Foxstone as an investment vehicle

Real Estate
61

9% is gross yield (annual rental / purchase price) without appreciation.

these days I guess it is difficult, but I still found 6% yielding properties (bought in Kt. ZH in 2012). I even found one that was 9% but that was pre-covid and also a 10 apartment block so too expensive for me (BS).

I lived in London for 10 years and talked to a few of my landlords (and also on a landlord forums) who were professional landlords. one of them had 10% yield as the yield she would sell at as it was then too low (conversely, value of the property high).

sometimes i think that those familiar with the markets only after the dotcom crash and have only known loose monetary environments and think that 5% yields for property is high could be in for a rude awakening. but then i think, maybe not, maybe they will all get ‘bailed out’ via inflation/monetary debasement.

I bought my current home in BL during covid and ‘overpaid’. I guess around 5% yield when factoring the benefit of a 0.75% 10 year mortgage, but for me, this was consumption and not investment.

If you want to invest, then be patient and don’t buy until there is a good deal. I had alerts set up and was keeping my eye on the housing market daily between 2011 and 2021. In those 10 years, I found only 9-10 properties that I would be worth buying from a financial standpoint. I made offers on 4 and bought 2.

yes, finding good deals is difficult. esp. post-covid. and people moan at me, but then I ask them, how much effort have you put into your search? do you have alerts/subscription on all the online sites? have you registered your interest with every bank in your area? do you look out for signs out and about and bike around your area for deals that don’t show up online? or read all the local newspapers for property sales? (last 2 are really best as they have limited visibility and reduced competition). i saw a great property just last week in an ideal location. the only advert was a sign staked into the garden. the owner obviously wanted it to go to someone local who is in the area. have you asked your colleagues? do you have an email signature saying that you are looking for housing so that everyone you email knows?

as with pretty much anything in life you often get results commensurate with the effort you put in. too many people but too little effort and expect exceptional results.

3 Likes
62

I think the next few years might give some good opportunities for properties if:

  1. continued inflation and high interest rates put stress on people and contain assets prices; or
  2. the long-awaited recession finally arrives and asset prices collapse
63

Those from pre-2020 are going around 7.0-7.5% in my Crowdhouse portfolio (6% yield + 1% safety deposits) as a fire-and-forget (management included, which is a huge plus) I think.

These days with SARON it’s only about 4-5%, 5.5% tops on the platforms. Some of them started to “blend in” the appreciation as well over time to make the deals more attractive to retail buyers, which I think is a bad practice, but again it’s not my business. :slight_smile:

I’m not sure the property market will be having any significant appreciation in the next 3-5 years, so Swiss properties are more of a security now than netting investments.

64

Isn’t there a legal risk there, in case a tenant contests the rent as abusive? As I understand it, 9% would reach the threshold, but there are many exceptions.
Or in practice, the risk is actually very low?

65

Are these gross rental yields = (rent achieved after vacancies) / (current market value of property)?

i.e. before leverage? If so it is higher than I was aware was commonly possible in Switzerland.

66

This is return on (initial) capital, with vacancies, repairs, and ofc. leverage (mortgage on top), all admin included, without appreciation → noone knows the current market value as properties are not measured every day :man_shrugging:

(disclaimer: this is not with Foxstone. I have one with Foxstone over 8% but that is for commercial use and thus a different profile)

67

For reference, you can buy the debt of distressed REIT MPW for a 10% - 13% YTM.

68

I know, I own quite some stock of them with 20% yield :money_with_wings:
But it’s a different category of investment.

2 Likes
69

Just for my understanding

7-10% yields are based on Rental income / Property value ?

Or

We are talking about following?

(rental income - mortgage premium) / ( initial capital from buyer )

I am just surprised that such high yields are actually possible in Switzerland.

70

As an alternative of the crowdfounding or direct RE investment has anyone thought about invest in RE Funds with leverage? (Lombard or Margin Loan)

There is no wealth tax nor income tax on most of these funds and max drawdown normally around 25%
The max debt they can have is 30%
You can find some residential fund with a yield of 3% and I am sure you can secure 5 years Lombard loan by a swiss bank for less than that. Worst case IB offer 2,75% margin rate.

Any thought about this idea?

71

though in recent years and esp. after covid it is very hard to come by.

I haven’t really looked at property much post-covid but I suspect to get similar yields, you can’t just buy as-is any more unless you are very lucky, but rather might need to unlock that value/yield in some way as RE has become very over-priced.

on this metric it would be closer to 20%. on my first property I bought in Switzerland, it was around 20% on this metric and so I got my initial capital back out in 5 years.

72

Thanks for the feedback. Living in Zurich I heard numbers like 2-3% max for rental yield and I just assumed that’s normal.

Will research into this for sure

73

It is for 90% of properties. Like I said, I was looking constantly and only found on average 1 suitable property per year. Patience and strict standards is the name of the game.

3 Likes
74

J’ai également commencé à investir dans 6 projets pour le moment.

75

Bonjour, j’ai commencé à acheter un fonds immobilier direct, l’avantage fiscal est qu’il n’y a pas de déduction de 35% sur les dividendes distribués.
Procimmo SICAV Immobilière
Symbole : PSCF
Il s’agit du plus grand fonds commercial suisse et n’est pas surévalué comme les autres fonds résidentiels.
J’ai également investi sur la plateforme Foxtone
dans 7 projets prêt participatif

76

any one here use Raizers to invest?

this is similar to crowdlending but investment and returns are in Euros

77

Would you mind to elaborate? What were you exactly looking for? And where did you look for properties?

78

I look for properties to live in. So look around where I live. I’ve moved several times so have looked in: Schaffhausen, Zurich, Basel and Basel-Land. I’m also looking at Solothurn as potential retirement location (lower wealth taxes).

You can take the Warren Buffett approach: be patient to find the right deal. If there are no good deals, then keep looking.

If you need a family home to live in, then you might not have the luxury of waiting. In this case, you can maybe use optimal stopping theorem to help guide you.

This is why I’m already looking now in Solothurn for a retirement move in 20 years time. It could take years to find the right property at the right price. All the while, I’m getting a better understanding of the local housing market there.

3 Likes
79

Even for living are you aiming for the same kind of yield as if you were going to rent the property?

80

Ideally yes, although, I might accept a lower yield recognising that there might be some element of self-consumption that I am overpaying for.

See my post above: