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Old 14.04.2021, 11:09
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How to get 7-11% return on housing in Europe?

What countries with close proximity to Switzerland can you get these high returns 7-11%? It's my impression Switzerland has very bad gross yield on investment properties compared to rest of EU but germany or Scandinavia might be better.

Also why does are people able to have to high returns in America.

Video that explain high realestate returns (7:30):


#1
https://youtu.be/Z8pVlfulkcw?t=449

#2 similar video
https://youtu.be/eVxeoKf0f7w?t=573

EU rental yields: (Switzerland at only 3%)

https://www.globalpropertyguide.com/Europe/rent-yields

As a european i'm on the fence if i should get diversified stocks or start a little side business. Endgoal is to make good money longterm but have a fulltime job as well, so could only check up on properties on weekend.

Last edited by maxjonson; 14.04.2021 at 11:21. Reason: missing details
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Old 14.04.2021, 11:42
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Re: How to get 7-11% return on housing in Europe?

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Also why does are people able to have to high returns in America.
It all depends on the ruler you use to measure the returns. Returns in USD may look nice for the people that live in the US and spend in USD. If you live in CH, spend around Europe and get a fixed amount for dollars for a rental property in USD......check the long term exchange rates.
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Old 14.04.2021, 11:45
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Re: How to get 7-11% return on housing in Europe?

Your link says where: Moldova, Ukraine, Montenegro.

Good luck!
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Old 14.04.2021, 11:59
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Re: How to get 7-11% return on housing in Europe?

It is all a gamble, depending on when and where and could go either way! Good luck
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Old 14.04.2021, 12:23
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Re: How to get 7-11% return on housing in Europe?

Don’t let inflation turn your head. Factor in historic exchange rates and it‘s another ball game...
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Old 14.04.2021, 12:34
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Re: How to get 7-11% return on housing in Europe?

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As a european i'm on the fence if i should get diversified stocks or start a little side business. Endgoal is to make good money longterm but have a fulltime job as well, so could only check up on properties on weekend.
7% -11% is a poor return on a high risk asset class in which you are forced to fore go diversification.
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Old 14.04.2021, 20:36
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Re: How to get 7-11% return on housing in Europe?

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7% -11% is a poor return on a high risk asset class in which you are forced to fore go diversification.
The 7-11% is just a rent yield. Add to it another 5-10% equity appreciation and you are on 20% a year.

I would consider real estate investments very similar to investing on margin into index ETFs, but with less hassle. Instead of monthly rent, you receive dividend. Margin loan is very similar to mortgage loan and you can reach the same 20% with very similar risk, but less hassle. In Switzerland, you can deduct margin interest payments from your taxes the same way as mortgage interest payments.
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Old 14.04.2021, 21:13
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Re: How to get 7-11% return on housing in Europe?

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The 7-11% is just a rent yield. Add to it another 5-10% equity appreciation and you are on 20% a year.

I would consider real estate investments very similar to investing on margin into index ETFs, but with less hassle. Instead of monthly rent, you receive dividend. Margin loan is very similar to mortgage loan and you can reach the same 20% with very similar risk, but less hassle. In Switzerland, you can deduct margin interest payments from your taxes the same way as mortgage interest payments.
1) Property is waaay more hassle than index investing. Bananas to suggest the reverse.

2) 7-11% is a very high return from rent.

3) 5-10% House price Inflation is unsustainable.

4) Property income is taxable, capital gains aren't.

5) the cost of holding property is far higher than charges on index funds

6) you have little to no diversification with property

Last edited by HickvonFrick; 14.04.2021 at 23:23.
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Old 14.04.2021, 21:15
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Re: How to get 7-11% return on housing in Europe?

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Your link says where: Moldova, Ukraine, Montenegro.

Good luck!
You can this in the dodgiest parts of north east England. You wouldn't want the tennants that come with this return mind ...
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Old 14.04.2021, 21:21
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Re: How to get 7-11% return on housing in Europe?

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1) Property is waaay more hassle than index investing. Bananas to suggest the reverse.

2) 7-11% is a very high return from rent.

3) 5-10% House price Inflation is unsustainable.

4) Property income is taxable, capital gains aren't.

5) the cost of holding property is far higher than charges on index funds
An exception: investing in real estate at home town where you know how things work and have a network of friends, lawyers and contractors to solve any problem at any time.

But the money is trapped over there. It's useful for me because I visit every once in a while and I want to return there one day. Local rents will be useful by then. For the moment, if I convert them to CHF and compare to Swiss prices for products and services...I cry :/. Of course, it's good to earn something instead of spending, but I still don't have the freedom to work 50% in CH.
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Old 14.04.2021, 22:49
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Re: How to get 7-11% return on housing in Europe?

I find rental yield to be a weird metric for defining the return from investing in real estate.

Most buy to lets, finance most of the purchase price with borrowing.

A better measurement of the investment return is rental income, minus costs (before tax) as a percentage of the capital deployed (deposit and any amortization).

That makes buy to let look like a much more attractive investment compared to other asset classes.

