Hey guys any idea why would a house in Wetzikon be so cheap?
Note that is not cheap for me but its generally a cheap price for Zurich
Baurecht is the start of the reason.
(You basically ārent the land on which the house is built onā)
But itās an apartment, so Iām confused (with your title too). 
2 Likes
It is cheap because it is a leasehold. That means you own the building (which loses value over time), but not the land it is built on (that generally gains value over time).
You have to pay rent on the underlying land. The landlord can raise this rent as the value of the land increases.
Leaseholds are generally best avoided, unless they work out much cheaper than renting.
5 Likes
Thanks my dudes! Makes sense!
wtf? are we in England? I didnāt know it was allowed/accepted. Also the title is misleading; it seems they sell you the land. 
1 Like
See that word, move onto the next property.
3 Likes
Hmm but wouldnāt make sense as an investment? I guess the answer is no but just to understandā¦ you buy an property for 300K that you can rent out for a nice price and get a nice %. The only variable is how much you pay for renting out the land? I guess this wipe out all potential gainsā¦
In any case, in which circunstances someone would like to buy a depreciating piece of property while still renting a land?
You are basically renting the property for an upfront lump sum. After a number of years, the lease expires and you are left with nothing.
Ah but then it make sense as an investment assuming (rental yield) >>> (property + mortgage interests + maintenance). If this is >5% It may be worth itā¦
To live there however makes no senseā¦
No the land owner needs pay you a lump sum in case the lease is not extended, in general 70% to 80% of the value of the property on the land. Given the picture this seems to be an old building with the windows and the radiators (although some renovations were done) so not much value to be expected which explains the low priceā¦ I guess this could make sense as an investment property but all the side costs (in particular what renovations are in the pipeline for the building itself, not just the flat) and the potential rental income need to be calculated.
That value could be zero or even negative.
Charming that the ad shows that under āVorteileāā¦
2 Likes
Basically your only chance of earning returns is by renting out, or renting out to yourself (aka the money you save on rent). But you have to bear in mind that buildings only ever lose value (there may be a few exotic exceptions like certain iconic buildings). So basically your income from the property has to be high enough to cover the amortisation of your investment, plus the depreciation of the building, plus maintenance and running expenses, plus the ground rent, and still leave you some left over for a return on the investment. Not impossible, but highly unlikely.
Most cases I know where people bought leaseholds, it was because they did not understand what they were buying, and ripped themselves off by failing to do their homework. But I do know at least one person who has one that he lives in, and it does make financial sense in his case because rents in that area have skyrocketed, but his ground rent has remained reasonable. But heās retired with no heirs, so capital gains arenāt a concern.