Actually I am not dreaming or suggesting this sort of monthly gross rental yield is realistic in Switzerland and I do understand that things are different here. My own annual rent is at a 0.25% monthly yield to my landlord in Basel and I would never buy my house. Operating costs in Switzerland should not be drastically different to those in the US in terms of upkeep/insurance/prop taxes, meaning that a 1% monthly gross yield would typically get eaten up by at least 30-40% in operating costs so the idea behind the rule is that you should expect to net out 6-7% max on the MARKET VALUE, not the initial DOWN PAYMENT. The Canadian market (where I am a landlord) is currently very similar to Switzerland. Rents have not kept pace with property values and landlords have a lot of equity (or debt + equity) sitting in properties not working optimally for them. So we are in agreement that this 1% monthly gross yield is not a realistic expectation in Switzerland.
However I do not agree with using a different ‘yardstick’ to measure the feasibility of a rental-landlord investment in Switzerland because the opportunity cost (next best investment) appears to be, on this forum, some combination of US or World equity/bond ETFs and I have seen some (at least one) Mustacian post that he/she would not be willing to invest more than 3% in Switzerland investments overall. I could see measuring rental properties here in a more conservative ‘Swiss’ way if we were just comparing those to an alternate Swiss investment/REIT but we are not. Isn’t the bottom line then that Swiss real estate is not a good place to put 550k (whether leveraged or not)? Is 13k or even 18K a good return on 550k invested? Seems like a lot of ‘dead’ equity’ sitting around to me.
In fact I think the reason ElMago did not get much advice on this investment is because most Mustachians here are not ‘in’ rental property investments here in Switzerland. ??
The whole argument becomes moot anyway I suppose, as this investment was gifted to him, albeit with a few strings attached.