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  #41  
Old 18.06.2019, 23:15
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Re: investing in real estate vs buying property

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These are some sweet numbers, but where do I find a 300k flat that will rent for 1400? Is "PP&E" Nebenkosten? So I assume it's more like 1000 Kaltmiete + 400 Nebenkosten?

I could sell you one
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  #42  
Old 18.06.2019, 23:46
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Re: investing in real estate vs buying property

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I'll give you some actual figures from one of my rental properties.
Thanks for this. I'm happy you're netting over 7%.
However, you are running the following risk:
- the risk of a single property
- leerstandspuffer
- apparently you need to manage it yourself (or are you having someone do it for you)?
(- also fmf will surely chime in and claim that it will drop 20% in value by next week, so you'll ultimate lose a pile of cash in retrospect )

C.H. would do all of the above for you, so your money is basically fire and forget. I haven't even seen the ones I'm invested in. I think that is work 1.5% less

--
on my other end: properties in Hungary are ticking at 5% pa on long-term rental with property management, CH taxes and all costs deducted - but the properties had a 100-120% price boom in the last 5 years. Go figure

Last edited by user137; 19.06.2019 at 00:14.
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  #43  
Old 19.06.2019, 00:12
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Re: investing in real estate vs buying property

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Have a read and see why such an investment is a bad choice.
https://lebijou.com/insights/crowdho...-alternatives/
thanks for this. the article basically says it's a bad idea to do this, because the author's completely different business idea is netting more cash.

well, I registered in LeBijou and am excited what they come back with.
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  #44  
Old 19.06.2019, 08:28
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Re: investing in real estate vs buying property

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Thanks for this. I'm happy you're netting over 7%.
However, you are running the following risk:
- the risk of a single property
- leerstandspuffer
- apparently you need to manage it yourself (or are you having someone do it for you)?
(- also fmf will surely chime in and claim that it will drop 20% in value by next week, so you'll ultimate lose a pile of cash in retrospect )

C.H. would do all of the above for you, so your money is basically fire and forget. I haven't even seen the ones I'm invested in. I think that is work 1.5% less

--
on my other end: properties in Hungary are ticking at 5% pa on long-term rental with property management, CH taxes and all costs deducted - but the properties had a 100-120% price boom in the last 5 years. Go figure



See, this is your problem, a lack of attention to detail !! :-


I'll give you some actual figures from one of my rental properties.


Managing a property is not actually so difficult if you have a network, but it is a valid point to take in to consideration.


All mine are long term
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  #45  
Old 19.06.2019, 09:23
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Re: investing in real estate vs buying property

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See, this is your problem, a lack of attention to detail !! :-
I got your idea and concept on the first go as well. but again, if you have multiples of 100k to invest in properties, then it's a different ballpark game already. (If I had 500k cash to invest in properties, it would mean I have at least the same chunk otherwise invested already for diversification.)

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Managing a property is not actually so difficult if you have a network, but it is a valid point to take in to consideration.
I'm not saying it's difficult, and many of my Swiss colleagues are doing this semi- or non-professionally. Overhearing them sometimes, I'm actually glad I don't rent theirs

I'm saying you do need a network, as you already stated, you need people, you need to put in time and effort sometimes. Maybe not much for 2-5-10 years, maybe more every now and then. Still, there's a difference to a fire-and-forget method where you basically pay someone to do this for you and you just see your money grow (albeit, 1-2% less).
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Old 19.06.2019, 09:27
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Re: investing in real estate vs buying property

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thanks for this. the article basically says it's a bad idea to do this, because the author's completely different business idea is netting more cash.

well, I registered in LeBijou and am excited what they come back with.
So, Le Bijou:
- Owners' Club with co-owning premium luxury short-term aparthotel pieces (similar quality to 5* hotels around HB). Entry from 50k to 500k, not guaranteed profits of 7-14%, LeBijou takes 20% commission
- 5-yrs Bond with guaranteed 5.5% interest from 10k onwards.

Looking at option 2, C.H. just got way less interesting.

I have the links in private if you're interested. You can register on their website to get your own invitation.

Last edited by user137; 19.06.2019 at 09:42.
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  #47  
Old 19.06.2019, 09:36
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Re: investing in real estate vs buying property

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So, Le Bijou:
- Owners' Club with co-owning premium luxury short-term aparthotel pieces (similar quality to 5* hotels around HB). Entry from 50k to 500k, not guaranteed profits of 7-14%
- 5-yrs Bond with guaranteed 5.5% interest from 10k onwards.

Looking at option 2, C.H. just got way less interesting.

I have the links in private if you're interested. You can register on their website to get your own invitation.

