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Setting up your real estate project: The requirements you’ve got to meet when investing

Many factors that determine the type of object you want to buy must be determined before you start investigating.

Many factors that determine the type of object you want to buy must be determined before you start investigating.

In particular:

· Price of the property
We’ll narrow down our search according to your budget and your borrowing capacity.

· Geographical area
In Switzerland, the region in which a property is located indicates clearly the risk and potential returns that can be expected. The closer the property is to a large urban area, the lower the risk of vacant apartments – but the higher the selling price, which will have a negative impact on how much return the property yields.

· Property might need renovation
Sometimes, you have to renovate a realty so as to maximize its economic potential. When you think of refurbishment, you think of uncertainty, and above all, bills. For this reason, we absolutely need to study this aspect if we want to carry out detailed research.

· Property characteristics: number of rooms, size, etc.
Compared to properties with larger net floor areas, smaller floor areas generally offer higher profits per square footage. Conversely, larger surface areas are on average rented out for longer periods of time.

· Property types:retail or office spaces, domestic or business premises, etc.
Once we have laid down the criteria, we will use our network of useful contacts so that we can find the right realty to meet your expectations.

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An investment built on solid foundations: A structural survey carried out by an architect

Real estate inevitably implies architectural design. That’s why we organize a visit to the location together with our architect before you think of making any price offer to acquire the desired realty.

Real estate inevitably implies architectural design. That’s why we organize a visit to the location together with our architect before you think of making any price offer to acquire the desired realty. In doing so, the architect will be able to evaluate the general condition of the real estate, ask you questions about it, and finally give you an idea of what you can expect from it.

The financial sustainability of an investment property depends on the quality of the piece of work, since you need to be able to budget for the future costs and maintenance work.

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Financial feasibility study of the real estate project: The business plan

A detailed business plan shows the costs and benefits that the purchase of your investment property represents.

A detailed business plan shows the costs and benefits that the purchase of your investment property represents.

This business plan takes into account:

· The equity capital and investment capital to provide
When acquiring an investment property, the equity you need to inject is at least 25% and can be as high as 50% for business premises. In addition to these funds, you must bear in mind that additional costs and taxes must be paid to finalize the transaction (property transfer taxes).

· Operating costs
A realty needs day-to-day management to generate a profit. It requires accounting, an insurance policy, current charges, a management company to take care of the tenants, possibly a janitor/caretaker, and finally general maintenance work. And of course, all these things will cost you money as well...

· Mortgage payment and amortization (payment in instalments)
Depending on the type of mortgage loan the bank grants you, this will be the most important expense item.

· The tax burden
The tax rate of the rents you receive may influence the attractiveness of your real estate project, and a key factor in its success – that’s why running a simulation of these taxes is so important.

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Tax optimization for your investment: Finding the optimal solution

When investing in real estate, the first thing that often comes to mind is investing in your own name. This means that you own the property.

When investing in real estate, the first thing that often comes to mind is investing in your own name. This means that you own the property. Although this option makes administrative procedures and selling a property easier, this option isn’t necessarily the most attractive from a fiscal point of view. And between us, it’s also possible to create a company that will acquire the property for you.

Our team and tax experts are willing to carefully study your application so as to look at all possible scenarios – then you’ll be able to choose the framework that best suits your needs.

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Optimizing your real estate return: Here comes the mortgage broker

The quality of the project and by extension the long-term return it yields depend largely on the property itself and the mortgage loan you take out.

The quality of the project and by extension the long-term return it yields depend largely on the property itself and the mortgage loan you take out.

The interest rate and the annual amortization are what really increase the profitability of your project. Thanks to our partners and experience, we'll work with you to negotiate the best terms for your home loan conditions so that you can achieve big returns on your investment.

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Conditional offer and validation of the mortgage

We will put in a firm or conditional offer depending on how advanced the project is and what your needs are.

We will put in a firm or conditional offer depending on how advanced the project is and what your needs are.

The terms and conditions generally apply to:

· A correction in the selling price
· A lack of documents (CECB/GEAK – Cantonal Energy Certificate for Buildings, renovation scheme, current leases, accounting of the property, etc.)
· Getting a mortgage loan.

