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Old 13.03.2012, 13:20
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Suggestions on investment - real estate in la cote or...

dear all within this forum,

this is my first posting so sorry if i am slightly off topic or asking for advice in the wrong way.

our problem is the following. We (a family with two small kids, parents working at the UN in geneva, one part time) will be inheriting a large amount of cash end of this year, around 700K CHF. We don't know how to best invest the money, we have no other significant savings so we have no experience. currently we live on a pricey rent in la cote and are considering to buy a small house or a flat (we currently live on 130m2 and would like to keep that size). the bank has told us that they would grant us a loan for around 800K CHF. If we deduct the "frais de notaire" (around 5 percent we were told) we would still be able to afford a house or flat for around 1.4 Million Swiss. Does this make sense. Or should we place the money elsewhere. We do not want to make profit but not to lose it away either, we are not risk-type investors. the banks offer us complex products which we do not really trust (absolute return funds etc). do you believe real estate makes sense in la cote, for us to live there, not as investment, despite the housing bubble? What kind of size could we afford in sqm very near to, or inside Nyon city? Any hints, experiences, welcome. Apologies if you find this posting misplaced.

thanks so much, annai...
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Old 13.03.2012, 13:24
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Re: Suggestions on investment - real estate in la cote or...

I suggest you take a look at this
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Old 13.03.2012, 13:30
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Re: Suggestions on investment - real estate in la cote or...

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our problem is the following.
wish I had your "problem"...

(sorry, couldn't resist)
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Old 13.03.2012, 14:15
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Re: Suggestions on investment - real estate in la cote or...

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We (a family with two small kids, parents working at the UN in geneva, one part time) will be inheriting a large amount of cash end of this year, around 700K CHF.
A dream client scenario, eh? Ching ching ching...

Anyone genuinely in that situation should take a look at this thread.
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Old 13.03.2012, 14:49
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Re: Suggestions on investment - real estate in la cote or...

I don't think many people here are/were in similar situation, so advices might be not-so-helping. I would look at places like homegate.ch to get a feeling about costs in areas You mention. But Nyon is pretty small, I would not expect many offers in area close to train station (everybody commuting to GVA would like to live there, no?
As for bubble - nobody knows when and if it will burst. Can be in year, 10 or never. Just because few people are screaming that prices are unaffordable and crazy (I agree with this) doesn't mean companies will stop moving in/move away from this area. Since there is very little new construction, and people are constantly pouring in, current situation is logical. And it can get worse, much worse...

On financial point of view - will You be able to hold Your jobs for long time? I didn't do the math, but 800k loan is quite a commitment, and You mention that You have no significant savings till now - how will You live & pay loan when main income in family is lost for at least few months?

Many people here & around the world have too much cash and no safe place to store it in, hence the rise of franc last year, gold etc. If there would be an easy way to do it, everybody would be there.

As mentioned - forget financial advisors, risk of loosing is too high, and banks are same, just in fancy buildings. I wouldn't let it stay in some savings account in francs, but that's my opinion.

Personally - I would "invest" it in something like land, or buy mountain hut or something. I don't get why people are willing to pay double price for saving 10 minutes everyday in commuting (make it 20 in both ways), and then not having any significant savings left. I don't spend more than 25% of my salary on living, and rest is so much I would have to be crazy to not save anything.
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Old 13.03.2012, 15:04
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Re: Suggestions on investment - real estate in la cote or...

If you are putting 700k into a house for your personal residence, typcially you only need 20%, thus if the bank is only offering 800k loan, it seems very low. Perhaps this ratio of about 45% down may be typical for a property investment, ie. not primary residence.

Speak to a number of banks, etc. with 700k down, you probably can afford much higher than 1.4 m if you want. A detached house in La Cote is very expensive, around 2 million if you look at some of the housing adverts and realtor sites. I assume some bank will easily loan you 2/3 the cost of env. 2 million if you are putting in 700k yourselves. Unless perhaps there are issues we don't know about like outstanding debts, short term employment contract, and the like.
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Old 13.03.2012, 15:18
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Re: Suggestions on investment - real estate in la cote or...

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with 700k down, you probably can afford much higher than 1.4 m if you want.
there is also the famous less-than-33%-of-your-salary-at-7%-interest-rate rule to be respected I guess.. a quick back-of-the-envelope calculation shows that they earn 800K at 7% *3 = 168K CHF / year at least, not bad
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Old 13.03.2012, 15:36
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Re: Suggestions on investment - real estate in la cote or...

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If you are putting 700k into a house for your personal residence, typcially you only need 20%, thus if the bank is only offering 800k loan, it seems very low. Perhaps this ratio of about 45% down may be typical for a property investment, ie. not primary residence.
That's not the only factor. The monthly total payments (when the loan is at 5%) must not be over 30% of the family income. So it's not just how much cash you have.

ETA: GVA got to it first although I've never heard it being calculated at 7%.
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Old 13.03.2012, 15:47
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Re: Suggestions on investment - real estate in la cote or...

If I had the money, I'd buy further away to avoid the expected bubble. Towards Fribourg or Yverdon, or even in Gros de Vaud. You'd get much more for your money and prices are going up slowly as the Riviera is choc a bloc.
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Old 13.03.2012, 16:07
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Re: Suggestions on investment - real estate in la cote or...