Although it is a more illiquid, asset class, which is perhaps also an unfortunate way to describe somebody’s home.
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Old 15.04.2021, 08:27
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Re: How to get 7-11% return on housing in Europe?

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I find rental yield to be a weird metric for defining the return from investing in real estate.

Most buy to lets, finance most of the purchase price with borrowing.

A better measurement of the investment return is rental income, minus costs (before tax) as a percentage of the capital deployed (deposit and any amortization).

That makes buy to let look like a much more attractive investment compared to other asset classes.

Although it is a more illiquid, asset class, which is perhaps also an unfortunate way to describe somebody’s home.
That‘s because you are mixing the financing decision in with the investment decision. Just because a high level of leverage is generally more easily available for property investing, doesn‘t make it a better investment.
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Old 15.04.2021, 08:52
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Re: How to get 7-11% return on housing in Europe?

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The 7-11% is just a rent yield. Add to it another 5-10% equity appreciation and you are on 20% a year.

I would consider real estate investments very similar to investing on margin into index ETFs, but with less hassle. Instead of monthly rent, you receive dividend. Margin loan is very similar to mortgage loan and you can reach the same 20% with very similar risk, but less hassle. In Switzerland, you can deduct margin interest payments from your taxes the same way as mortgage interest payments.
Even after thirty years, I still find these kind of schemes amusing... there are very few people who generate genuine wealth based debt financing and those that do invariably have a very big edge in the exercise beyond a scheme.
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Old 15.04.2021, 11:05
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Re: How to get 7-11% return on housing in Europe?

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You can this in the dodgiest parts of north east England. You wouldn't want the tennants that come with this return mind ...
When the tenants have trashed the place the outgoings to repair and reinstate to a livable condition would blow any potential return anyway.
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Old 15.04.2021, 11:07
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Re: How to get 7-11% return on housing in Europe?

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When the tenants have trashed the place the outgoings to repair and reinstate to a livable condition would blow any potential return anyway.
That's even assuming they paid rent fro the last 3-6 months, deposits being 1 months rent.
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Old 15.04.2021, 11:15
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Re: How to get 7-11% return on housing in Europe?

If you want to understand what could happen have a watch of this;

https://www.channel5.com/show/nightm...lum-landlords/
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Old 15.04.2021, 14:20
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Re: How to get 7-11% return on housing in Europe?

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Even after thirty years, I still find these kind of schemes amusing... there are very few people who generate genuine wealth based debt financing and those that do invariably have a very big edge in the exercise beyond a scheme.
Well, I currently generate $30k a year just by using debt financing. That's more than 10% of my total annual income. I'd consider that quite a solid wealth generation, given that I just hold it without any active management. And this amount will increase over time.

Borrowing $100'000 costs me around $100 per month (or around 1.2% annually) and with these borrowed funds I generate 8% annually on average. Some years it's +30%, some years it's -15%, but on average MSCI World index is around 8% annual growth since inception (for the last 150 years or so, including both world wars and the great depression).
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Old 23.04.2021, 10:16
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Re: How to get 7-11% return on housing in Europe?

As they say on Reddit WSB, can't go tits up
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Old 23.04.2021, 12:29
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Re: How to get 7-11% return on housing in Europe?

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Well, I currently generate $30k a year just by using debt financing. That's more than 10% of my total annual income. I'd consider that quite a solid wealth generation, given that I just hold it without any active management. And this amount will increase over time.

Borrowing $100'000 costs me around $100 per month (or around 1.2% annually) and with these borrowed funds I generate 8% annually on average. Some years it's +30%, some years it's -15%, but on average MSCI World index is around 8% annual growth since inception (for the last 150 years or so, including both world wars and the great depression).
You have no control on your borrowing costs, you assume you can borrow in USD for @1.2% & thats normal. The historical 30 year Average US mortgage rate is very much higher.

"Historically, the 30-year mortgage rate reached upwards of 18.6% in 1981 and went as low as 3.3% in 2012. 30 Year Mortgage Rate is at 3.04%, compared to 3.13% last week and 3.33% last year. This is lower than the long term average of 7.87%." https://ycharts.com/indicators/30_year_mortgage_rate

http://www.freddiemac.com/pmms/pmms30.html
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Old 23.04.2021, 20:00
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Re: How to get 7-11% return on housing in Europe?

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You have no control on your borrowing costs, you assume you can borrow in USD for @1.2% & thats normal. The historical 30 year Average US mortgage rate is very much higher.

"Historically, the 30-year mortgage rate reached upwards of 18.6% in 1981 and went as low as 3.3% in 2012. 30 Year Mortgage Rate is at 3.04%, compared to 3.13% last week and 3.33% last year. This is lower than the long term average of 7.87%." https://ycharts.com/indicators/30_year_mortgage_rate

http://www.freddiemac.com/pmms/pmms30.html
Yes but the forward yield curves all show that rates will be low for many years in the forward. You can even fix mortgages for 10 years at 3% in the Uk these days
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