ᐅ Condominium as an investment property, maintenance reserve fund
Created on: 22 Jul 2015 11:28
M
Musketier
I have a few questions for investors in condominiums.
As far as I understand, owners of condominiums pay a monthly fee for the building’s maintenance and administration.
This fee includes both service charges that can be passed on, service charges that cannot be passed on, ongoing maintenance costs, and the reserve fund for communal property.
For the reserve fund of the individual unit, there are different calculation methods, such as the Peters formula or according to the Calculation Ordinance.
If I interpret this correctly, using the Peters formula, for a building approximately 12-15 years old (historical construction costs for a multi-family house estimated at 1000€/m² (92.9 sq ft)), you would arrive at about 1€/m²/month (0.093 $/sq ft/month).
According to the Calculation Ordinance, for a building younger than 22 years, it would be 0.60€/m²/month (0.056 $/sq ft/month) or 7.10€/year (0.66 $/year).
How realistic are these numbers?
In addition to the communal property reserve fund, one should also build a separate reserve for the individual unit. What order of magnitude should one realistically expect when calculating this for a building about 12-15 years old?
The context is an investment in a condominium apartment to rent to parents.
For an initial rough calculation, I would like to know approximately what ongoing costs (excluding interest) the landlord should expect to incur over time.
As far as I understand, owners of condominiums pay a monthly fee for the building’s maintenance and administration.
This fee includes both service charges that can be passed on, service charges that cannot be passed on, ongoing maintenance costs, and the reserve fund for communal property.
For the reserve fund of the individual unit, there are different calculation methods, such as the Peters formula or according to the Calculation Ordinance.
If I interpret this correctly, using the Peters formula, for a building approximately 12-15 years old (historical construction costs for a multi-family house estimated at 1000€/m² (92.9 sq ft)), you would arrive at about 1€/m²/month (0.093 $/sq ft/month).
According to the Calculation Ordinance, for a building younger than 22 years, it would be 0.60€/m²/month (0.056 $/sq ft/month) or 7.10€/year (0.66 $/year).
How realistic are these numbers?
In addition to the communal property reserve fund, one should also build a separate reserve for the individual unit. What order of magnitude should one realistically expect when calculating this for a building about 12-15 years old?
The context is an investment in a condominium apartment to rent to parents.
For an initial rough calculation, I would like to know approximately what ongoing costs (excluding interest) the landlord should expect to incur over time.
ypg schrieb:
I would also discuss this with a tax advisor: you are allowed to charge a reduced rent to direct family members. The 66% rule applies here. After all, you need to declare the rental income and pay taxes on it in your tax return. I understand the various options. They would make the setup a bit more attractive.
PS: Even though I’m not as confident with income tax matters anymore, I still remember some leftovers from my training as a tax specialist, so I can save myself a trip to the tax advisor. 😀
Musketier schrieb:
I understand the design options. They would make the structure a bit more attractive.
PS: Even though I’m not as sharp on income tax anymore, I still remember quite a bit from my training as a tax specialist, so I can save myself a visit to the tax advisor. 😀Good for you! 🙂
However, quite a few changes were made in 2012. But you’ll probably know that already or you can quickly catch up on the new material.
B
Bauexperte22 Jul 2015 18:23Musketier schrieb:
My parents once expressed interest in the apartment and have now been approached about it. The problem (according to my parents) is that the owner might want to sell the apartment in 10 to 15 years, and they are afraid of a possible termination for personal use when they are older. