The Geneva Situation

[Beffa V.]

Hi,

I'm new to this forum and I come from Geneva, Switzerland in Europe, I found a lot of very interesting informations and rules, like the 50% and the 2% rules, on BiggerPockets but it seems to be impossible to invest in my local market with these rules so I registred to try to see what you, US expert, thinks about the situation in Geneva and what I should/can do here.

First things First, in Switzerland everything is expensive, and housing is specialy expensive in Geneva since we have a lot of banks, international companies, NGO and even the United Nations who brings a lot of very high paid employes to our city.

The whole Switzerland is probably smaller than most states in the US and Geneva is a small state in Switzerland. We have a population of 200k ppl in 12,130 km2 (31,417 /sq mi). We are on the french border and arround 200k french ppl cross the border everyday to work in Geneva.

On the housing front, only 17% of the ppl are house owners, most of the houses are owned by private and public pensions funds. We have a very high majority of renters and we have a severe house shortage, Geneva population has a growth of 8% for the last 5 years with only a 3% growth of the houses number, it's a political issue since most construction projet in Switzerland are approved in 2-3 month when in Geneva it's 2-3 years.... Forclosure simply doesn't exists, since there was only 9 forclosure last year....

A simple, basic SFR is over 2,000,000 USD and a good property in a good location is over 10,000,000 USD so It's completly out of reach for me and I'm looking at condos.

For condos, the median price is 10000 CHF per square meter, to translate it's 1000 USD per sq ft and it's a median price, condos near the lake or in the city center are two or tree times more expensive.

With theses prices, the 2% rules is completly impossible to obtain since the rent for a small condo of 300 sq ft is around 1500 USD (0.5%) per month and a 1000 sq ft condo is arround 4000 USD per month (0.4%).

The only good thing is the interest rate who is incredibly low at 2.79% for 15 years for a fixed rate for exemple, another "strange" local particularity is that in Switzerland we don't really pay our mortages, ever : for fiscal reasons it's a lot more interesting to have a debt on our house so we pay a small interest rate and have a big tax reduction.

Most of the experts agree that Geneva face a housing bubble, the problem is that 10 years ago they where saying that too and prices have rised by 100% since... and there is still a severe house shortage and very low credits costs so I don't really see how things could really change...

I tried to look in other part of Switzerland, the price is lower but the rent goes down too so the ratio isn't really better...

One possiblity would be to invest in France since the border is so close and the price theres are 40% lower and there is a lot of government helps for investors like 19% of your money back on a new house purchase if you keep a gov fixed (read low) rent for 9 years.

What would you do in my situation ?

PS : Sorry for my English, it's not my main language, I hope you can read it.