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If I had the money, I'd buy further away to avoid the expected bubble. Towards Fribourg or Yverdon, or even in Gros de Vaud. You'd get much more for your money and prices are going up slowly as the Riviera is choc a bloc.
I'd buy two house in France for that money, but I imagine the commute to the UN would be terrible!
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Old 13.03.2012, 16:08
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Re: Suggestions on investment - real estate in la cote or...

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That's not the only factor. The monthly total payments (when the loan is at 5%) must not be over 30% of the family income. So it's not just how much cash you have.

ETA: GVA got to it first although I've never heard it being calculated at 7%.
The reference interest rate is indeed 5% but most banks add 1% for maintenance and another 1% for amortisation (not sure if for such a high capital contribution the 1% amortisation would apply!)

see for example

http://www.ubs.com/ch/en/swissbank/p...alculator.html

and

http://www.bcv.ch/fr/simulateurs/sim..._hypothecaires
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Old 13.03.2012, 16:11
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Re: Suggestions on investment - real estate in la cote or...

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If I had the money, I'd buy further away to avoid the expected bubble. Towards Fribourg or Yverdon, or even in Gros de Vaud. You'd get much more for your money and prices are going up slowly as the Riviera is choc a bloc.
Either that or wait two years for benchmark rates to return around 4-5% and see all the newfound owners of today whinge when their interest rate burden jumps up on the one hand and they get margin calls on the other.
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Old 13.03.2012, 20:24
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Shorrick, how I wish you were right :-)
Is anyone/any indicator showing in this direction? Inflation would have to pick up in the major economies of EU - read Germany, but will it outweighs austerity-inflicted deflation in the south?
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Old 13.03.2012, 20:50
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Re: Suggestions on investment - real estate in la cote or...

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dear all within this forum,

this is my first posting so sorry if i am slightly off topic or asking for advice in the wrong way.

our problem is the following. We (a family with two small kids, parents working at the UN in geneva, one part time) will be inheriting a large amount of cash end of this year, around 700K CHF. We don't know how to best invest the money, we have no other significant savings so we have no experience. currently we live on a pricey rent in la cote and are considering to buy a small house or a flat (we currently live on 130m2 and would like to keep that size). the bank has told us that they would grant us a loan for around 800K CHF. If we deduct the "frais de notaire" (around 5 percent we were told) we would still be able to afford a house or flat for around 1.4 Million Swiss. Does this make sense. Or should we place the money elsewhere. We do not want to make profit but not to lose it away either, we are not risk-type investors. the banks offer us complex products which we do not really trust (absolute return funds etc). do you believe real estate makes sense in la cote, for us to live there, not as investment, despite the housing bubble? What kind of size could we afford in sqm very near to, or inside Nyon city? Any hints, experiences, welcome. Apologies if you find this posting misplaced.

thanks so much, annai...
yup, buy a property - don't have to worry about future investments, just pay off the mortgage.
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Old 13.03.2012, 22:41
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Re: Suggestions on investment - real estate in la cote or...

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Shorrick, how I wish you were right :-)
Is anyone/any indicator showing in this direction? Inflation would have to pick up in the major economies of EU - read Germany, but will it outweighs austerity-inflicted deflation in the south?
Last time the SNB deflated the Swiss Franc the inflation rate picked up from ca. 0% to 7% in a couple years.

No need for fancy indicators.
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Old 13.03.2012, 23:04
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Re: Suggestions on investment - real estate in la cote or...

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Last time the SNB deflated the Swiss Franc the inflation rate picked up from ca. 0% to 7% in a couple years.

No need for fancy indicators.
Will the SNB respond with higher IRs though, or will their hands be tied?
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Old 13.03.2012, 23:11
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Re: Suggestions on investment - real estate in la cote or...

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I'd buy two house in France for that money, but I imagine the commute to the UN would be terrible!
Good idea! Maybe... If you've got serious money, you can buy a really nice house in Pays de Gex, which is an easy commute to the UN. For say, 1M€ you get e.g. 185m2 + 1000m2. You can also shoot for a Swiss franc mortgage with a French bank, which might be a better deal. The schools in Pay de Gex are amazingly multicultural. We had 27 nations in our primary school in Segny. The kids loved it.

I suppose the real estate bubble is a worry. Worth thinking about, IMHO.
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Old 13.03.2012, 23:22
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Re: Suggestions on investment - real estate in la cote or...

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We don't know how to best invest the money, we have no other significant savings so we have no experience.
Nothing to beat 'brick and mortar' if you take the long view. Also, the fact that you'll be living in it is the icing on the cake.

Various suggestions for moving a bit away from the 'hot' areas are spot on.
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Old 14.03.2012, 01:11
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Re: Suggestions on investment - real estate in la cote or...

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Good idea! Maybe... If you've got serious money, you can buy a really nice house in Pays de Gex, which is an easy commute to the UN. For say, 1M€ you get e.g. 185m2 + 1000m2. You can also shoot for a Swiss franc mortgage with a French bank, which might be a better deal. The schools in Pay de Gex are amazingly multicultural. We had 27 nations in our primary school in Segny. The kids loved it.

I suppose the real estate bubble is a worry. Worth thinking about, IMHO.
Oh, I was thinking further out, like Bourg-en-Bresse.
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Old 14.03.2012, 08:28
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Re: Suggestions on investment - real estate in la cote or...

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Will the SNB respond with higher IRs though, or will their hands be tied?
Why would their hands be tied? They certainly weren't last time around...
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