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Real estate is not only an interesting proposition for personal use but is also in great demand as a profitable investment. Find out what your options are for investing in a rental property and how you can benefit.
The key points in brief:
Gone are the days when real estate was just for personal use. The numbers prove it: according to the Swiss National Bank, every fifth mortgage is taken out with the intention of renting out the property. Three reasons that speak in favor of real estate investments:
Find out in this article how you as a female investor can investor directly or indirectly in real estate.
Direct investment: real estate as an investment
Real estate can be purchased for the purpose of renting it out – be it in the form of a condominium or a multi-family unit. As an investor, you have the prospect of regular returns from rental income and can also benefit from any appreciation in value should you decide to sell the property in the future. Direct investments in real estate also entail risks. You should therefore factor in management and renovation costs and take taxes into account. In addition, there is often a lack of risk diversification, as a lot of capital is tied up in a single property. If one or more apartments are empty, this reduces your return. You should therefore find out about regional return and vacancy risks before investing. We would be happy be happy to provide expert guidance in answering your questions about real estate investments. Arrange a non-binding consultation here.
Indirect investments in real estate
To invest in real estate, you as an investor do not necessarily have to purchase an apartment, house or multi-family unit right away. Various investment instruments allow you to invest indirectly in real estate, even with smaller investment amounts.
There are three investment options:
Similar to “classic” investment funds, real estate funds also pool the capital of several investors and invest it in real estate. These real estate assets consist of developed and undeveloped land, residential and commercial properties and industrial buildings.
A distinction is made between two types of real estate funds. Open-end real estate funds manage multiple properties and allow investors to trade units at any time. Closed-end real estate funds generally do not allow for ongoing incoming and outgoing payments – instead the investment amount is clearly defined from the beginning.
Advantages | Advantages | Disadvantages | Disadvantages |
|---|---|---|---|
Advantages | Regular distributions, some of which are tax-exempt. | Disadvantages | Real estate funds are subject to regular fluctuations in market value and are not exempt from the risk of loss in value. |
Advantages | The fact that you can benefit from any appreciation in value. | Disadvantages | There are fees for the administration as well as for the trading of the funds. |
Advantages | Investments in real estate funds are more broadly diversified from the outset than when buying an individual property. | Disadvantages |
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Advantages | As an investor, you benefit from the professional management of the fund. | Disadvantages |
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Just like traditional exchange-traded funds (ETFs), real estate funds also track a specific index or other underlying assets. Real estate ETFs usually invest in other real estate funds or real estate stocks. UBS real estate ETFs are just one example.
Investing in an ETF enables investors to purchase a broadly diversified real estate portfolio. In addition, administration fees for passively managed ETFs are often lower than for investments in individual real estate funds.
Those who invest in ETFs are not protected from fluctuations in stock market prices. We recommend that you attach great importance to identifying a reliable provider when selecting an ETF. Anyone who invests in foreign real estate ETFs is also exposed to currency risk. Real estate ETFs, which invest to a large extent in real estate stocks, also correlate more strongly with developments on the stock market.
REITs are a special form of indirect investment in real estate. A REIT is a company that owns, manages and finances income-producing real estate and is usually traded on the stock exchange. Unlike in other countries such as Germany or the US, they are not licensed in Switzerland but can be traded on foreign stock exchanges.
REITs are generally tax-exempt at corporate level. In countries such as Germany, a 90% profit distribution is required by law. In the case of REITS, the correlation of returns with the stock market is often higher than with the performance of the underlying properties.
Real estate as part of a diversified portfolio
Including real estate in a broadly diversified portfolio can be worthwhile, as it supports the distribution of risk in the portfolio as an additional asset class.
Whether and how much you should invest depends on your current investment strategy. Other asset classes may be better suited for helping female homeowners achieve broader diversification.
Are you also interested in a real estate investment, but are not yet sure which one best fits your investment strategy? We would be happy to help you in a personal consultation.
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