This is a great forum full of expertise. My wife and myself have a good amount of experience in RE (currently own 2 x houses, but all outside of Switzerland). We are at the position where we think we should invest in Swiss RE, but in this forum I have read a lot of hesitancy about RE. So I thought this would be a great place to test our plans. The proverb - Plans go wrong for lack of advice; many advisers bring success. So hoping you can assist with good advice and to alert us if there is something we are overlooking
Here’s the context:
- We are non Swiss and non-EU. We have lived in Switzerland for near 4 years. No kids.
- We currently rent in Geneva. Nice apartment, but expensive - about CHF4000k. Yes, I know we can get cheaper, but to be honest, what we have is very nice and if we go to 2.5 - 3k, there is a significant drop in quality + space.
- I work from home 100% (not COVID related, I worked from home before COVID), and my wife about 50%. Hence why we need quite a large and nice space, which leads to an expensive apartment.
- We have permanent job contracts, managerial level positions, so not likely to leave Switzerland. However, if my wife loses her job, we have 2 months to leave the country (by law). From a RE perspective, this means that we need to look at both ownership to live, AND also to rent it out. So it needs to be a good investment PS. I know some people may say that in 5 years we can get a C permit, but unfortunately C permits are not possible for people of CDL visas. Even if we live in Switzerland 20 years, there is no C permit or citizenship. Even in 20 years, we always have this risk that if my wife loses her job, we need to leave. So the property needs to be a good investment
- From a bank perspective, we are pre-approved for a mortgage (one of the major Swiss banks). It is also no problem if we leave the country according to their advice.
Why RE in general?
- As mentioned, we have 2 x properties already outside of Switzerland. This experience has given us a positive experience of real estate. Both properties have rent more than the cost of the mortgage (P+I) plus all expenses. In other words, they all generate profit and they have gone up in value a lot
- Leverage. We can turn 200k of deposit into a 800k house. Ok, we put 200k of deposit in shares and they go up 10%, that is 20k profit. The 800k house only has to go up 2.5% to make the same profit. So there is higher potential upside (if prices rise of course)
- … and the other pros for real estate that I don’t need to mention here.
- I will note we are not only in property. We do have a good share portfolio, but we are heavy in property, and of course debt with them! This could be precarious if interest rates go up, but we could go up to 5% without any problem.
Swiss RE / outside Swiss
Of course, please let’s know if you disagree with the above, but in our minds, the decision is not RE, but where RE. We can also get loans in other countries of 80-90% easily. We also obtained pre-approval for France, Portugal, etc. But we are really unsure if buying in Switzerland is the best move.
Benefit of Switzerland.
- Paying 48k / year in rent+charges makes no sense to me. The reason to look at Swiss RE is at least we will be paying for a house as opposed to rent.
- Very stable country and high demand. We CAN buy as non-EU now as we will live in it (non-EU allowed to purchase as a residence). This is not something we could normally do. Unique opportunity to buy in Switzerland now, and have an investment property if we leave (also allowed from my understanding. The restriction is in ‘buying’ not ‘owning’)
- We can pledge our 2nd pillar to make up 10% of the deposit (uses less capital)
Cons of buying in Switzerland.
- We would need to buy out of Geneva. Actually we are looking at Saint-Cergue so we can have a detached house. So we need to add in car costs which we don’t have today.
- Capital growth. Is the market overpriced today. Properties stay in the market in Saint-Cergue for just a few days. Could be a good thing or a bad thing
- FX. The deposit would come from abroad and convert to CHF which is arguably overpriced at the moment. If the CHF falls, we could lose a lot of investent
- $ goes further abroad (you can buy something very good for 750k in other countries in Europe). Can make an investment property that pays for itself, while having flexibility in Switzerland of renting. Maybe could decrease rent costs in Geneva slightly
A neutral. When we do the maths of a house of 750k (achievable in Saint-Cergue), add in a car, maintenance, etc. It comes to 4k / month. So we are neutral cash position to what we are today. But we are paying off a house.
A long post and a BIG thank you for reading. I thought it best to provide as much context to show we have thought it through. We would love to hear your comments.