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Old 02.01.2012, 11:46
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Swiss buy to let questions

Couldnt find anything on this topic from searching...

Anyone out there who can give a sense of typical rental yields, leverage/financing ratios, management fees and interest rates for doing residential buy to let in Switzerland?

Im guessing at gross rental yields of say 4 to 6% depending on the type of property, maybe 50% leverage at say 3-4% interest. How much one might expect to get out of a small portfolio of properties at the end of the day 3%? Less?

I do know there are some interesting planning opportunities on the tax front if you refurbish dilapidated properties too.

Daniel
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Old 02.01.2012, 11:51
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Re: Swiss buy to let questions

what permit do you have? That will also be taken into consideration
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Old 02.01.2012, 12:13
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Re: Swiss buy to let questions

C permit, but I wouldnt be looking in restricted mountain resorts etc anyway. A good relationship with the bank with a principal residence and decent pension pot as further collateral.

I did some further scouting on comparis, and a 4-5% gross yield seems ballpark right 2kchf per month for 500kchf properties on 3.5 room flats in residential blocks.

Daniel
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Old 02.01.2012, 12:40
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Re: Swiss buy to let questions

Here is a link to some reasonably current data suggesting 4.5% is about right for Zurich region.

http://www.globalpropertyguide.com/Europe/Switzerland

I also found this old thread meanwhile, but its quite out of date, would be keen to hear any updates, and maybe a moderator wants to move this thread to the business forum.

Residential and Commercial property investment in Switzerland

Last edited by dannyt986; 02.01.2012 at 12:54. Reason: Added thread link.
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Old 22.01.2012, 11:02
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Re: Swiss buy to let questions

I would also be interested to hear more if anyone has experience of BTL n Switzerland
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Old 22.01.2012, 13:06
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Re: Swiss buy to let questions

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I would also be interested to hear more if anyone has experience of BTL n Switzerland
What information are you looking for? This topic has been discussed a few times already. If you scroll down there may be similar topics listed or have a search around. Then if you have specific questions that haven't been answered you might find a better thread to post under.

Good luck!
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Old 22.01.2012, 13:27
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Re: Swiss buy to let questions

Is that considered an attractive yield? Presume you might have other unexpected costs, like maintenance & vacant months, that chip away at that?

I suppose on the other side you get the extra interest payments on the debt which chip away at taxes, but not really seeing the attraction at that level.
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Old 22.01.2012, 15:10
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Re: Swiss buy to let questions

There is in fact very little on Swiss buy-to-let experiences that I could find on the forum, and none of it recent.

4.5% would be a gross yield ie rent (excluding nebenkosten) divided by acquisition cost, you need to take all costs off that: management, insurance, finance, void periods, running and capital maintenance, taxation etc. and ignoring any capital yield.

Depending on location that is probably even an optimistic number for prime locations in the current market. For new builds it is the most you can current ask for without risking rent challenges (reference rate 2.5%+2%) from your tenants.

Is it a good return? Depends what you are looking for and if you think the Swiss property market is experiencing a bubble. My view is that if you are looking for a reliable form of fair inflation proof annuity type income, can leverage with some attractive bank finance, and are not overly sensitive to medium term (10 years) valuations, probably still worth considering.
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Old 22.01.2012, 15:37
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Re: Swiss buy to let questions

A Swiss friend of mine has recently bought 2 buy to let properties, with several apartments each. He says that it is the only way to get a decent return on your money - providing you've got it! If you have to borrow, even at current rates, you are taking a big risk in his (experienced) opinion.
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Old 22.01.2012, 15:45
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Re: Swiss buy to let questions

Agreed, but concerning borrowing it's the classic corporate finance question of leverage. It enhances your returns but magnifies your capital gains and losses plus adds interest rate risk. But with 10 year fixed rates available at say 2.5%, and the rental reference rate being at an all time low, I think if you have a 10+ year horizon on the valuations and enough headroom on the loan to value, you shouldn't be taking too much risk.

Daniel
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Old 22.01.2012, 15:55
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Re: Swiss buy to let questions

We live in uncertain times and possible housing bubble - so I'd think it is a risk we couldn't afford to take ourselves. But each to their own- bonne chance. Must say too that it is really useful to have excellent local knowledge and contacts for repairs, improvements, etc, as our friend has + sufficient funds to pay for essential repairs, emergencies, etc.
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Old 22.01.2012, 16:11
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Re: Swiss buy to let questions

with current valuations, it's hard to get a decent return here. you're probably looking more at 3% gross yield if that. however, swiss property may be a good bed still if you are betting on:

- it being just the start of the boom (but watch out for taxes) and want to cash in on capital gains
- want to bet on long term CHF devaluation and get a long term fixed rate mortgage

personally, i think in 2012-2013, we will see a very rapid deterioration in the economy with asset price collapses across various classes in particular property. switzerland will be an interesting market since there are a number of factors pro/contra house prices, but it will be hard to predict what the final outcome will be. i guess you just have to pick and hope for the best

there will probably be some bargains to come if you have a long investment horizon.
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Old 22.01.2012, 16:50
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Re: Swiss buy to let questions

Another Brit obsessed with BTL...

In Switzerland the numbers just don't stack up on a smale scale. This is not the same property market and dynamics that exist in the UK.

Do the numbers... it's not that difficult to work out it's a mug's game.

Good luck though.
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Old 13.05.2012, 19:49
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Re: Swiss buy to let questions

Yes, refurbishing costs can be tax offset


Quote:
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Couldnt find anything on this topic from searching...

Anyone out there who can give a sense of typical rental yields, leverage/financing ratios, management fees and interest rates for doing residential buy to let in Switzerland?

Im guessing at gross rental yields of say 4 to 6% depending on the type of property, maybe 50% leverage at say 3-4% interest. How much one might expect to get out of a small portfolio of properties at the end of the day 3%? Less?

I do know there are some interesting planning opportunities on the tax front if you refurbish dilapidated properties too.

Daniel
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Old 15.02.2015, 01:36
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Re: Swiss buy to let questions

Instead of starting a new thread, I thought I'd latch on to this existing thread (...given the high quality of questions / responses).

We live in Zurich (British citizens, Swiss work permit currently B but moving to C soon). I have the option to take out a buy-to-let mortgage through my employer at what I think are relatively attractive terms (20% cash, 80% loan split into 66% (1st mortgage) and 14% (second mortgage), 10-year fixed at c. 1.5%).

Ideally I'd like to take out a mortgage to finance a flat that we live in but we dont have the 20% equity required for such a flat. Hence we're considering buying a small studio / one bed in a good rentable location as a long term (buy to let) investment. Given that we live in Zurich, the idea to be able to save a little on maintenance expenses, real estate management fees etc (and hopefully see some capital appreciation in the mid term)

Was hoping that someone could help with a few specific questions (buy to let)
1) I understand rental income earned is taxable. Any idea what the tax rate is on rental income? Is it 35%. I live in Meilen (feldmeilen to be specific) but intend to buy somewhere in central Zurich
2) I know that with a own your home mortgage (i.e. a primary residence mortgage), you get certain tax deductions (interest payable, maintenance expenses, etc). Do you get the same tax deductions for a buy to let mortgage?
3) Also, do you get tax deductions on principal repayments?
4) Capital tax rates are very steep. Any idea (even ball park figures would help) what the cap tax rate is in Zurich canton after say 3yrs (55%?), 5 yrs (still 55%), 7 yrs, 10 yrs?
5) With regards to capital gains tax, say I sell the property after 3-4 years. I understand that I may not have to pay capital gains tax if I use the gains to buy another property. Do you know if this is true even if I buy another property outside Switzerland (i) say in an EU country / UK (ii) say in a non EU country / Singapore.
6) In a situation where we cant manage the property ourselves, and end up hiring the services of a real estate agent to manage the property, any idea what the charge is? This is typically between 8-14% of annual rent in the UK that I as the landlord would have to pay to the real estate agent / manager.
5) On a side note, would be good to hear peoples thoughts around where CHF 300-400k could buy you a small studio / one bed (...key criteria being easily rentable location, targeting gross yield of 3% - hopefully more but want to be conservative as i do the math to see if this makes sense as an investment)

Cheers,
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Old 15.02.2015, 02:25
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Re: Swiss buy to let questions

Quote:
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Instead of starting a new thread, I thought I'd latch on to this existing thread (...given the high quality of questions / responses).

