I agree, I think in some other thread we discussed that the 1% should probably be calculated over the replacement value of the building, and that the land value could probably be ignored.
Maybe some labor is more expensive in popular areas, but it might be offset by an increase in competition and choice.
In our particular case, the value of the house is actually irrelevant for the total property value – if we sell it would get bought by a developer that would tear the place down and replace with appartments. So, any investment should be considered a qulity of live improvment, but doesn’t chance the value.
You could argue that way. 1% per year of the volume of the house (7k/year for a 700m3 house) and 50 CHF/m2 per year + Erneuerungsfonds for flats? That could work.
I think we may be over analysing this. The 1% is a rough rule of thumb. Each property is different, some may have more, others less. It also depends on the owner e.g. do you paint the walls yourself or outsource it?
As you mention, that’s really depends. I lived 7 years and I have done almost nothing for the flat. But there were some renovation on the building itself. may something like 5k
This year I’ve spend 9k on fixing electro-domestics and some small renovations… to get it rent it at good price.
I’m just trying to calculate a sensible annual return, with an actual maintenance rate that would be applicable regardless of location or type of property.
I think we should calculate the depreciation of the house/building over its entire lifetime. You know, houses get razed, which means they become very unattractive relative to the land they stand on. Maybe you had no major renovation at your place, but I can’t imagine replacing the entire bathroom / kitchen would be cheap.
This interests me: how can one guess how much more rent one might ask for a house after replacing the kitchen, put underfloor heating, redo the bathroom etc…?
Market research+trial and error, visit flats in the neighboorhood and compare.
Put a flat at a high price and see if you get it rented out.
But basically yes, appraisal is a problem with real estate in general… you might find someone dumb enough who is willing an absurd price, or the other way round, some funny thing you did not consider important will make no one else want it for the price you though right.
The more you lack comparison (e.g. countryside etc.), the more it becomes difficult of course.
You can ask whatever you want But mainly we were lucky. The apartment has a quite special setup that it is not interesting for all the parties. It has 3 floors with the rooms at the bottom and on the top floor leaving the common area (living room) in the center.
We look at the similar properties and and go a higher and wait for customers. One family like it and done.
But as far as I know here in CH is regulated somehow. So you cannot increase whatever (in fact you can and your tenant can challenge you the price and then you need to go down.
I guess one needs to find a good balance between asking for a rent that is as high as possible without being so high that the tenant will quickly start looking for something cheaper.
Is this legal?
If the rent reference index interest rate goes down, your tenant can ask for a lower rent and you have to adjust it accordingly, as far as I know you can’t opt out of this.
Yes, it is. In fact our tenant suggest it to include it as we were not sure if it is the right candidate. and I have it as well in the new property.
About the index rate, I am aware.
At the end for me it is an exercise of 3 years (next mortgage negotiation). if it profitable, I will keep the rent if it is not, I will sell the property.
That’s “OK”. Current value is a bit below ~1m. It needs to drop more than 30% to be in loss and if this happen, I can move back and become once again main main residence.
So let’s say you have a fixed rent in your contract for 3 years. Now if next year the index rate goes down and your tenant asks to reduce the rent due to the lower index rate, would the contract still be valid and he would not be allowed to reduce it? I’d assume that he would get a lower rent if he brings it to court.
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But mainly we were lucky. The apartment has a quite special setup that it is not interesting for all the parties. It has 3 floors with the rooms at the bottom and on the top floor leaving the common area (living room) in the center.