Re: rural or alps I effectively mean not the major cities. So it is a broad description.
To be more specific, actually, here I am thinking of using as a primary residence for personal reasons for a year or so (work from home and it would be nice). However, as it won’t be a forever home, I was thinking of buying something nice to stay for a year, and then convert to an AirBnb.
Does anyone have any experience or knowledge of the returns for AirBnbs in Switzerland?
I would probably purchase around Valais (speak French and still some connections to Geneve), but open to ideas…
Side note: I own a property in a southern european country and most of the discussion boards are about investment for AirBnb. I don’t see this here much, so I wonder why… as the AirBnb rates are very high.
Following should be checked:
Is the construction in a building zone or outside the building zone
Is the land attached to the grid
Is it possible to change the use from primary to secondary residence
Are there any agencies that could arrange the cleaning and booking process?
Depending on what you have to invest take a local architect since in vaials its difficult if you are not “one of them”.
Keep in mind, AirBnB charges 17% (and only gets you a platform and contracts).
Rules and regulation for Airbnb vary between municipalities and cantons. Make sure to account for possible rules when choosing where to buy. Whether the property is a freestanding house or an apartment can also make a difference. For example, in 2019, a Swiss court ruled that co-owners of condominiums can object to an apartment being rented out on Airbnb:
The rules governing primary and secondary residences are also a key consideration. Each municipality has quotas for primary and secondary residences.
There are also restrictions on the total which you can earn from renting out a property. This must be in keeping with what is considered an acceptable monthly rent in that municipality (so as not to disprivilege residents who have to rent housing).
There are many home owners who successfully rent out there properties to holidaymakers on Airbnb and other platforms. In fact, this kind of thing was being done long before the world wide web existed. So it is perfectly possible to Airbnb in Switzerland, but it requires more ground work than it would in many other countries.
You can find some basic guidelines here:
Before buying check the implications of the federal law on max 20% of non-primary residences that each commune is allowed to have.
Many communes are above this limit. The consequence is that if you move in to a property that currently has approval to be used a secondary residence, it may be reclassed as approved for primary residence only and then impossible to convert back to be used for Airbnb.
See my thread here:
Be really careful that the home is in building zone and not outside it.
Hi Barto - this is a very interesting point. Is there a website where this can be checked, or do you need to ask each commune individually?
One thought that comes up is the use of 2nd pillar. I would love to use this for 10% of the deposit (either pledge or pay direct) - and as it would start as a primary residence, this is easy.
I have researched extensively - and I see the requirement to pay it back if you sell the property. However, I cannot find any requirement to pay it back if you change it to a second residence / AirBnB / investment rental. It seems that as long as it was a primary residence when you start, as long as you don’t sell, it doesn’t matter. Does anyone have knowledge in this area?
Another general question - from an investment perspective, does anyone have thoughts on the ROI for this. Using Airman.co for example - and using Nendaz Valais (not where we are looking specifically but an area I know) - average rate is CHF181 / night, and annual occupancy is 61% year. So at gross level it is 40’300CHF / year. Take away 30% for AirBnb and other maintenance and utilities for it = 28’209 CHF / year. A decent house costs about 500’000 CHF. Plus acquisition costs (Valais is ~3%) = 515’000CHF. So a return of a bit over 5% per year from the AirBnb. If there is capital gains, this increases it further. So this seems like a relatively good ROI?
Even if AirBnb does not work (or too difficult), a comparative house at long-term rental is 1’600 CHF / month. 19’200 CHF / year, which is 3.7%, plus potential capital gains. Not fantastic, but not bad.
PS. I know I said rural, but maybe I should have said more like a small village. Not too disconnected. Something at the level that has a Coop / Migros for size.
The Gemeinden with more than 20% secondary residencies (where new building or buildings undergoing sizeable transformations (more than 30% gain of space or potentially change of affectation, as seems to be pointed out by @Grog’s example) must be used as primary residence) can be seen on the federal geoportal (housing inventory, click on the Gemeinde to see its name):
There are a ton of other useful maps I encourage to dive through.
For Valais/Wallis, a look at the Register of public law restrictions is also highly recommanded before buying land/a building/an appartment. They will list most restrictions resulting from local law (including zoning) with the official documents to back it:
In French: ArcGIS Web Application
In German: ArcGIS Web Application
There’s unfortunately not Italian version, nor English.
Then you remove 1% for maintenance, you remove the taxes, interest payments and whatnot and in the end it’s probably not worth the effort, unless you really want to reconvert into hospitality.