We live in Zurich (British citizens, Swiss work permit currently B but moving to C soon). I have the option to take out a buy-to-let mortgage through my employer at what I think are relatively attractive terms (20% cash, 80% loan split into 66% (1st mortgage) and 14% (second mortgage), 10-year fixed at c. 1.5%).

Ideally I'd like to take out a mortgage to finance a flat that we live in but we dont have the 20% equity required for such a flat. Hence we're considering buying a small studio / one bed in a good rentable location as a long term (buy to let) investment. Given that we live in Zurich, the idea to be able to save a little on maintenance expenses, real estate management fees etc (and hopefully see some capital appreciation in the mid term)

Was hoping that someone could help with a few specific questions (buy to let)
1) I understand rental income earned is taxable. Any idea what the tax rate is on rental income? Is it 35%. I live in Meilen (feldmeilen to be specific) but intend to buy somewhere in central Zurich
2) I know that with a own your home mortgage (i.e. a primary residence mortgage), you get certain tax deductions (interest payable, maintenance expenses, etc). Do you get the same tax deductions for a buy to let mortgage?
3) Also, do you get tax deductions on principal repayments?
4) Capital tax rates are very steep. Any idea (even ball park figures would help) what the cap tax rate is in Zurich canton after say 3yrs (55%?), 5 yrs (still 55%), 7 yrs, 10 yrs?
5) With regards to capital gains tax, say I sell the property after 3-4 years. I understand that I may not have to pay capital gains tax if I use the gains to buy another property. Do you know if this is true even if I buy another property outside Switzerland (i) say in an EU country / UK (ii) say in a non EU country / Singapore.
6) In a situation where we cant manage the property ourselves, and end up hiring the services of a real estate agent to manage the property, any idea what the charge is? This is typically between 8-14% of annual rent in the UK that I as the landlord would have to pay to the real estate agent / manager.
5) On a side note, would be good to hear peoples thoughts around where CHF 300-400k could buy you a small studio / one bed (...key criteria being easily rentable location, targeting gross yield of 3% - hopefully more but want to be conservative as i do the math to see if this makes sense as an investment)

Cheers,
Finding an apartment for that price in Zürich is - in my opinion - close to impossible.
homegate
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Old 15.02.2015, 02:53
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Re: Swiss buy to let questions

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Finding an apartment for that price in Zürich is - in my opinion - close to impossible.
homegate


I would have thought so too, and was surprised to find
Charmante 3.5 Zimmer-Wohnungmit grossem Wintergarten-Balkon
http://www.immoscout24.ch/de/d/wohnu...ap=1&ci=3&ct=4


which is in 8052
https://www.google.ch/search?q=karte+8052+z%C3%BCrich
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Old 15.02.2015, 11:56
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Re: Swiss buy to let questions

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I
We live in Zurich (British citizens, Swiss work permit currently B but moving to C soon). I have the option to take out a buy-to-let mortgage through my employer at what I think are relatively attractive terms (20% cash, 80% loan split into 66% (1st mortgage) and 14% (second mortgage), 10-year fixed at c. 1.5%).
Are you sure this is a "buy to let" loan and not one for your own residence? Usually for a buy to let you need to put down 40% yourself.

Also, are you taking into consideration your pension fund when you determine how much you have to put down?
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Old 15.02.2015, 12:37
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Re: Swiss buy to let questions

Thanks for the links. Didn't realize I'd be limiting myself to all of ONE flats in Zurich that fall within a CHF 300-400k range. Having said that, I have some flexibility in terms of increasing the price range so if anyone has any thoughts around some of my questions, those would be appreciated.

Yes, buy to let for sure although I see that I mistyped the interest rate. It's about a 1% higher so around 2.6%.
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Old 15.02.2015, 12:44
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Re: Swiss buy to let questions

There are no openly advertised properties in Zurich that will be profitable. Anyone buying now is either paying a premium for their own place or gambling on low rates forever.
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