Invest or not Invest, your arguments

Hi mustachian folks

Thank you for all your reflexion about this topic, in tune with current economy news.
Any opinion will be appreciated :slight_smile: no good/bad answer. I am just alone on this subject ^^

Have a nice day !! :slight_smile:

Owner of an 4.5p in Switzerland where I live,
I may have the opportunity to invest in an uncle’s house, in France near to Basel (140m2, 2016, low energy consumption, 5-10 minutes by car, 1h by public transports) at a -still- decent rate (< 1.75%, if i wait it will be 2.5% in two months)

Data :
Price 720k€ (max) + 40/50 notary fees.
Available : 260-280k€
Real estate loan : ~500k€ > monthly payments 2100/2200 CHF/€
Possibility to block the CHF/€ rate
On 25 years (will maybe be sold around 20)
Rent it in a first time
Then see on a quite longer period if I use it as a principal house
Already invested in stocks next to it

I am one of those who think that the euro zone is going into recession. Leading a rise in interest rates, and a decrease in real estate prices. In addition, the Swiss franc may appreciate against euro.

Several points :

  • “best moment to invest was yesterday, the next one is now” ?
  • border area is driven by high CH real estate costs, high salaries and CHF/€ rate : the fall in real estate in neighboring would remain limited (ok if CH Real estate do not go down)
  • loan in CHF = set a budget in advance. Loan in € = cheaper and cheaper with time ? (Hate Forex ^^)
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Why do you want to do it ?
Is your flat too small and you will prefer to endure the commute ?
What is your time horizon to move in ?
Will it be a summer house in between ?

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What is the rent you can expect from it? Generally in this environment you want a gross margin above 4%.
I would think through this really carefully. Also check out for some tips, though it’s tailored for Germany.

Are you getting a big discount on market price because it’s your uncle selling? That might be a good reason to buy.
Otherwise, not knowing how much other assets you have, it’s impossible to have an opinion.
In general, consider the (likely?) option that the RE market is peaking, given the raise in interest prices.

Why : cash sleeping currently + interest rates still nice (1.75, 25y fixed…)
My flat : fits perfect, do not think leaving it until 4-5 years. Our project : get nearer from Mulhouse region (family), in a home.
Between : can be a summer house, a short term rent, or a long term rent

We thought about 2k/month > yeah around 4% gross.

Not really a big discount ^^ only agency fees avoided
→ I also think that we are currently peaking. But don’t you think the border zone is particular ?
Do you think houses prices will really decline equally to the mortage cost rise?