Should I invest in real estate or ETF?


I’m looking for some advise about where I should put my money to work.

Here is my situation:

  • I have 80k in the bank
  • I have 110k in the VT ETF
  • I have 60k in 3rd pilar A (99% in stocks)
  • My parents are willing to lend me money if I decide to buy some real estate (they would do that at the best possible rate on the market and wouldn’t care about a minimum down payment from me)

I accumulated the money in the bank because I intended to buy some real estate in order to get some passive cash flow. But after a few months of research, it seems to me that it’s almost impossible to buy anything at a decent price in order to do that.

With the high prices, possible rental vacancies, PPE/Stockwerkeigentum costs, interest rates, maintenance fees and tax on revenue, it seems it would always cost me more money that I would get in return…
Or that the return on investment would be horribly low for the risk and hassle (~2%).

For for the calculus (see the Google sheet I use here):

Should have I done differently ? Or did I miss something important ?

In the end, isn’t it less risky to continue to invest everything in the VT ETF ? And less time consuming as having a rental property requires some work and to deal with day to day problems.

Thanks for you advice :slight_smile:


Don’t invest directly into rental properties, it doesn’t make sense, unless
(1) you have the income of the CEO of Nestlé and you want to write off repairs or
(2) you buy an extra small appartment that you and other family members such as your parents or children can move in when there is big renovation (like 1 extra maximum for 3-4 your family actually use) and you let it half of the time. You can switch the appartment you let ofc or
(3) if you work in construction such as an electrician and you can buy a broken house for nothing

If you still want to invest in real estate, you can buy swiss real state funds for example SXI Real Estate Funds Broad Index | SIX. They are more diversified and more liquid than a direct investment.

I think it is better to invest in companies for the long run, especially because in your situation you wouldn’t benefit a lot from the savings in wealth tax that some real estate funds offer


Your analysis and conclusion is correct, buy-to-let does not make sense at this stage. I also agree with @REandSTOCK, in that I would only consider it if you or your family intend to live in it long-term.

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It could be worthwhile if your apartment is furnished and suitable to be rented short and medium-term through Booking or Airbnb. Of course, it will depend a lot on the flat itself, its location, surroundings and the relevant regulations by local authorities. Still a lot of hassle and work for sure, but at least you could make it work financially.

Doesn‘t account for leverage? What‘s the yield on your own equity?

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Let’s say someone wants to buy an apartment in a “prime location” in the Zurich or Geneva area that gives a 2% net return (without leverage), can this be considered a solid investment within the overall portfolio that can replace bonds or even gold?


One apartment can’t be considered a bond replacement, because it is ONE apartment. It has considerable concentration risk. It’s one huge egg in your basket.
Gold is not a good portfolio stabilizer as it is very volatile and produces no returns.

If you have problems with a tenant or can’t find a tenant for a longer time, the 2 % you get net is not a lot. A few months of revenue loss can easily extinguish 1 or 2 years’ returns on a single property.

If you want around 2 % cashflow, you might want to consider a 5-10-year medium-term note with Cembra Bank or other bank’s. Less headache, less work.


Avoid anything below 5% net unleveraged, because of reasons discussed in various places in this forum. In a nutshell: there are costs (maintenance, insurance, taxes) and as @yetanothername says, uncertainties with tenants.

How would you account for leverage in this calculation, as I thought it did? Sorry, still learning, thanks :slightly_smiling_face:


Inflation is currently 2.8%. You lose money in real terms

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If you have a 80% mortgage, the return on equity will be 5x higher.

Thank you all for for your answers.

To @Cortana:
The Google sheets I shared did take the leverage factor into account as I calculated the return on investment only relative to the amount of my own funds I invested and not relative to the whole price of the property.

What do you think would be a decent percentage of return on investment on your own funds ?

You can get 7% ROI easily if you expose yourself to the mortgage risk (growing interest rates). Everytime the tenant changes you can see if the market conditions allow for a higher rent. When you are done, you can sell the apartment for more than you bought it (hopefully), repay the mortgage and keep the difference. That’s what the persone who sold me the apartment did

Would I do it again? For three of the four units I bought, yes. The 4th, which cost me as the other 3 together, is eating half of what the other 3 are generating, and it’s very hard to sell

Long story short: choose wisely.

You won’t find an appartment of reasonable quality for that yield. Unlevered yields are more around 2.5-3.5%

If the unlevered yields are around 2,5-3,5%, that mean 12,5-17,5% with a mortgage ? That’s huge considered I never found anything to yields more than 2% (with leverage).

How do you find such appartments ?


Don’t forget the costs of leverage. If unleveraged yield is 3.5% and mortgage costs 2.5% p.a., with 40% own funds your yield is 5%, with 20% own funds - 7.5%. Then add interruptions in the occupation, other expenses, and it doesn’t look that nice anymore.


Seems right. Since a few of years the Swiss market looks completely dry in that respect (reasonable quality and reasonable yield). Fortunately, nobody forces you to buy anything :blush:.

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2.5% to 3.5% net yield is in my experience the current pricing for an entire multi family building (I work in the real estate industry).

However, single appartments (stockwerkeigentum) is usually more expensive, since most buyers purchase for their own use. They usually compare prices to other stockwerkeigentum on the market and don’t necessarily calculate a yield on a potential rental income.

If i were to invest into real estate for investment purposes, I’d buy a fund or real estate AG for.diversification purposes.
Funds with direct real estate ownership are already taxed where they own their buildings and hence dividend is (almost) tax free.

I wouldn’t touch crowdinvesting with a stick and would not buy a single appartment. Imagine having a tenant who doesn’t pay rent - it takes about 6 months to kick him out.
Or even worse: a “messy” tenant could easily cost you 50k to 100k for refurbishments…


Crazy. Some buyers are definitely looking for trouble…


What would be a reasonable return on equity with leverage that could be considered as a good investment?

What if 110% financing is possible, eg in France? At which point is it considered good? I’m taking as example Mr MP who purchased a rental property that would give a 20+% yields.