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Old 24.07.2021, 20:25
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Investing - Buying small flat for renting?

Hello everyone!

I have this - sort of - crazy idea of investing (probably next year) in real state in switzerland and i was wondering if it make sense or not... Someone with experience in this topic?

I was thinking of buying a small new flat somewhere near Sion, Vaud (pay upfront 20% + loan) for then renting it and making the rent pay at least most of the monthly loan payment.


Thanks in advance, and sorry if it sounds crazy
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Old 24.07.2021, 20:29
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Re: Investing - Buying small flat for renting?

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Hello everyone!

I have this - sort of - crazy idea of investing (probably next year) in real state in switzerland and i was wondering if it make sense or not... Someone with experience in this topic?

I was thinking of buying a small new flat somewhere near Sion, Vaud (pay upfront 20% + loan) for then renting it and making the rent pay at least most of the monthly loan payment.


Thanks in advance, and sorry if it sounds crazy
There are some threads on the subject I think, but iirc the bank may either want a larger slice from you for the upfront payment or the mortgage rate will be higher than if you were buying it for your own use.
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Old 24.07.2021, 20:58
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Re: Investing - Buying small flat for renting?

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Hello everyone!

I have this - sort of - crazy idea of investing (probably next year) in real state in switzerland and i was wondering if it make sense or not... Someone with experience in this topic?

I was thinking of buying a small new flat somewhere near Sion, Vaud (pay upfront 20% + loan) for then renting it and making the rent pay at least most of the monthly loan payment.


Thanks in advance, and sorry if it sounds crazy
It’s a crazy idea but no need at all to be sorry. The rental yield in Switzerland is tiny. The numbers don’t stack up in my opinion. Interest rates will likely stay low but you need to be prepared that they don’t. As was mentioned already, deposit requirements are usually higher for buy-to-let mortgages. You’ll still likely have a sizeable loan on an illiquid asset. Very important to consider the opportunity cost of having the deposit tied up. If your investment horizon is long enough you’re much better putting capital to work in the equity markets. Best of luck!

Last edited by Polymath; 24.07.2021 at 21:12.
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Old 24.07.2021, 21:44
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Re: Investing - Buying small flat for renting?

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Hello everyone!

I have this - sort of - crazy idea of investing (probably next year) in real state in switzerland and i was wondering if it make sense or not... Someone with experience in this topic?

I was thinking of buying a small new flat somewhere near Sion, Vaud (pay upfront 20% + loan) for then renting it and making the rent pay at least most of the monthly loan payment.


Thanks in advance, and sorry if it sounds crazy
You will likely need a 35% deposit & interest rates will not be the lowest as it's a commercial loan & not for your own use. You can't use any pension fund for the deposit either.
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Old 24.07.2021, 21:48
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Re: Investing - Buying small flat for renting?

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... If your investment horizon is long enough you’re much better putting capital to work in the equity markets. Best of luck!
That. Plus:
- Sion area won't be a particularly liquid real estate market for year-round rental. If it comes to vacation rentals, the return is uncertain, and the arrangement is not viable unless you luck out with a local key/cleaning/handyperson.
- It's about 3h30's drive from St Gallen, different canton, language... don't underestimate the administrative costs and hassles.
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Old 24.07.2021, 22:06
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Re: Investing - Buying small flat for renting?

It seems to me from the OP‘s wording that he / she is not really seeking to get rich on rental income but will be satisfied if it covers the costs . I thus assume the real gains will lie in the appreciation of the real estate itself .

In other words, is a significant upward trend likely ?
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Old 25.07.2021, 02:52
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Re: Investing - Buying small flat for renting?

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It seems to me from the OP‘s wording that he / she is not really seeking to get rich on rental income but will be satisfied if it covers the costs . I thus assume the real gains will lie in the appreciation of the real estate itself .

In other words, is a significant upward trend likely ?
Sort of, but it seems that its not a good deal to do so...

My idea was that the flat would pay itself, but as some said:
- Valais is a terrible place to buy a flat for this (and its sort of the cheapest place to buy a flat in the whole switzerland, at least less than 250k)
- Any profit will be loss

Problem is that the only place that could/would give me a loan eventually would be switzerland, other countries is a no go since I dont live there, so most likely I would have to save until i can buy a flat with cash upfront
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Old 25.07.2021, 07:39
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Re: Investing - Buying small flat for renting?

It isn’t a bad strategy for a long term investment, particularly if you are paying interest and capital (even 1 or 2%). Building equity is a form of savings and builds your reputation with lenders.

But smaller flats, studio or 1bedroom, tend to attract younger tenants who are more transient and less reliable. A bad tenant can make you life very difficult.

Study the Valais marketplace; are flats in demand; what can you expect in rent; etc.

Go in with your eyes open and you should be OK.
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Old 25.07.2021, 07:45
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Re: Investing - Buying small flat for renting?