Never any such thing as a free lunch.....be very careful here, 14% is ENORMOUS RETURN and totally unrealistic for a company based thing, privately, maybe occasionally.


Try getting your money out, this is a very nebulous scheme when you want money back.


Networking is useful for repairs in YOUR appratment, painting, repairs, etc etc, the rest is handled by the PPE
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Old 19.06.2019, 09:53
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Re: investing in real estate vs buying property

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Never any such thing as a free lunch.....be very careful here, 14% is ENORMOUS RETURN and totally unrealistic for a company based thing, privately, maybe occasionally.

Try getting your money out, this is a very nebulous scheme when you want money back.
well to be fair, it says on the brochure as well that there's no way out - "strictly for the long-term investor, off-market, no volatility". The company does not even have such a platform as Crowdhouse, where you could broker your co-owned slices away, should you need the money. So zero flexibility for very high potential returns. I'm not sure the property market needs this kind of risk though, for this we have fully liquid NASDAQ ETF's.

The 5.5% 5 year fix is a corporate bond, though, so I'll take a look there at least.
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  #49  
Old 19.06.2019, 09:58
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Re: investing in real estate vs buying property

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Not as such because i think this PPE in question my apartment is 44/1000, budget is Chf 130k of which Chf 20k is for an extraordinary event an Chf 60k is for the renovation fund.


As such the real amount is Chf 70k for the PPE which is considerably less, arguably Chf 50k as Chf 20k is not a repeat item


But i do see where you coming from, but the return of 7.8% on MY investment is not so bad really, better than Woodford, that's for sure !
OK, let's deduct the 20k as a one-off which should be spread. Presumably the renovation fund deduction is taken every year to smooth out maintenance expenditure, so I would keep.

So then 110k *44/1000 = 4.8k

16.8/300 = 5.6% gross yield, while still under what I would consider investable for property is pretty good in the current environment.

however deducting the PPE gives only 12/300 = 4%

a bit low, but I could consider it if it was going to be my long term primary residence rather than rental property.

however. still better than woodford
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Old 19.06.2019, 10:38
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Re: investing in real estate vs buying property

It seems two different things are being compared here.
Owning home v investing into Swiss real estate.

For many people buying a +-1 million home outright is out of the question, hence banks and mortgages. If you're buying the property to live in, and providing you are making the regular mortgage payments, it's highly unlikely the bank will force you to put up more money or sell the property should there be a downturn in the market. Over the long term property prices will rise and when you're ready to downsize you may even have enough from the increased value, to buy a smaller place outright.

If you're investing in Real Estate, then do it for the longer term and you'll be fine. Again unlikely the banks will ask for more money in a downturn, as long as you make the regular payments. The longest held property I have, mortgage free, is making me 9% based on what I paid and the current rent I receive. If I sold it today the new buyer would have a gross rent of 3.6%

Another example is my latest purchase, where I have a mortgage, 20% down, and now yields me 2.9% on the purchase price, but 9.5% net of interest on capital invested.

Buying longterm to live in or rent out, property is a good investment, if you're looking to buy and flip in a short period of time, then it can be very risky.
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  #51  
Old 19.06.2019, 10:51
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Re: investing in real estate vs buying property

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The longest held property I have, mortgage free, is making me 9% based on what I paid and the current rent I receive. If I sold it today the new buyer would have a gross rent of 3.6%

Another example is my latest purchase, where I have a mortgage, 20% down, and now yields me 2.9% on the purchase price, but 9.5% net of interest on capital invested.
buying at 9% and selling at 3% makes sense. buying at 3% and selling at 9%, not so much.

the wild card is the low interest rate environment which boosts ROCI. If it stays low for long enough, then even buying for just a 2.9% yield could make sense.
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Old 19.06.2019, 11:04
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Re: investing in real estate vs buying property

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buying at 9% and selling at 3% makes sense. buying at 3% and selling at 9%, not so much.

the wild card is the low interest rate environment which boosts ROCI. If it stays low for long enough, then even buying for just a 2.9% yield could make sense.
Why is it going to rise in near/mid future ?
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Old 19.06.2019, 11:08
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Re: investing in real estate vs buying property

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Why is it going to rise in near/mid future ?
Who knows, that's the fun of buying an illiquid asset (ask Woodwood) using borrowed money when the lender can demand repayment at the end of a fix.
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Old 19.06.2019, 12:08
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Re: investing in real estate vs buying property

if say, you can borrow at 0.9% for the next 27.5 years then the 2.9% yield gives 2% 'profit'.

on 100k, that 2*27.5 = 55k

reducing the cost of your investment down to 45k

so then your yield then becomes 2.9/45 = 6.5% (which is my threshold acceptable yield)

whether you can borrow at 0.9% for 28 years is uncertain.
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Old 19.06.2019, 15:06
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Re: investing in real estate vs buying property

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well to be fair, it says on the brochure as well that there's no way out - "strictly for the long-term investor, off-market, no volatility". The company does not even have such a platform as Crowdhouse, where you could broker your co-owned slices away, should you need the money. So zero flexibility for very high potential returns. I'm not sure the property market needs this kind of risk though, for this we have fully liquid NASDAQ ETF's.

