@baldur I tried to calculate the ROE for my current rental apartment in Zurich, valued roughly CHH700’000 for 2200 / Month. Credit Suisse gives me a 9% ROE.
Then I use my own spreadsheet that take taxes and costs, salary, special taxes and I get no more than 6.1% ROE which is comparatively a lot less interesting.
Do the 2200 / Month include costs for heating, etc. (F: Charges; D: Nebenkosten) ? If so, how is it without them ?
I excluded Nebenkosten in my calculations as I believe you should.
Then your flat has a net rent return of 3.77%. Not bad at all ! Zurich city ?
Thanks for the answer. However, I am still confused here and I think that it is mainly because I do not understand what is equity in this case.
Hi Guys,
Could someone share a spreadsheet with the calculation for buying real estate in switzerland? I mean including, 1% Nebenkoste, Taxes, etc.?
I’m having some trouble figuring this out. 
Thanks
Gross and net return calculation:
Here is a very rough idea of a spreadsheet for calculating the ROI of a property
I am not taking in account things like inflation, local taxes and such…
Tell me if I am completely off on this… Did I forgot something important?
Hi,
In your calculations, I think you did not take into account all payments, for such a property, we have around 4000CHF per year (water, heating, PPE management, reparation funds, cleaning, snow removal, check and replacement of lift to doors, gardening…)
But I still believe it is good to buy.
On being fixed, I would say, I bought several appartments in my life, and was always able, either to sell it or rent it when I needed to move.
Value always raised, but I think even if the value is not good to sell it you can always rent it, as we say 3 factors for real estate investment: location, location, and location.
Dear All,
I have a quick (and probably simple) question. Maybe it has been answered before in some thread but I couldn’t find the same.
I am looking to buy a house and have shortlisted an interesting property. It is a flat terraced house in the middle of a row of houses.
According to the property sale documentation, the following details are given for the sale area:
Total Wohnflache: 150 sq metres
Total Nutzflache (untergeschoss): 80 sq metres
Total Wohn/Nutzflache: 230 sq metres
Question is: Considering the average price per sq. metre in the locality, is the estimated house sale price calculated on the basis of the Total Wohnflache only OR the consolidated Total Wohn/Nutzflache?
Thanks in advance for your responses.
It should be the living space (Wohn) + a percentage of Nutzflache/Terrasse, I don’t remember if it’s 50% or less.
It is a good beginning. Amortization should be for what you need to pay back for your mortgage (1% is realistic, but it depends on what the bank asks for). Then add 1.75% of the gross value for property taxes, insurances, frequent repair, infrequent repair (the roof every x years). Add more in case of complex settings like flat root, lift, etc. . Set 3% interest rate, to be a bit safer - it is still low by historical standards, but probably the SNB would not let mortgage rates go much higher (otherwise, there will be a collapse in real estate and everything else for sure).
I believe it is a mistake to only consider money when it comes to investing in property you want to live in. It will be your living space with all things around that. You can not just disregard those things and measure only mortgage % etc.
I know this is a usual one to one comparison before you make such decision but do not let yourself to be misled by fancy internet readings.
There are some rule of thumbs but all others you will work out and there is a natural sequence in the process you will not change.
Long term perspective thinking and planning for years ahead are important in this subject. Taking monetary market experiences from past one decade only is not a good idea. There are plenty of risk factors, probabilities in taxation and political environment not to talk about sustainability progresses.
But again, you will be living there, going home each day, let your kids go out playing, talking to neighbors … those are more important then money. If those are fine and you do not lose a penny, it is already a positive investment and probably more lucrative than it is just looking like from the figures. You may say that „but that you can do by renting as well“ and you are right and wrong at the same time. Yes, it is important to take the same things in account by renting too but the „living somewhere“ thing is not a free choice each day. You have to live somewhere. That you can not put on measure each time you wake up. When you decided where to live then you can play around with the question of owning or renting. Not another way around. So you will not decide upon renting or buying and then deciding about the where. Your personal preference must be considered before and probably your professional life or carrier pass is also drives you to a place to live. Then you can hesitate in between renting or buying but not vica verse.
Probably the buying/renting is not even an exchangable option at a certain place you chose to live. You may have a limited budget what will not allow you to make a good purchase of property. If you have unlimited money or your budget makes you free to make such decision anywhere easily, even before the decision of the place, I believe your options are not going to lead you to the dilemma of renting or buying at all. With that amount of money you can make more choice and create your own portfolio of your welth anywhere.