Lonza (Visp) are hiring like crazy, they've just announced plans to hire 2k more people wordwide. No info on what that means for Visp, but it can't be bad, not for VS either. At least as long as Lonza is doing well.
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Old 25.07.2021, 08:25
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Re: Investing - Buying small flat for renting?

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- It's about 3h30's drive from St Gallen, different canton, language...
The Valais is bilingual. French and German.
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Old 25.07.2021, 09:41
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Re: Investing - Buying small flat for renting?

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The Valais is bilingual. French and German.
Well 2 languages are spoken but people are far from bilingual in my experience. If you are used to Zurich Swiss German don't expect to understand Valais Swiss German.
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Old 25.07.2021, 09:46
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Re: Investing - Buying small flat for renting?

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Well 2 languages are spoken but people are far from bilingual in my experience. If you are used to Zurich Swiss German don't expect to understand Valais Swiss German.
Apparently Valaisdeutsch is hard for most Swiss (Swiss German speakers) to understand. My Mrs had more than one look of bemusement when chatting with a couple of locals!
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Old 25.07.2021, 09:49
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Re: Investing - Buying small flat for renting?

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Well 2 languages are spoken but people are far from bilingual in my experience. If you are used to Zurich Swiss German don't expect to understand Valais Swiss German.
Yes but all the paperwork etc is in French and High German.
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Old 25.07.2021, 10:10
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Re: Investing - Buying small flat for renting?

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It isn’t a bad strategy for a long term investment, particularly if you are paying interest and capital (even 1 or 2%). Building equity is a form of savings and builds your reputation with lenders.

But smaller flats, studio or 1bedroom, tend to attract younger tenants who are more transient and less reliable. A bad tenant can make you life very difficult.

Study the Valais marketplace; are flats in demand; what can you expect in rent; etc.

Go in with your eyes open and you should be OK.
Thanks Bowlie! Yes, I agree... Im not expecting to become rich but to increase the capital over the time, have multiple sources of incomes and so on...

I did a bit of research and find out that there are some Universities around and some other shops / factories, so that is a sign that there are people living there all year long
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Old 25.07.2021, 11:35
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Re: Investing - Buying small flat for renting?

It's a matter of personal choice and many people rent out property and in the UK "Buy to Let" is now big business. In fact, without this market, many who cannot afford to buy and so must rent, would be in trouble.

That said I would not touch this kind of "investment" with a bargepole.
Dealing with tenants and finding new ones.
Handling complaints and repairs.
Producing annual accounts and getting rent money out of tenants.

There's more too - and the icing on the cake is capital gains tax on the eventual sale...
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Old 25.07.2021, 11:39
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Re: Investing - Buying small flat for renting?

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The Valais is bilingual. French and German.
Sion is French only.

The CANTON is bi-lingual, but none of the town/villages.

Tom
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Old 25.07.2021, 11:40
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Re: Investing - Buying small flat for renting?

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Yes but all the paperwork etc is in French OR High German.
FTFY.

Tom
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Old 25.07.2021, 11:53
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Re: Investing - Buying small flat for renting?

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It's a matter of personal choice and many people rent out property and in the UK "Buy to Let" is now big business. In fact, without this market, many who cannot afford to buy and so must rent, would be in trouble.

That said I would not touch this kind of "investment" with a bargepole.
Dealing with tenants and finding new ones.
Handling complaints and repairs.
Producing annual accounts and getting rent money out of tenants.

There's more too - and the icing on the cake is capital gains tax on the eventual sale...
What would you recommend?
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Old 25.07.2021, 12:50
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Re: Investing - Buying small flat for renting?

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It's a matter of personal choice and many people rent out property and in the UK "Buy to Let" is now big business. In fact, without this market, many who cannot afford to buy and so must rent, would be in trouble.

That said I would not touch this kind of "investment" with a bargepole.
Dealing with tenants and finding new ones.
Handling complaints and repairs.
Producing annual accounts and getting rent money out of tenants.

There's more too - and the icing on the cake is capital gains tax on the eventual sale...
Without the BTL market, property would be considerably cheaper so would be able to buy themselves rather than rent.

Since the gains are taxable in CH, it's a bad idea v stock market where capital returns are tax free to private investors.
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Old 26.07.2021, 18:06
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Re: Investing - Buying small flat for renting?

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Without the BTL market, property would be considerably cheaper so would be able to buy themselves rather than rent.

Since the gains are taxable in CH, it's a bad idea v stock market where capital returns are tax free to private investors.
Problem is that the stock market now its a bubble about to * pop *

The safer products are:
- Gold
- Silver
- Real State

... Oh well, what a boomer, I had high hopes to be able to buy a small flat in valais or so for 170k-ish to then rent it and let it pay by itself
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