View Single Post
  #35  
Old 18.06.2019, 14:48
Meadow's Avatar
Meadow Meadow is offline
Senior Member
 
Join Date: Jul 2016
Location: Zurich
Posts: 272
Groaned at 6 Times in 5 Posts
Thanked 95 Times in 63 Posts
Meadow has no particular reputation at present
Re: investing in real estate vs buying property

6% annual rental yield in Switzerland? According to Numbeo statistics, the average is 3.5%. That means something like 3% for expensive property and 4% for cheap property.

6% is realistic in countries like Poland, but if you take exchange rate / inflation into account, the real return is much lower.

Btw, I guess for your comparison to make sense, both options should be similarly leveraged. In your Option B, you invest 250k and take a loan for 750k. That's a 3:1 debt-to-equity ratio. I wonder what is the leverage in Option A to get these 6%.

Also, not sure if it makes sense to count amortisation as cost? You pay back the loan, so the loan get's smaller. I think maybe for the sake of simplicity, you should consider a scenario where your LTV is low enough that you don't have to amortise (65%). That would put your debt-to-equity closer to 2:1.
Reply With Quote