Purchase exclusive multi-family properties in sole ownership

What are the reasons for buying an apartment building? 

A multi-family house (often referred to as a block of flats) is in great demand in Switzerland, especially as an investment. There are good reasons for this – while shares and numerous other asset classes are subject to regular market fluctuations, the market for apartment buildings is relatively stable. This market stability makes an apartment building in Switzerland an attractive investment – not only for institutional investors, but also for private investors.

In addition, an apartment building has several apartments. Compared to a single-family house or a condominium, they offer the advantage of risk diversification. If, after purchasing a house with 8 apartments, one or two apartments are vacant in the meantime, the owner still generates income.

With the current low-interest environment, it becomes even more interesting to buy a multi-family house. Rarely before could borrowed capital be obtained at such a low interest rate. This gives investors the opportunity – taking out a relatively inexpensive mortgage – to multiply your return in relation to the (equity) capital invested.

What equity is needed to buy an apartment building?

The amount of equity required to purchase an apartment building depends on its size and purchase price. For private investors, a reasonable investment volume starts at around CHF 2 million. Since January 2020, investment properties can be mortgaged up to a maximum of 75%, which means that the minimum equity ratio is now 25%. If the desired apartment building has a purchase price of CHF 2 million, at least CHF 500,000 of equity is required for the purchase.

Which locations are suitable to buy an apartment building?

Before buying a multi-family house as an investment, the goals associated with the purchase should be clear: Are you aiming for the highest possible return and accepting any fluctuations for this? Or do you want to generate a somewhat lower, but stable, passive income? Based on the desired result, different locations are suitable for the purchase of an apartment building.

On the Swiss real estate market, a basic distinction is made between A and B locations. While apartment buildings in A locations usually have a high rental stability, the yield is somewhat lower because the costs for the apartment building are usually higher. Multi-family buildings in B locations are usually somewhat less expensive, which is why they also allow for higher yields. At the same time, renting can be more difficult, which increases the risk of vacancies. The utilization rate plays a major role in the purchase of building land as well as in the purchase of an apartment building with the idea of a conversion.

It is therefore worth taking a closer look at the different regions of Switzerland and checking the location of the desired apartment building before buying.

Property management after buying an apartment building

As the sole owner, it is up to you who you hire to manage your property. However, Crowdhouse will gladly take over the complete real estate management of your property upon request. Our Real Estate Asset Management consists of several specialized departments with over 30 employees.

They take care of a professional maintenance and value preservation, an efficient first and re-letting as well as a sustainable management of your apartment building. In addition, our in-house experts are available at any time to assist you with acquisition, due diligence and property valuation, as well as providing competent legal advice.