Real Estate - CH/FR/CA

You mean “higher”, right?

Even by that rule, it seems that I’m better off renting an expensive apartment in the city center. Amazing.

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With more flexible work-from-home conditions in the future (ie. WFH for 2/3 days per week), has anyone considered moving to Cantons that are farther away from the larger cities (ie. Jura?) or moving across the border to France/Germany?

But, mostly a useless one of course. Unless we move out and sell there’s little or no difference (except wealth tax!). As long as the value doesn’t drop to a level where the bank gets anxious about their mortage, it affects us very little.

It also depends quite a bit on zoning regulations; all single family houses in our neighborhood that are sold, get replaced by multi-family appartment buildings. Depending on the location those can be either 3 or 4 stories high, or for bigger surfaces (ie several plots needed), 5 or 6 stories. We’re currently in a 3 story area – if that gets changed, land value will change too.

I am happy if it doesn’t change, since having one family house next door is more attrcative to us than a multi-family unit.

That’s indeed not one of the worries in my live at the moment :slight_smile:

4% is too low. 5% is ok, and using yearly rental income without charges / Nebenkosten.

  • mortgage cost, amortization ← ~1500.- Fr. every 3 months
  • nebenkosten ← ~1300.- Fr. every 3 months
  • renovation budget (1% property cost) ← irrelevant as I very likely sell the apartment within 15 years. But add the 8500.- Fr. a year
  • what you pay to taxes in rent (I do not remember the name) ← Eigenmietwert, neglectable as it’s less than 10% of the taxable income. Let’s say 2’000.- Fr. a year

That way we’re still at 1’808 Fr./month or 1000 Fr./month under a comparable apartment

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At a 50-50 split between working from home and commuting to the office, you won’t be saving on costs for public transport. Individual tickets or passes will still cost the same or more as your monthly/yearly travel card, even for the same number of zones.

Speaking of Jura, while accommodation may be very affordable in the canton, it is (relatively speaking) a tax hell for most of the high-earning singles on this forum.

Rule of thumb (and I did indeed calculate a few examples a while ago) for Germany: It may be beneficial if you have 2.5 kids or more. Due to lower rent, (relatively) higher child benefits. Also, depending on your circumstances, less expensive health insurance and lower taxes as a couple. Or if you’re hellbent on buying your own house somewhere.

For singles, Switzerland almost always wins out for quality life (shorter commute to work) and due to lower taxes.

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Very useful. You’re right, Jura does have high income taxes (although Vaud isn’t too different).

Has anyone moved from the French side (Romandie) to the Swiss German side of Switzerland? Or vice-versa? I’ve heard the salaries are generally higher on the Swiss German side, but besides that, is there a higher/lower quality of life?

I was just trying to show that they need to add more variables than the mortgage… Your case is extreme positive.
In my case it was positive and getting excellent with the mortgage renovation.

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To complete the example from the viewpoint of an investor you would also count the opportunity cost or “cost of capital”

Since he so bought well and his flat appreciated so much, Mr Cheese now has 420k chf of equity tied up in the property. The cost of capital is the return he could get on the alternative use of this 420k. If he could invest it and expect to earn 7% pa the cost of capital would be 2450 chf per month

Of course there is more, emotionally, to owning your own home than just the economics. There is also the benefit of diversitication. And once you FIRE it could become difficult to rent

But this is why I do not worry about “paying rent for ever” given extremely low rents relative to prices where I live (canton Geneve). It is better, financially speaking, for me to rent.

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Single, no children, living in a mountain resort.

I’m currently renting a very cheap, very small, very old independent “house” (I like my privacy) in order to build up my net worth more quickly. The plan is to buy a small individual house or a good quality flat in a year, pledging 3rd and 2nd pillar, then quickly amortize the 3rd pillar (to get better investing options for it) and 2nd pillar (to open up selling options) and use my equity in that place as a downpayment for a bigger house if I feel the need for it, using the smaller unit either as a chalet or a rental.

My main focus while searching for something to buy are that I would feel good in it and that it would hopefully keep resale/rental value. I am willing to wait more to get both of those.

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That’s why you buy a new house and for 10 years you should not have anything to care about

even if it doubles after 10 years, in my case and considering my rent (2030 CHF per month), the paperwork for the house (around 20k) I will save around 100k in 10 years. And this is considering 600 CHF for mortgage and 400 CHF per month of future issues. Then even if house will keep just his value, it would not be still a loss.

To wrap up, I consider the house as diversification of my investment, because right now move 200k to the stock market is scary (at least for me).

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In a hyperinflation or depression scenario, they will raise again.

I used the calculator and in my case 150k for “Supplemental and maintenance costs” sounds a bit too much for a brand new house.
My landlord didn’t spend money for the past 7 years for extra activities…and actually I have problem in the ceiling that hasn’t be fixed since many years…so I don’t see it as an advantage.

In addition I’m not sure why in the calculator is adding amortization to the interest cost. That amount of money will be still yours and it’s not a cost.
Then in the Rent section the “Excluding yields on assets” how can be that calculated? Nobody knows if we are going to face a bear market in the next 10 years. And also “Excluding down-payment” to be honest is not clear to me why it’s deducted. I mean the house can also increase in value.

Previously, I lived in Lausanne, currently in Zurich.

I found live in Lausanne quite a bit more pleasant than in Zurich. Whereas not everyone is easy going in Lausanne, generally speaking people ar emuch less friendly and accomodating here. Curiously, I didn’t speak any French while living in Lausanna, and it never was a problem. I speak some German but it being neither perfect nor Swiss enough, is regularly an issue.

Food, wine and general culture is quite a bit better in the French part of CH as well; for my function, salaries are very similar.

I used the calculator and in my case 150k for “Supplemental and maintenance costs” sounds a bit too much for a brand new house.

The recommend rate used by the calculator (1% of property value) is from the Swiss homeowners association. AFAIK that rate is based on the average (low costs when the house is new, higher costs as it ages).

I agree about amortization not being a cost in the big picture, assuming your home at least maintains its value.

It’s also true that opportunity costs are not predictable (unless you would use bonds or medium-term notes). Since property price increases and stock market performance are equally unpredictable, I would recommend just putting zero in that field.

Thanks, I didn’t know

I agree

Gerd Kommer evaluates that costs to be closer to around 2%, and states that it is often undervalued to 1%. Especially if you want to keep it up to a “new standard”.

Basically, if only putting 1%, at some point your house will be so far off new standard it will lose value.

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I wholeheartedly agree. My personal approach would be to pay myself “rent” at standard rates, and put this in a dedicated fund for future renovation. If you do not end up needing it all, great! But just counting that money as spent like you would with rent is psychologically beneficial.

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Maintenance costs have increased much less than housing prices the last decade, so if anything the costs as percentage of house price should be less than a decade ago.

If you are willing to do some minor stuff yourself, like changing a leaking seal in a tap, cutting your own grass etc. average maintenance costs comes to less than 1%.

(Our kitchen vendor tried to convince us a new kitching is in order every 7 years – he might be in leage with Gert Kommer).

Of course you should not take the current value of the house, but the construction cost of it.
As far as I know, Kommer did his analysis with real numbers over a larger statistical field.

I am no specialist, just throwing in some insight of, as far as I can say, an expert who actually looked it up in detail. What you do with it, is at your discretion.

I would not say that this comes under maintenance, more like cleaning up, and this is more micro stuff than minor stuff. The big stuff is totally different (road reworks, sealing against ground/rainwater, roof)

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