I know the basic pros and cons but would welcome the feedback from anyone who has actually done this. Specifically, any issues around the mortgage ? Liability and insurance ? Property management ? Finding tenents ? Legal issues ? Any 'gotchas' ?
I'm thinking about renting out 'my' (I have a mortgage) flat in Switzerland while I continue to live in Switzerland.
Choose a tenant carefully and without haste. A lousy tenant will make your life miserable.
When we moved to the Land of Cheese and Chocolate, we rented our house out in the US...
...and we got completely snowed.
It cost about USD 15,000 in lost rent, legal fees, and eviction services, not to mention massive amounts of stress. Maybe even more - for my sanity I never went back to look at exactly how bad it was.
After that we hired a professional, and while we make somewhat less money (I'd guess about 15% to 20% less) we also have almost no stress.
I cannot say anything about being a landlord here, but depending on where you are in your life, I'd argue that making less but having professionals sweat the details is a net positive.
Where is the flat you want to rent out? Basel or elsewhere?
We rented out our house for 5 years in the UK in the early 90s. It was essentially a nightmare!
The first tenants were OK and all went smoothly for 2 years. Then the house was empty and needed cleaning up for new customers. We used an agent in the area and they needed chasing weekly when we were looking for tenants.
We then went through a series of awkward customers, who complained a lot and the agent just bounced complaints to us.
After 5 years we had just about covered the mortgage payments and agents' fees with rental income. The house was filthy and we had to go over to clean the place up to sell. In those 5 years, the market was falling and the selling price we achieved was 30% below the value 5 years earlier.
My advice is unless you absolutely cannot sell your flat or intend to return to it in a year or two - sell it and forget it...
I'm a bit confused. Are you talking about renting out Swiss property while also living in Switzerland? That's what I'm getting from the title, but talks of TNCs make me think you might be talking about renting from without the country.
In either case, when we bought our second house here, we decided to rent out our old house. We chose a rental company; they take about 5% and handle most of the interactions with the renters. It's been pretty stress free (knock on wood), but we may have been lucky.
Hi... thought I was clear enough.. but I'm looking to hear from anyone who lives in Switzerland and also rents out a property in Switzerland.
Particularly interested if you can recommend an agency to handle 'everything'.
Can you tell me the name of the rental company ?
You are almost definitely going to need to change your mortgage.
Depending on how much deposit you originally paid, and how much of the actual mortgage you have paid back (rather than the interest portion), you may need to pay another lump sum to increase the deposit.
Not my story, but a colleague's, so I may be a bit hazy on the details:
She is a year into eviction proceedings. It's been a nightmare.
She had to go back to her home country to care for a parent and expected to be gone 6 months. So she looked for a short term tenant to rent her house. She found a visiting researcher here on a sabatical that lined up with her dates, everthing looked rosey. And eveerything was rosey until she returned to Switzerland.
Well, her tenant decided to leave a month early, and rather than contact her, sublet the place. My friend had no idea that the sub-tenant was there until after until she finalized the end of contract with her tenant, done from abroad. She came back to Switzerland expecting to live in her house, only to find someone else already there.
The sub-tenant has never paid rent. But because he is considered in some way vulnerable he has some level of protection against eviction. (I don't know any more than that.) Hence the lengthy eviction process.
Not only has the sub-tenant never paid rent, but he has trashed much of her home.
She hopes to have her home back soon - but every trip to court is a roll of the dice. The whole nightmare has cost her a fortune. She would have been far better off letting the house sit empty for the six months she was gone.
Good to remember to put a closure to forbid subletting in the contract
Can’t recommend an agency as I am not in your area. But I can recommend going with a professional, at least for the initial period. But check the contract very carefully. We got caught when our tenants wanted to buy the property only to discover that we had committed to paying the agency 5% commission on the sale.
BD Gérance.
I'm not sure how widespread they are, as a forewarning. I also can't say if my experience is unique or if they're generally good, as I only have my experience.
