Buying real estate at an auction


#1

I have visited this house in Lausanne on Friday that will be sold an an auction soon. This quite a small house with 2 apartments (rented for about 2900CHF together) and another piece of land where you could build a house.

https://www.vd.ch/themes/economie/poursuites-et-faillites/ventes/detail-objet/objects/villa-de-deux-logements-et-terrain-sous-forme-de-vigne-1012-lausanne-964/

Off course if could be a good deal if the house goes for a low price, which is probably an unlikely event. I put it out there because those kind of objects are rare in the region. My calculation show that even for 1 million that would be a good deal as the constructible land is estimated at 400’000 CHF, that would put the house at (12 * 2900 / 600000) = 5.8% annual yield which I understand is pretty good.

Any thoughts? Are my calculation off? I myself don’t have large enough shoulders to put so much money on the table so I figured why not sharing with the community?


#2

Great, love this thread!

It’s paramount to also understand the condition of the house, the heating unit, toilets, kitchen and so forth if you plan on renting out. Add taxes into the equation.

Once ready to acquire, get your money bazooka loaded and ready for your best shot!

At auctions the best price is usually obtained by people who can pay it all in cash - e.g. by cash transfer but within a short period of time (…if you have the ability to get a flexible loan facility ready - then you can do it!) - you can settle the time consuming mortgage process later. However, better be aware of how much mortgage a bank would give to you beforehand. I have friends who bought multiple apartments and homes using this method at auctions. Sometimes the mortgage amount exceeded the price paid!

Have fun and let’s share more strategies to acquire real estate and making passive income from it in Switzerland here!

Cheers,
Matt


#3

Buying a house at auction in Switzerland is a tricky business and potentially dangerous but it can be rewarding as well.
Before going to the auction check the condition to fulfil in order to bid. In this case it seems that if the day of the auction you can put CHF 290’000 on the table you can secure your bid and then have 60 days to finance the object.
The debt situation is complicated as a bank and a private person are involved. Both will be very motivated that the house goes for more than CHF 800’000 in order to get their money back.
Do not expect inside to be in great condition, the owner is broke.


#4

If a bank is involved, usually it will bid up to the price it need to cover their loan. If they have lent 600’000 for example, they will bid up to this sum. If nobody overbids them, then they will take the building and try to sell it themselves. I remember during the last real estate crisis (during the 90’s if I remember well) the bank where I was working had dozens of real estate items bought at auctions.
In your case it can be a different case, like someone not paying his/her taxes or inheritance liquidation.


#5

I have visited the 2 appartements. There were in fine condition but nothing modern or extraordinary.