Some relatives were interested in these flats. I don’t think the prices have changed since completion. Also some had hefty premiums because of the view and floor. Saw some for sale at 1.5 recently, same price they were initially advertised. Too much IMO, can buy a house with decent garden for 1-1.5 if you know the area and have some patience.
Well, you can then take more debt on the building to profit from this capitalisation.
I get where you are coming from, but you should really clarify with yourself if this is a pure investment or a way of getting into the swiss real estate possibly for your own usage.
As an investment, and an investment you don’t plan to get out for a long time, I’m personally sold to it (I do own rental properties).
I looked at foxstone and crowdhouse shared ownership but the end game is too unclear for me.
I wouldn’t care about “recent” properties: essentially you pay upfront for the future advantages (lower energy costs, lower maintenance, etc.) and it is difficult to increase the rent to match the higher cost.
As for my personal experience (2015 building) maintenance costs are lower but not as low as one would expect, there are ton of things which are unrelated to energy efficiency.
I only own now “old” RE (i.e. >20 years old), with as low charges as possible, so you can save money yourself for the foreseeable works to come.
Location of the RE is much more important than the build year.
Just look for something with good connections, reasonable price and decent return from rents today and some space for increases if/when you’ll have to carry out works.
Also look for somebody to take over the daily stuff, rental agreements, looking for tenants, cashing in, small works and don’t expect extraordinary returns.
Think about owning in your name or via a limited company upfront, once you start it is expensive to change, one way or another.
I would be interested in knowing which way you’ll go, keep us posted.
Good luck
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both: investment (with potentially sub-par returns) / hedgind for stocks, as well as a potential for own use or passive pension and letting my next of kins inherit it later.
which way did you start and why?
Also: how do I pick a valuation? I’m not sure a certain flat in middle-of-nowhere Aargau is worth 500k or 800k as well as I’m not quite sure about the possible rental yield either. I’m sure Wüest Partner knows (for a good amoun of cash), any other data point other than a “gut feeling”?
I don’t know every location in CH and in my area where I do know the situation, nothing is for sale as everything is owned by institutions.
@Giff I believe you own rental units as well, care to share your story?
it still matters as you can use the object as collateral for a mortgage and you can let your family inherit it or draw a passive income. This is (partly) how the Swiss build generational wealth.
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FPRE. IAZI. None are free.
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I’d think this is much too open/undefined: for own usage you will have subjective criteria, for rental you can run a spreadsheet and figure out some tentative returns, only subjectivity left if where to buy.
In a sense the two objectives are orthogonal and this might blur your judgement. Can it be done? Yes, you just need a lot of lucidity about your reasons.
Again, I’d set up a primary goal and do the analysis on that angle only, rental or self usage.
I started buying for my own usage, but I started some 20 years earlier than you, not comparable.
I still have one property in my name and the others via a company.
You don’t need WP to figure out anything, just use realadvisor.ch and choose the town/canton you are interested in and start looking at the average price/m2 and at the rental prices, etc.
Also check comparis.ch for the advertised selling prices or rental prices to get a feeling, don’t assume that the advertised prices will be achieved though… Look at how long things are on the market, a good indicator of possible problems or out of the market prices
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Sorry I am on holidays and not following this thread. I got a decent deal on a rental unit because I got it for below market price. It’s otherwise hard in the Zurich region to get decent yields. RE is costly so it only makes sense IMHO if you have a sizeable NE (well above 1M) so that you don’t end up with high double digits percentage locked in one single investment.
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I guess you mean realadvisor.ch, or realadvisor.com actually?
The one with the “s” looks fishy as hell. 
Thanks, my mistake, just fixed it
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I’m in a similar situation and targeting a small apartment as an inflation hedge against local swiss market prices, which we are not exposed to using stocks.
I did a lot a lot of research, but still I think there are some “common knowledge truths” which I still miss.
For example, is it true that property appreciation for 1970 buildings has been very low? I tend to think that buying a low price and estetically decent apartment (not a non maintained high rise) from that period may be a smart move to avoid paying 50/100% more for a new build, but then looking at how they seem hard to sell I desist.
What is the truth there? It is not justified only in terms of maintenance costs in my opinion. Are they so difficult to rent?
Generally nothing is difficult to rent (BUT: location, location, location…).
But with the old houses, looming costs can hit and destroy you, like a completely new roof or redoing the canalisation, the heating system, etc… those that are common property among owners.
I think expected real estate property appreciation has nothing to do with age of the property
But costs to keep the property in shape are higher for the older buildings. However at same time, the price of those same buildings would be lower than a new building in the same location.
Price of RE = Price of land + price of construction
- Price of construction keeps depreciating every day. And the older the building, the lower the value.
- Price of land appreciates over time
The key point is to not over pay for the asset and estimate maintenance and renovation costs wisely.
I’m quite close to buy a rental building from the 1960 with 10 apartments (cheap region). Gross return is 4.5%. It’s a low vacancy risk location (0% in the last 5 year). Since it’s an old building and that I never bough real-estate before, I hired an expert for the visit. It was well worth the money imo. He made a 10 year plan with each major expected repairs and a detailed DCF analysis. My net return on capital is in the 4-6% range (before tax), highly dependent on the deal I will get from the bank.
Unfortunately, it is much more complicated than expected with banks. Despite meeting the self-financing requirements at 75% LTV, the bank value the building at a significantly lower price requiring me to make a much larger down-payment. They use an arbitrary high cap rate of 5.5% to value the building. My first bank answer resulted in a 60% LTV with a SARON margin at 1.2-1.3%. This put me at 4% (before tax) return on capital.
It’s night and day compared to primary residences where people are talking about 0.5% SARON.
For this kind of larger project, it’s wise to put it into a RE company but that’s really something that will hurt the financing, especially for the first purchase.
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Thanks for sharing
4% Gross Return is good. I have heard that returns on entire buildings are better than individual flats. I think you checking with expert regarding costs is a good idea. It’s really important to do the DCF with as much details as possible.
But I have now more respect for Swiss RE funds which provide 2-2.5% NET return without any ownership hassles.
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This is obvious to me because whoever does the admin only has to talk to one owner with one opinion. And there is just one agenda concerning renewal of heating or facade. Also rent is calculated once for all flats and when renewals of kitchens and bathrooms need to be done, one gets better deals for 10 kitchens at once.
This brings us to the conflicts and friction losses of houses or flats that are rented out but ownership is considering moving in in the future. Ovens, Bathroom tiles and whatever energy-related renewal is done quite differently depending on whether the owner lives in the house or whether it is rented out.
this thinking leds me exactly to Crowdhouse, as owning entire buildings is a multi-million CHF adventure even with old buildings, but then you have efficient management over dozens of buildings AND less capital requirements.
But aren’t you already invested in Crowdhouse?
Was wondering if anyone actually exited a property there
Reality of multi-family apartment rental is that renovations happen when apartments are empty.
They empty whenever someone moves out, which is not usually coordinated.
So chances are until you empty out the entire building (and risk bad publicity etc) all purchasing is done in a staggered manner even if you own an entire building.
I am, so?
An exit event has happened already in one of my properties (find the log in the forum), but the idea is to never exit anything, otherwise it’s not passive income but speculation.