Thoughts on our RE situation?

Hi FIRE friends,

We inherited an old big single family house within 10 min drive from one attractive Swiss city center. (Sorry to be vague) It would need a complete renovation and, by law, the outside “look” of the house must be preserved. We can’t really afford to do it in any foreseeable future (middle income, both from low-income families). Nor do we want to. We also have sizable land that is zoned as agricultural.

We have been approached but don’t feel ready to talk to agents and such so just looking for general ideas/opinions. We’re definitely out of our depth at the moment.

Our questions are:

  1. If we sell the house as is, what price range can we expect from it? What’s usually behind the “price by request” process?
  2. We’re not struggling and more interested in the FI part but hope to be able to buy a house one day and the inheritance would move that sooner for us without touching our investments. Or should we just hold it and build equity? but I feel like the market is nuts and if we wait, we may be priced out forever (the same old income/mortgage rule thing.)
  3. Should we hold off selling the agricultural land? I heard some communities have rezoned land for building. It is in a good location with a view. We dream of building a small house there but yeah, may be just a dream. We are not farmers so holding it would mean keeping the inheritance lawyer on the case with occasional bills? Also liability for maintenance/damage.
  4. Anything else we should know/inform ourselves about?

Thank you.

I’ll pitch in for #3.
Why do you need an inheritance lawyer on the case “occasionally”, once the inheritance is split?
Just rent it out yourself, it’s a simple contract, with a long running time (6 years are common). Then it’s usually renewed, u don’t have much work or bills to pay.
Liability/maintenance … are there also buildings on the land? You don’t mention it. Land doesn’t have much maintenance, except maybe a fence?
I expect maybe approx 2-3% (income-taxable) annual rental income (as a percentage of its worth), unless people are knocking on your door to buy, speculating on it being rezoned.
Agricultural land - maybe a good low-maintenance way to diversify your investments? I mean, Bill Gates is one of the biggest farmland owners, and if that made sense for him…

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Dear Val

To be precise, do we talk only from agricultural land or from a „landwirtschaftliches Gewerbe“?

Please be aware of the specialties (Vorkaufsrecht, duration) when it comes to the lease of agricultural land, following laws should be known:

BGBB and LPG incl the following ordonnances.

Depending on your location and the quality you can rent if probably for 0.5-0.9 CHF /m2/year. Selling price is factor 10.

Most Gemeinden had a Zonenplanrevision recently. You should be able to find out about the Baulandreserve in your place and you can talk to them if there are plans to make a new construction zone.

I might be able to explain some details via PN

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We share the farm land with someone else who wants to cash out but we’re still thinking about taking over while saving up money, hence, not over yet and the lawyer.

Sorry, I should’ve mentioned there’s a currently unused rotten barn on it. With liability, for example, a long time ago, landslide damage from natural disaster that we paid 10,000 out of pocket with insurance to fix it up. Worth it? Dunno. Might be one time bad luck.

We got offers but say no so far and rent it out for veryyyyy low return, set up by the previous owner, so, temporarily more of a “for old time’s sake” and only occasional uses. We don’t mind given the low tax but, naturally, it’s frustrating for the other person.

We tried to split the land but the lawyer specialized in farmer inheritance says it takes time, many procedures, requirements to be met (even specific people for renting it to) and bureaucracy fees and lawyer bills will end up costing a lot more than simply selling the whole land. Selling as farm land has a cap.

The only thing both parties agree on for now is holding it in case of rezoning (god knows if or when). Honestly, we lean more towards selling it eventually cuz we’re not in a position for additional big bills or loans:( our financial “may” change in the future but our main goal is a house in Switzerland as we own farm land in another country (spouse’s inheritance, rent out to farmer to avoid hefty land tax, may set up a farm later with lower costs there) in terms of diversifying.

Thanks for your reply. Great points to think about.

Dear newhere,

I admit we’re not well-versed about this whole thing, therefore, a specialized lawyer. From our understanding, it’s freehold and never really used to produce anything. Just trees and grass. It may be what you said. There’s a cap on it as farm land. It’s vast so it’s still a lot of value for us even with the cap.

So far, the lawyer informs us as soon as there are some changes but thanks for pointing us clueless peeps some directions:)

Thank you for your kind info. We may reach out but we don’t think we know what we’re talking about in any more useful details :grimacing:

Hi Val,

You mentioned that you are not sure about there value of the land. Why don’t you ask some agents to value the land? It does not cost you anything and you may be positively surprised.

If the land is vast, you can also try to understand if you can split it. E.g. sell the majority and keep 1k sq meter where you can build your house. Or if not buildable, use the money as deposit for your own property somewhere else.

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Hi Val
I would give similar advice as SteveDB.
Get an estimate how much you could sell it for and then write down your options and the financial implications of each. For example:

  1. hold it and wait

  2. sell and buy a property you would like to live in. May be a good option if this involves « downsizing »and if you have the view the market is crazy high now, you would remove some exposure from the property bubble. One of our neighbours is doing this as their kids left home

  3. sell and invest in stock market. Over the long term, >10 years, you can expect to earn average 7%. So if you can sell for 1M you earn 70k per year. (Although you can’t safely budget you will earn that in any 1 year)

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Hi @SteveDB

We don’t know the exact potential/market value of the house. We haven’t listed/talked in details with any agents with our work and pandemic in the way but eventually we will. The highest offer we got thrown our way so far was 2 mil. with the reason being a big house (in better condition but further from city) in the same district recently listed for 2 mil. No idea about the final sold price. We live in a different canton to the inherited house.

We deep down want to keep some of the vast farm land but we’re scared of the unknown due process and more expensive bills that come with the detaching/new registration, warned by the lawyer.

It sucks that we don’t have enough money to pursue that path now or even pay for another consultant/lawyer. We just keep good faith that the lawyer has our best interest in mind…

So yeah, may sell the farm land or the house for the deposit and keep the land with the other party or buy them off with the capped price if we have enough money left.

Thanks!

Hi @Barto

Thank you for your advice!

Yes, we aim for a small house, no kids and definitely hope to have some capital left to invest.

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Sometimes numbers help: If you sell for 2m and invest it, if 7% long term average repeated itself in 10 years you’d likely have 4m and in 20 years 8m. If you are still emotionally attached to it you could perhaps buy it back

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