning to take a strategic decision: say the minimum needed and talk less, especially about investments.

He knows where I’m working and my past base salary, but I have decided to play a small solid fish.
He is not aware of our actual income, wealth, or any fancy early retirement plans.
That was maybe the reason for not getting any increase in the rent while the rental market really skyrocketed these years.

But, that can change now as I want to ask about the possibility of buying the property.

Totally makes sense. Right now, we are still exploring only the first option.

We do have time, we are not in a rush. We are in a good place, with the right price.
Also, we are in a good relationship with our Swiss neighbors, not because we want their properties, but because we really like living next to them.

With that, of course we want to stay here, and if I don’t buy the next property available, another real estate developer will buy it.
But, I need something like an agreement or contract that I can build on. Right now, we have a verbal statement, which shows intent, but doesn’t guarantee anything.

Also, how is it possible that someone would give a 6-8M plot with an house for half of the price because he loves the people? Did you encounter this?

Thank you, it’s the first time I’m hearing about this. I’ll check that.

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An experience I’ve made is having a bank guarantee ready (after discussing with banks and selecting a suitable one). That’s how I got my house after the first (preferred) buyer was not able to come up with the financing. I also heard that at prices upward of 3m, homes are considered luxury items and therefore banks require 30% own capital.

Good luck with your strategy!

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Hello,

Looking at these prices I’ll assume you’re in Zollikon Küsnacht kilchberg rushlikon (further I think it’s overpriced ) I know we don’t like speculative view in this forum but I think after the last Trump move the era of cheap interest rate is over. And you should move fast if you want to secure something descent. With RE you’ll diversify which is great and being leverage in a least volatile asset. Apart from this I think you have good strategies to find a bargain keep looking I’m sure you’ll find.

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