With renting it is easier to change the place where you live if the neighborhood isn’t a good fit.
Very good clip from the Economist (the current issue’s theme is home ownership). Switzerland features heavily.
Honestly, the thing about housing policy that most shocked me (and that I approve of) when I arrived here is that capital gains are levied on housing profits, but not on stocks. From my point of view, Switzerland has, on the whole, struck a good balance on housing, recognising that where people live shouldn’t be treated the same as any other investment instrument.
That is the most common short term thinking bias you can hear from people. After a while you will lose interest in moving away to the next place. Please try to think abot that your life will change in many aspects and you want to have something what gives you stability, support you live over different kind of problems, and not least your life is going to move to that status when not only the next visit of the next pub/cinema/boy-girl/andwhatsoever will make you happy but other things. In CH you can also live very long time at the very same place, it is not a bad thing anyhow, paying only rent, however once you really think about long term, that brings you to risk of increasing rent due to renovation of the house, and at the same time you will have less income because you go to retirement.
Well, comparing Singapore, Romania to Switzerland saying that Singapore and Romania is undeveloped and make you think that it is because the house ovnership is high in both Singapore and Romania. Wow, such a misleading demonstration. Another rediculous example that home owners who live in their homes stop further developing their erea. It is quite opposite. They do develop but they do not make it unattractive by building too much and they do not want to move too many people there because that makes negative impact on life quality. Of course we need homes for the new generation too, but it is not granted to anyone for free. This video is more a propaganda against govermental support of home ovnership. Nothing more. It will not give you any support but just talking sily. Home ovnership is not a mast but not even an evil. You have to think over many aspects of life and make your own decision. And not because it is supported by any government, but because of your best interest. In Switzerland Insurance companies, Pillar2 funds and many, say big investors make money on hausing business. You as a single person can not just go out and make the same. You are lacking of skills, knowledge, practical capabilities and routine to make it right. It is not enough just search the net and buy your dream home and make money on it. You will more likely fail. Not because of the government made you fail, but because of your own mistake. E.g the former East block countries, Romania, Hungary , Poland, they all introduced CHF based mortgages after the Russian gone hme from their lands. People bought homes/cars/whatever like no tomorrow. And suddenly the CHF went sky rocketed. Large portion of people could not manage their mortgages anymore. They started blaming everyone and most the government, but not themself. Still this subject did not change the population and their cultural heritage of home ownership. So yeah, think twice before you buy but dont blame just because you like renting more over buying. Renting is important instrument in any economy but it is still not the cause and it is not the medication for everything.
I think you need to watch the report again. Maybe with subtitles on?
sweeping statement .
but I am happy waiting for your interpretation, so I can learn something
How do you interpret that “the biggest Economist policy mistake in the west is homeownersip”. “its time to build entirely new housing market, one that actually Works” Who is going to build that for you?
Blaming me for lacking of language skills is ok, I can accept that, especially when I know myself.
But still the message of this video is just nothing else but propaganda against government of usa specially trump in it, Just telling that the housing crisis was generally under other leadership, but it does not matter for political interests. Also Blaming uk economists. It does not really telling you the reality but only tipical today well sounding phrases.
And Im only challenge the video and I am telling how wrong they are about their conclusions, not you in person. But I know videos are more fancy today than reality
Well, first off the Economist is a classical liberal publication, around since 1843 (go on their website and read the associated articles if you don’t want a video). They are not advocating for governments to get directly involved in building housing. Also, they didn’t say Singapore is an undeveloped country (it’s not) - they used it and comparatively underdeveloped Romania as an example to show that high home ownership rates don’t necessarily mean high levels of economic development.
They do, however, make a very serious point that frothy housing markets and the do-or-die quest for home ownership (the “American Dream”) have some very negative economic side effects. Furthermore, government policies that are meant to promote home ownership often end up inflating prices and adding more systematic risks to the economy. For example, where I am from, capital gains are levied on everything except your primary residence. First time homeowners can get grants from the government to buy a house. And you only need 5% down (and banks are fine with you spending 50%+ of your income on mortgage repayments). On first inspection these may look like interesting policies but what they do is inflate prices and heighten the risk of runaway problems when the economy takes a hit.
Perhaps our different interpretations of the matter stems in part from my reference point being North America and yours being Eastern Europe? I do believe that part of the issue is societal and part is policy-related.