I know this may be unusual and not even possible but anyway I want to throw the question out there and I need the sage advice of my fellow EF'ers so please make yourself a cup of tea and settle down to read the below...
The story is that I have lived in the same apartment now for almost 5 years and I really like it, the location is ideal next to Sihl City so pretty damn central with great links to public transport and the size is perfect for 1-2 people (though I would have to eventually move if I met someone and had kids). My rent is also unusually cheap for the area I live in, 1650chf for 83m2 and 3 rooms. The apartment is old and hasn't been renovated in a couple of decades, but extremely cosy and with some love could be an amazing place. As such, I think it would make my ideal first property purchase.
However, I have no idea if this is generally even possible and before I ask I would like an idea of how to approach this. The apartment can be summarized as:
The building looks like 1950's. The apartment was probably last renovated in 1980's or so. The balcony is tiny and not worth bothering about. The bathroom is serviceable but small, the layout is crap and ideally needs to be ripped out and completely re-done in every respect. The kitchen is serviceable and is a decent size but ideally needs to be ripped out and completely re-done and re-floored. The floors are only partially wood with laminate plastic in the hallway and kitchen (that is really showing its age) and I would ideally need to re-lay a new wood floor in the living areas and lay a tile floor in the kitchen. The kitchen and dining room floors also have some creaky noisy spots so would need some love. The hallway storage needs to be ripped out and re-built. The bedroom and living room are in my view fine and would not need much attention. I would need to move and add electrical plug sockets in the rooms as they are at chest height and not ideally located.
As it stands, without renovation but given the central location of being next to Sihl City it looks to me that this apartment is probably worth around 450-500'000 if I was to give a ball park figure based on my little knowledge of the Zurich property market. With renovation to fix the above listed issues which I would think would cost around 50'000, I think it would be worth 700'000+. I would also hazard a guess that my dear old retired dad who is a DIY guru would also come over and help me to do things like tile and lay floors and save some money there.
What is surprising to me is that whoever owns this building has not invested more money in renovating this building in order to maximise their profits, they basically just touch it up when someone moves out and otherwise it is full of very long-term residents whose rent has essentially gone down in all of the years that they have lived here. This give me hope that the owner is old and likes an easy life without being a money-grabbing mercenary in business. I also have the money to pay a deposit.
So, that's the story and what I would please like to know is do you think I have any chance with approaching the Verwaltung to discuss buying it and what would be the best approach?
Are some of the apartments invidually owned?
If not, forget it.
Tom
No, as far as I know (without asking) they are not and this is why I am asking if it would even be possible. It could be purely a pipe dream but I have to ask.
Most likely the owner is would only be interested in selling the whole building, as it's too much of a mess otherwise to deal with.
My late MIL made that mistake, and we are dealing with the mess.
Tom
Yes you are right it raises a lot of concerns as I would essentially be able to put a halt on any plans the owner had for the building.
We bought ours three years ago, but all are individually owned, about half occupied by the owners, the other half rented out, so no problem in this case.
Tom
From a quick back of the envelope calculation, based on your rent and around 3% rental yield you won’t get the apartment for less than CHF700k anyway.
For me, I don’t see myself buying any property in Switzerland anytime soon because I see better opportunities for the tied up capital elsewhere and a substantial correction potential for house prices or the Swiss Franc once interest rates start rising around the world.
My two pence: keep renting!
Most people are paying about 400 months rent to purchase. If it's only worth 500k it's clear why the landlord does not renovate as he is way ahead at the moment. Renovations have quite a short life at the higher end, possibly 10 years it all starts to look tired again.
Personally, I think 400 months rent is huge bubble territory, I would prefer to pay 200-250 months rent if I was investing myself. I suspect UK prices will fall to 160 months rent as that's the max the new legislation for BTL lending allows,
We paid 266 months rent for ours.
Tom
Thanks for confirming my calculation Ace1
400 months rent is equivalent to 3% rental yield (12/400 = 0.03!)
Those are the sort of no's I like to hear & realistically in the right ballpark for a long-term commitment.
The bank had no problem giving us an interest only loan with only 30% down, so I guess that they figured it was worth more than we paid.
Tom
Where are you getting your valuation from? I think you are underestimating the market. I did a search on Homegate.ch for 3-3.5 rooms with 60-80m2 in Zurich City. The best I could come up with was 71m2 in Albisrieden for 700k. It’s in ok condition, but you’d want to do similar work to what you’re suggesting.
I also think you’ll be doing well to do everything you are talking about for 50k. I’m no diy expert, but if you are moving sockets and stuff around you’re surely going to have get a plasterer and decorator in as well. Average flooring for the whole apartment is easily going to run you to 10-15k fitted. Figure 15-20k for a small kitchen (maybe less from Ikea). 10k for a bathroom. It quickly adds up! You can obviously save doing some yourself, but do you have all the equipment.
Thanks guys for the common sense comments and sense checks, this is not an area I am knowledgeable or experienced in. eyebeebee you are of course right than I am very likely underestimating the market and costs of renovation, It was really a case of waking up and then having a Blackadder-esque, Baldrick-style "I have a cunning plan"... and we know how those end up.
In the end I will just email them and ask and if I get laughed at so be it... there are plenty more apartments to buy in Zurich when I am ready.
Do you pay the rent to a company or to an individual?
In the former case, you can just about forget it.
As your rent is rather cheap, I'd let it go and enjoy the low rent.
If it's going for sale, it will sold as a whole, for an insane amount and then renovated and then the rent will be 50% more (or 75%, or as it's close to Sihl City and they'll always find someone from Big G, 100+% more).
This is where the legal minefield is, and it may cost you a hell of a lot to protect your position on this.
Our last apartment was also in a 1950's building of 6 apartments. The Swiss man we rented from owned the two front facing, lake view 1st and 2nd floor apartments, and the couple who owned the other 4 apartments lived in the ground floor garden apartment. Apparently, the couple sold 2 apartments to pay for the last round of refurbishment of the building without having to go into their savings.
When they died, their children inherited and sold their share of the building to a property developer, and our landlord was bought out. There was little else he could do as the new owner had the kellers, land, access to the maintenance areas for the shared facilities, stairwells, etc...and our beautiful building was demolished last year. Even the agent who came to do the inspection and key hand over said it was criminal that such a beautiful place was to be demolished.
250 for mine, when I bought it ten years ago. According to the bank valuation it's currently worth 60% more than we paid for it.
244 rents for mine. That was in Lugano in 2006.
<300 rents here, bought in 2015. Canton Bern.
I'm interested in how this pans out. I might potentially do the same with the apartment I'm renting right now.