Not certain that is legal, but you can insist on approving any sub-let.
I live in Switzerland and have been renting a house for 20+ years here.
A key point a house; the renting business is a game of ratios; if you rent a house or flat they both come with the kitchen and bathrooms. But you get far more rent for a house than you do a flat; however the cost of fixing/replacing things is roughly the same, so renting a house you easily cover your bases, a flat less so I strongly suspect.
As for agencies, when we lived on the other side of Switzerland we had no choice, I contracted an agency for 10% if the rent to manage the place.
Over the years we had a few tenants, they rent stay for a few years and then leave. Thankfully no-one trashed the place, but nor did they take much care of it.
In the meantime the turnover of staff in the agency was high; it is rarely the same employees who rent and then manage the exit. This brings with it the usual excuses; the last group of tenants I had claimed the place with fifty when they moved in, so they didn't want to clean it when they moved out. Given the girl who did the inventory X years before no longer works there, you can imagine how that goes.
Indeed the agency put in the minimum effort to manage anything, they will just call a tradesman and pay the bill [out of your money]. If you're making a good return, tell yourself it is a business and life is too short. If you're not, then it isn't funny.
These days we live closer and I manage the place, don't lose 10% and personally investigate any issues the tenant has BEFORE I call anyone. So random tradesmen visits to the place no longer happens and I don't get tradesmen visits looking for work, saving me 500CHF a month I suspect, but its more hassle for sure.
So I recommend managing yourself if you are less than an hour away. if you're not then you need to make it clear to the agency you want it actively managed if you can. So problems need to be investigated before tradesmen are called, ideally you'll find an agency with older staff, staff who will more likely be there to see the tenant in and see them out too.
Be very certain and clear with the keys and cleaning. I am sure we gave 4 keys to the agency in 2001 when I first rented the place... by the time I fired them I had just 2 keys? Did they change the locks, no. Could I charge the tenants, the last lot maintained they had only 2 keys, no. Who pays, I paid.
The best tenants where Japanese, they were polite, quiet and everybody [as in the neighbours] liked them. The worst tenants where Portuguese, they made lots of noise, loved BBQs and the neighbours all hated me for letting the place to them.
If you do manage it yourself, you need to be confident & assertive; people will be people and they'll try it on. If it wasn't broken when they moved it and suddenly it is, then they have broken it and need to pay for it.
I didn't mention mortgage; I use UBS and they don't care. As long as the mortgage is paid. Finding tenants has become increasingly difficult as the place has aged. To-date I had to drop the rent by 25% over what it was 20 years ago, principally because I am competing with new builds; New Builds with shinny new kitchens and shinny new bathrooms. In retrospect, maybe I should have put in a new kitchen/bathroom after ten years; but wait a minute you're talking about 50K investment, so easily a years rent. Your call.
Did mention pets; I accept dogs, not so keen on cats, ferrets etc. Birds are ok. Ideally the older the tenants the better, ideally with a grown up family living elsewhere, hey'll be less likely to move, quieter and take more care of the place. Families with kids, young ones will trash the place as will teens, so ideally older than 5, but younger than 12. I know it sounds unreasonable, but so are teenagers and under 5s.
Given that you can now get yields on bonds that do better than Swiss property, there's no reason to have the hassle of renting out property.
This is what I was looking for .. thanks a lot
In another thread I asked about bonds and didn't get any decent info. Can you give pointers to which bonds you are referring to ?
Using Agencies, thinking about this a little more I wanted to share a true story about passive management. Names and Events have been redacted.
It is Friday night and Hiroko and family [teenage girls] are going on a ski holiday at Zermatt. He is just about leave when he notices a wet patch on the ceiling above the kitchen. Being Japanese and a good tenant he decided to email the agency to let them know, maybe there is leak somewhere.
The weekend passes.
Monday morning Madeline [the 15 year old intern at the agency] picks up his message and tries in vain to contact Hiroko for more details. She doesn't work Monday afternoons.