With a conditional offer, you express your strong interest in the property while asking to make adjustments before both parties eventually take up the final offer.

As soon as both sides accept the purchase offer, we will proceed to secure the end mortgage loan.

Investing in real estate: How to proceed, with the help of FBKConseils

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1. The first meeting!

The first meeting with us is always free of charge. Our aim is to get to know you and to take the time to understand what you want your project to be. We take this opportunity to show you not only to the team that will be assisting you, but also how we work.

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2. The specifications!

If our vision for your project suits you, we'll draw up specifications to plan the ideal real estate project for you. Then, we can start looking for a quality property – which takes between 1 to 8 weeks to find.

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3. The visit on the premises!

Once we have found a property that meets all your criteria on paper, we'll organize a visit on site with our architect so that we can examine the current state of the property and draw up a list of the renovations that have to be carried out over time. Finally, we'll tell you what we think about the quality of the property.

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4. Let’s examine your application and ask you questions!

If the property’s overall quality appears to be good, we’ll ask you for all documents we need to create your mortgage application file. We’ll also take this opportunity to provide you with an economic and fiscal analysis to highlight the overall financial impact when you complete the purchase of your realty.

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5. Firm, conditional, or mortgage offer… It does matter!

We will make a firm or conditional offer to the seller. This offer expresses your willingness to purchase the property and include the details that must be clarified before completion. Simultaneously, we’ll work hand in hand with our mortgage lender to get you a previous contract from them.

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6. Let’s firm it up!

If the offer has been accepted by both parties and you have approved the secured loan, we’ll schedule a meeting with the notary of your choice. Then, we'll prepare the final documents that need to be sent to the bank so you get the final credit offer.

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7. Let’s sign and get the disbursement!

Once we have fixed the appointment with the notary [in civil law, a notary is the equivalent of a UK solicitor or a US real estate lawyer or signing agent – Notar in German; notaire in French; notaio in Italian], raised equity and mortgage, all you have to do is wait for D-day.

How long does it take and how much does it cost?

No matter the type of file you have, investing in real estate takes time. Most of this time is spent searching for a suitable property – to find it! Once we have found it, the rest goes on quite quickly. From 1 to 8 weeks are needed to carry out our research, then 1 month to examine and complete your application.

You only have to pay for the support services once we have found and bankrolled the property. FBKConseils gets money as a percentage of the property price based on how big the house is and how demanding the task was. The rate varies between 1 and 3% and is all-inclusive.

Frequently asked questions regarding real estate investments in Switzerland

Not to be confused with the investor’s net return – a return on a property is around 3% for a city like Geneva and can go up to 5% in some cantons like Jura if you only count the rents you receive. Another form of real estate return is the value of your property, and in Switzerland, their values have been increasing for years. So, you’ll receive the rents and might eventually sell the property at a higher price and realize a capital gain.

If you want to buy a property to live in, the minimum equity will represent more or less 20% of the sale price. However, if you're buying a property to yield return, the minimum equity requirement will be 25%. Whether you’re buying it to rent or to live in it, you’d rather not forget to add fees and taxes from your sale to these figures.

No, it’s not mandatory. It has become commonplace over the last few years to hear that if you want to invest in real estate, you absolutely must establish a real estate company [société immobilière (SI)/Immobiliengesellschaft] or would require a société anonyme (SA)/Aktiengesellschaft (AG) [equivalent to a PLC in the UK and a corporation, incorporated, or joint-stock company in the US]. Some advantages of this approach can be, i.e., that it becomes more tax-friendly until the rents pay out. Still, a company, no matter how small, must be managed. In addition to the time-consuming management, using profits for personal use becomes more complicated than if you purchase the property in your own name.

It is clearly easier to invest money in stocks than in real estate. Nevertheless, with our mortgage rates and with a big disparity in housing prices, it’s possible to find apartments between CHF 200'000 and CHF 300'000. You thus need to personally contribute between CHF 50'000 and CHF 60'000.