I think in Zurich I paid something like 0.1-0.2% of the purchase value. Other cantons have higher fees.
You forget that you can easily leverage RE with a mortgage. So you ROI is going to be quite a bit higher if computed only on 20/30% downpayment.
I believe to buy a property slightly outside of Zurich is worth it as interest rates are so low that you actually save money + likelihood that the real estate will gain value over time. At the same time I also would say for instance buying a property in Germany is a good thing as you can with the rent income pay off the interest and pay off the debt and still have some extra money. But this does not apply to centers such as Munich etcâŠFor me the factor that you can loan for a longterm with a very low interest is very appealing
Thanks I am actually from the economics field and would not believe that your argument about which part of my brain to think with is really adding any value hereâŠPls add to the 1-2% interest also the inflation rate run a CF Analysis and you will see that still it is better to buy real estate that is cheaply leveraged than to hold cash or some low or even neg yielding assetsâŠnext time I wonât give you any answer cause you seem not to be worth the time
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insults apart, propertiesâ prices have been inflated way more than the traditional 2-3% yearly over the last 5 years.
Itâs not representative, but I was looking at a Mönchaltorf property for 1.2M the other day. Then comparis said similar newly built apartments have been bought between 800 and 900k between 2017-2019 in the vicinity. And this place doesnât even have a train station. The standard seems to be 1.2-1.4M for something that used to be 800k-1M some 3-4 years ago.
We might be on the top of the appreciation curve, where itâs either going to correct a bit, or slowly fade out into a 0-1% appreciation until the historical averages are catching up. Even if interest prices shall rise, you wonât be able to raise the rent your tenants are paying as the market is pretty much saturated already. Weâll seeâŠ
Iâm NOT from the economic field, so Iâm not used to many things, such as: looking at numbeo I see a good part of the world reports <5% of gross rental yields. In my specific italian situation I see that you can easily lower your GRY by 2,5-3% to get to the net yield. With this low % we are one unforeseeable big problem away (earthquake? big storm?) or one raise of inflation away to have 0 gain.
How the hell can RE be an investment at all?
But you also lose the 20% downpayment. Is there some formula to see how much you lose/gain leveraging but losing the initial chunk of money?
You âloseâ it in the sense of opportunity cost: you lose the return those money could have generated in another way. And you lose diversification.
What you really lose are the (high in Italy) notary fees, taxes, and real estate agents provisions.
When you use the 2nd pillar, you can cover 10% (of 20% down payment) with that currently âstaleâ money. The 2nd pillar money has currently very, very low ROI - currently with 1%.