Tuesday morning Madeline tells Bernard [her 16 year old supervisor] about the issue. Fortunately for me [landlord] he has some experience with burst pipes and water damage and tells Madeline this is important and needs to be addressed tout-suite. She doesn't know Hiroko has taken a vacation, since he didn't mention it and continues to call the house with no answer.
Wednesday she again reports to Bernard the problem. He is a tad concerned now and tells her to warn me and contact the tenant. She again tries to do so by calling the house and leaves me a message at the end of the day.
Thursday I call the agency for some clarification and talk to Bernard about it. What water leak, how much damage is there; I am concerned the tenants deposit isn't going to cover this. Bernard assures me its in hand and chases Madeline by sending her an urgent message, although she doesn't work Thursdays at all.
She comes in Friday and picks up her bosses emergency message. She MUST contact the tenant that day, She hunts through the paperwork, finds his emergency contact details, calls him in Zermatt and insists he cuts his vacation short to return to the house. Hiroko being a good tenant does so but warns Madeline that he won't make it back until 7pm that day. Madeline arranges for an emergency plumber Pierre to meet him at the house at 7pm.
The weekend passes
Monday I call Bernard and ask for an update on the leak last week. He assures me it has been handled, they called back the tenant early from his vacation to get into the place and found no problem, they will manage the fee for the emergency plumbing call [by taking out of my rent]. I am not happy with the answer and insist they investigate further.
Tuesday Bernard passes the instruction to his minion Madeline and she calls the Pierre the plumber back in again. He talks to Hiroko and discovers that his teen age daughter likes to have long showers and frequently floods the bathroom. Bernard concludes that was the reason water was coming thru the ceiling.
Wednesday Bernard reports back to Madeline telling her he has the solution and can reseal the bathroom. She feels guilty about this whole thing I guess and agrees that would be a good idea, he should do so.
Thursday Bernard returns to the property and seals both the upstairs and downstairs bathrooms. I call the agency in the meantime but can get no reply. You recall Madeline doesn't work Thursdays. Bernard happens to be out.
Friday I touch bases with Hiroko and hear the whole story, the emergency plumbing visit, and the subsequent one to real seal BOTH bathrooms. I call Bernard, and ask for his explanation. He doesn't know anything about the second visit or why they resealed BOTH bathrooms but will handle it [by taking the cost of the work out of my rent].
So in summary there the tenant cut his vacation short and I paid 1 emergency plumbing visit for nothing and then the cost of sealing TWO bathroom, for nothing, even though there was no leak.
This is a TRUE story, maybe the timing didn't quite layout like this, but I won't forget the 4 figure bill I had to fix the non-exist leak. Use an agency by all means, but you may have a few surprises.
OK.. I think I have my answer.
I have rented out my UK house for 20 years through an agency. I've had a few issues but they've all been handled efficiently and overall it's been worthwhile (and getting work done in the UK doesn't have the same implications as it does here).
This horror story, and the reality of Leherstelle working in a Verwaltung is another piece of weighty evidence.
If only I knew enough about investing in Bonds.
It should make no difference to the bank, so don't expect to pay more. In fact, they will add the rental income to your income and may lend a higher amount.
Vet the tenant carefully. Previous landlord and employer. Phone them as many do not want to give a bad reference in writing.
Check they have no debt against them and if the tenant is co-signing with a partner, check the partner as well.
For a private tenant you can take up to three months as a deposit (onto a blocked account) and for a company it's six months.
Add clauses such as no sub-letting without your authority
A third party liability insurance must be in place
No pets and if you do make sure the insurance provides cover in case of damages
Make sure there's a clause for extraordinary termination of the rental contract if terms are breached.
Make the contract yearly and renewable, giving one months notice. Make sure no notice can be given for end December as this can be a nightmare for both landlord and tenant regarding removal, repair and cleaning companies.
Other than that it can provide a good sourcce of extra income.