The 5.5% 5 year fix is a corporate bond, though, so I'll take a look there at least.
OK scratch this one.

Basically it's a sales pitch, the company exists since March 2019, the guy seems to be the sole owner, is looking to raise 2M CHF in bonds so that he can start something large.

If the company goes insolvent in 5 years, you've basically lost your capital. No secondary market, all risks born by the bond holders.

Seems more like a scheme than an investment. For that, the 5.5% is way low.
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Old 20.06.2019, 12:50
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Re: investing in real estate vs buying property

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whether you can borrow at 0.9% for 28 years is uncertain.
28 years no, but we've been offered a 15 year mortgage at 1.42% I've seen 10 years offered at between 1 and 1.3%.

If I was starting out now I'd be tempted by a 15 year deal, but the problem is if if you wanted to sell sooner, the penalty for an early repayment would be quite horrendous.
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Old 20.06.2019, 13:43
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Re: investing in real estate vs buying property

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28 years no, but we've been offered a 15 year mortgage at 1.42% I've seen 10 years offered at between 1 and 1.3%.

If I was starting out now I'd be tempted by a 15 year deal, but the problem is if if you wanted to sell sooner, the penalty for an early repayment would be quite horrendous.
I know someone I advised on property with a good income that got a house almost for free because of that. The owner died, the family were selling, and the fix rate was 3.5% for many years. The buyer had an excellent income, no spare cash, so he took over the old mortgage in exchange for the equity he needed, and got a top up new mortgage for the rest of the purchase price. The property was in Glarus, where yields are good.

The fixed deal allowed the original owner to purchase knowing his payments were fixed. Yes the family lost some money, but they would presumably have had nothing if the owner had not made the call and rented all his life.
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Old 20.06.2019, 14:16
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Re: investing in real estate vs buying property

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28 years no, but we've been offered a 15 year mortgage at 1.42% I've seen 10 years offered at between 1 and 1.3%.

If I was starting out now I'd be tempted by a 15 year deal, but the problem is if if you wanted to sell sooner, the penalty for an early repayment would be quite horrendous.
my friends have shot at a 10-yr fix with the goal to be able to pay the property in full if shit hits the fan at renewal time. Of course it's a smart choice, but it limits one's buying power to sub-perfect locations
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Old 20.06.2019, 15:47
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Re: investing in real estate vs buying property

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my friends have shot at a 10-yr fix with the goal to be able to pay the property in full if shit hits the fan at renewal time. Of course it's a smart choice, but it limits one's buying power to sub-perfect locations
Buying in a perfect location (whatever that means), you can always shift it if you take a loss of some sort. Property there can change hands very rarely or quite often. Good areas can go bad, get flooded etc.. If you buy in a perfect location and still have it securely after 2 years, at that point maybe you think about fixing it longer term and getting another there. Two properties in a perfect location close to work self managed can be much less work than one investment in a hands off property fund. If you can pull off 2 in a prime location close to work, maybe you can sell off parts of one to clear the mortgage on that property and get a garage of flat for free, or sell with planning and pay off the other before 10 years. If the shit hits the fan and you have to fight, you will be more creative and fight harder to keep something ina prime location. You will also have more options open to you, more chance of doing Air BnB, renting to a small company, jeweler, financial advisor, etc.
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Old 20.06.2019, 16:07
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Re: investing in real estate vs buying property

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Buying in a perfect location (whatever that means), you can always shift it if you take a loss of some sort. Property there can change hands very rarely or quite often. Good areas can go bad, get flooded etc.. If you buy in a perfect location and still have it securely after 2 years, at that point maybe you think about fixing it longer term and getting another there. Two properties in a perfect location close to work self managed can be much less work than one investment in a hands off property fund. If you can pull off 2 in a prime location close to work, maybe you can sell off parts of one to clear the mortgage on that property and get a garage of flat for free, or sell with planning and pay off the other before 10 years. If the shit hits the fan and you have to fight, you will be more creative and fight harder to keep something ina prime location. You will also have more options open to you, more chance of doing Air BnB, renting to a small company, jeweler, financial advisor, etc.
I share your viewpoint (thus, I'm still renting). Unfortunately that also means buying your own flat is not really an option anymore as prices are insane in the 4.5+ rooms segment.
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