Quick answer: An investment property in Eastern Switzerland can be worthwhile. What matters is the net return after all costs. In good locations, 2 to 4% is realistic.
The problem
The stock market fluctuates, the savings account earns barely any interest. An investment property sounds tempting. But is it really that simple? Many buyers overestimate the return. We show you how to calculate honestly.
Why invest in property at all?
Property offers tangible advantages over other investments:
- Stable rental income -- Money flows into your account every month.
- Inflation protection -- Rents generally rise with inflation.
- Value appreciation -- In good locations, prices increase over the long term.
- Leverage effect -- With a mortgage, you invest more than your equity alone.
- Tax advantages -- You can deduct maintenance costs and interest. More on this in our tax guide for property owners.
How do I calculate the return correctly?
Many look only at the gross return. That is not enough.
Gross return
Annual rental income divided by purchase price, times 100. In Eastern Switzerland, gross returns on smaller properties often range between 4 and 6%.
Net return
The net return is more honest. It takes into account:
- Maintenance and management costs
- Reserves for renovations
- Mortgage interest
- Taxes on rental income
A net return of 2 to 4% is solid. Anything above that is above average.
Which property is suitable as an investment?
Not every property works as an investment. Check these four points:
- Full occupancy -- Is the property already rented out? Then you have immediate income.
- Location -- Good transport links and infrastructure mean low vacancy rates.
- Condition -- Freshly renovated properties save short-term investment costs.
- Tenant profile -- Long-term, reliable tenants significantly reduce your risk.
What risks do I need to be aware of?
Be honest with yourself. Property also carries risks:
- Vacancies and tenant defaults
- Unexpected repair costs, such as a new heating system
- Interest rate increases on variable mortgages
- Market value fluctuations in certain regions
What does this look like in practice?
An example from Eastern Switzerland: a fully rented apartment building with monthly rental income of CHF 5'350 and a purchase price of CHF 1'400'000.
- Gross return: around 4.6%
- After deducting management, maintenance, and interest, a net return of about 2.5% remains.
- On top of that comes potential value appreciation over the years.
Compared to Zurich or the Lake Geneva region, Eastern Switzerland offers a significantly better price-to-performance ratio.
Expert tip from Nico: Always factor in a vacancy rate of at least 3 to 5%, even if the property is currently fully rented. This way, you avoid unpleasant surprises.
Conclusion
An investment property can be worthwhile if you calculate carefully and focus on quality. Do not be dazzled by high gross returns. For larger properties, read our article on apartment buildings as an investment, and if you are considering a rented apartment as an investment, you will find all the details there. At Rüttimann Vision, we help you find the right investment property in Eastern Switzerland.