Hi all, I’ve been tweaking a spreadsheet that taduncombe generously shared in this thread back in 2017, since he/she set up the spreadsheet with a much more ROI / “possibly rent the apartment out while still owning it” focus. I instead wanted to look more purely at completely owner-occupied house/condo/apartment purchasing versus renting, especially over longer periods, so I came up with this:
https://docs.google.com/spreadsheets…it?usp=sharing
As in the original spreadsheet, you can adjust pretty much anything in the blue boxes depending on different income/canton/economic assumptions, and you end up with Net Profit (or rather Net Cost, since it’s almost always negative) comparing renting versus buying, so for example the current sheet setup shows you coming out about 85k CHF ‘ahead’ after 25 years when buying a 1,500,000 CHF flat versus renting at 4,000 CHF (starting rent). Eigenmietwert is always a super tricky one to calculate, but I took the Kanton ZH condominium rough calculation of 4.25% purchase price * 70%, not sure how close to the mark that actually is.
Biggest thing is that lots of these factors (mortgage rate, investment return, appreciation, rental rate increase, tax) become more uncertain over the longer term, so probably approaching the assumptions over longer durations with some conservativism / pessimism is best.
Anybody have any criticism/recommendations/input? Let me know if you have any questions!
Yeah! What is the likelihood in the next 15 years of:
dealing with lousy neighbors?
suffering a flood?
getting laid off?
being forced to relocate?
getting divorced?
having an earthquake?
a local nuclear meltdown?
getting hit by a comet?
These are all factors to consider
Just like comparing the outcome to the return on the S&P! When you see people do that, you just know they don't understand risk.
To the above two posters: that's right! Why make a model at all or a forecast? I mean, just buy businesses and properties because you have business sense and if you don't have that business sense then too bad for you. And actually, as we are about to get termo nuked anyways why bother right?! I mean come on, models are for people who just don't get risk....
To the OP I looked at your excel, I think it's quite practical, it's always nice to play with various assumptions. I tend to be a bit more simple when buying real estate and use a general rule of 6% gross yield for rentals (I haven't bought a rental since 2014...) and otherwise I just do construction projects and for this I simply take (market price of finished product -10%) minus (purchase + construction costs +10%) and see if the money makes sense. But no one should discourage you from building more complex models, we all realise reality is not the same as an excel, but an excel should raise any potential red flags fast...
For my home in Switzerland I am less picky - I just looked at my fixed mortgage rate and how much it costs me and compared it to the rental I was paying and that was it. Given you can deduct basically anything you do to your house (improvement work), the theoretical rental cost of the property gets diluted fairly fast making home ownership in Switzerland a lot more interesting than what most people were telling me initially.