Would moving outside of Geneva, but within reasonable commute distance, be a consideration? You would have a much better chance of finding either a much lower rent, or a freehold single family house that you can afford. Depending on the municipality, you might also substantially reduce your tax and health insurance bills (Geneva is among the least-favourable municipalities for both).
Of course, there’s also work/school/social life/personal preferences. But taking a look at competing offers (with regards to municipalities) can help give you a picture of what the market looks like.
Notary fees, with 1k per month saving it could take a couple of years to break even…it doesn’t mean that it’s not worth doing, but your time horizon should be longer than your transaction costs, if you see what I mean.
But that also means you don’t own this property anymore. So no more price appreciation/rental income from that.
That’s the opportunity cost at minimum.
Not effectively deploying capital you own always has opportunity cost.
Yes, this I got. But you would have to sell it to finance a downpayment anyway. So you actually have 3 options, and doing nothing is not a lack of decision, but a decision in itself.
There was a lot of research showing that buying in most of the cases is more expensive than renting (eg. Ben Felix). So I think it’s more emotional decision, depending on what you want to do/have in life.
From financial perspective, there is always, potentially huge opportunity cost. But if you are not comfortable keeping everything in stocks, maybe buying is an option for this? Maybe there are other, non-financial reasons?
Already a few years after buying (in 2021) I can tell you one thing - doing anything inside or around house, is crazy expensive here (and probably in most places anyway). So it is a “good” incentive to learn a lot of stuff and just do it by yourself, engaging companies only for more complicated stuff. Not sure if accounting 1% yearly for future renovations be enough .
Well I am ok with 100% in stocks. It’s just that I used to pay 1.5k for the same space for a flat abroad and now the prices in Geneva are so crazy that make me think all these scenarios.
It just feels very bad and weird paying 4k (or even 3k for lease agreements made years ago - I have some lucky colleagues). My brain tells me to try to “get rid” or “do better”.
Owning is a big deal and responsibility, I know as an owner (abroad).
I will have to reassess some things. Thanks
Indeed (side note that we still have a mortgage at a below 1% rate) but when completely paid off we expect 24k per year net (after costs and taxes in France).
You own a RE already and it has a net income of X
Your rent in CH is Y
NET cost , Z = Y - X
If you sell the RE, buy a new one. What would be the new NET cost? Is it higher than Z or lower?
As your main driver is cash flows, let’s ensure Z* the new net cost is actually lower. Otherwise what do you gain ?
Since we don’t know the capital appreciation potential of RE in CH vs other country, let’s just assume it’s same in real terms.
Another motivation one can have is to benefit from leverage that CH RE can bring for you. But that’s next level of financial jugglery and only results is real cash when RE is sold again.
To give you more food for thought based on real-life example. Our case - we were paying 3950 CHF of rent for twin villa with small garden. We’ve bought an individual house, in the same village, with a nice view and much bigger garden. We have renovated it heavily. Currently we pay ~2850 CHF for the mortgage and this is after we had to renew several tranches (we took over previous owners mortgage) at 2.1%, instead of 1.11% we got for the tranche which was needed on top of existing ones when buying (fixed for 10y). So, still nice, monthly savings of over 1k CHF. But we have just finished exchanging the windows which were not done during big renovation - 17k CHF. We need to fix leaking veranda on our own (very long story), another…15k? I hope that at some point we will stop spending that much money…but then something else will need to be fixed, replaced etc. And suddenly these monthly savings are not looking that good .
After the Covid pandemic, housing prices experienced an “incredible hike”, says Ursina Kubli, head of real estate research at Zürcher Kantonalbank (ZKB).
I am so lucky to have bought at the perfect time, just before covid.
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