Zurich serviced 1-bed: do the CHF 721,600 numbers hold up?

[findTheAtlas]

An 8.9% gross yield looks strong, but the CHF 5,378 monthly figure is my main concern. This would be my first serviced-apartment purchase: a one-bedroom in Zurich priced at CHF 721,600.

I have budgeted for empty periods, management, ordinary upkeep and a larger repair, although I may be treating the rent as cleaner income than it really is. Should I first establish whether it is tenant rent or operator revenue before adding cleaning, utilities, insurance, furniture replacement and turnover costs? I also plan to test the financing at a higher rate. Once those figures are separated, what net return would you require for the remaining vacancy and operating risk?

 

[uma.moss]

The first thing I would clarify is whether CHF 5,378 is actual rent paid to you or gross serviced-apartment revenue before utilities, cleaning, linen, booking costs and furniture replacement. Those items can make the 8.9% headline figure misleading. I would also model tenant turnover separately from ordinary vacancy, because each change may create both an empty period and extra costs.

 

[ari.brooks]

Is the CHF 5,378 based on an existing tenancy, an operator forecast, or comparable apartments? Also, does management charge a percentage of collected revenue or a fixed amount? Without those details, choosing a satisfactory net yield is premature. Include insurance, ownership-related charges and financing at a higher rate than initially offered, then see whether the cash flow still works.

 

[ari.brooks]

I would be more cautious than Mia about treating this mainly as an operating-cost issue. The larger risk may be that the monthly income assumption is too optimistic or depends on consistently high occupancy. Build three cases using the same expense categories: expected income, a meaningful vacancy period, and lower rent plus higher financing costs. Then compare annual cash flow after every expense and reserve, not just the resulting yield percentage.