And you mention potential capital gains, but I’d be wary of potential capital losses; any change to the aforementioned law on secondary residencies and it’s anyone’s guess where the prices will swing in touristic regions.
If I understand it right you want to live 1 year in the alps and then leave for somewhere else…why not renting a place for a year and call it a day?
There’s a reason if there’s not a lot of talk about investing in real estate in Switzerland, property is crazy expensive so the yields are not very attractive compared to alternative investments.
A few random thoughts as I have been thinking about this.
One thing I haven’t seen discussed is the very low performance of Pillar 2 and how it could be better used via property. Pillar 2 has very poor returns, stable, but poor. Since this property would be purchased as a primary residence, pledging 50 - 100k of pillar 2 as a deposit, turns it into a lot more (simple leverage). But also, you don’t have to put that much in. Working on assumption of 10% pillar 2, that is only about 13% of cash. This makes it much more appealing.
PS. I know it is for primary residence, which it will be. However, I can find no where at all that says you have to repay if you change it to an investment property in the future (either via pledge or withdrawal). So this Pillar 2, has potential for leverage which is powerful. And it is much better than having it sitting there at such low returns.
I am personally not convinced of the 1% of maintenance per year. We have owned 3 properties, 1 now for about 10 years. I have made a rough calculation of about 0.35% is more accurate.
What I like is you can use the Pillar 2 to buy a house, and if you have a house that rents in the future - enough to make a couple of % return after payments including mortgage principal, you have a ‘bonus’ of owning a house at the end of it. So in 25 years, with no major effort, and generally no cash flow required, you own a house that you can rent out or sell. Even if there are no capital gains except inflation, you have a whole house which is a huge asset that you would not have had.
Once again speaking from experience of one of our investment properties (another country). Yes we had to put in a deposit (30% actually), but the rent just paid for the house. In 20 years the house we will own outright, with no cash required. The more I think about it, I think this is a great strategy in Switzerland, as you have your pillar 2 (10% of deposit), and therefore the overall deposit required is less. Plus in some cantons, purchase costs are 3% or less.
Thoughts in process…
What works in other countries (e.g. rent/house value ratio, maintenance/house value ratio), is not necessarily valid in CH.
House prices are just astronomical here, but so is the cost of any work done on it on the other hand (so the latter ratio might in fact equalize )
Also, P2 performance can be occasionally better than “poor”, like this/past year for example.
Well it depends what you factor in those costs, also your data sample is too small.
If you consider that at some point you need to come up with new kitchen, bath or floors the average can rapidly go trough the roof.
Also depends what you exactly call maintenance.
If it is only upkeep it is low, but if it is including the cost to maintain it to an up-to-date standard, it is a different story.
On my sample, I have included a new roof and a new kitchen which we have done. Not in low cost countries either. On the 1% guideline, for a 1M house = 10’000 / year. That’s a lot, but I do get the point
I know this is a different topic… but I don’t find Swiss house that high if comparing to other ‘comparable’ countries in good regions. Yes, much more than France, southern Europe, but wages are double / more here. If I look at countries with comparable wages - e.g. USA, Australia… house prices in Switzerland are actually comparable.
PS. this could be an argument that house prices are too high there as well. However, I remember when we purchased our first house about 15 years ago, a well meaning friend sent me an article about how how prices were too high then… now they are double the value.
I doubt you can find a chalet in an area like Nendaz that you can buy for 500k CHF and generate 40k CHF rent
Having looked into it before my belief about ski and vacation areas is that rental yields are usually lower than elsewhere because investors are in competition with people who are buying for personal use for lifestyle reasons and who don’t care much about profit
This said if you work really hard on Airbnb to stand out from the crowd perhaps you can counter that but then it is no longer a passive investment
Watch out: if using 2 pillar you may have problems when remortgaging if no longer your primary residence. It happened to some friends who moved abroad and rented out their flat, the bank forced them to sell
p.s. One thing 2 pillar does allow is to own a building with 2 or more apartments where you live in one as your primary residence, and rent out the other one.
Yeah - that’s what we were finding too. In our research, we are now looking more around Monthey (on the outside). Some of the small villages around it including Troistorrents for example. This seems ‘safer’ in the sense that there is also a strong local community / demand for long-term rentals (compared to Nendaz). But you are also closer to touristic areas. So you can go both ways… and prices are comparable.
Realistically, 700k seems to be the price for something in this area.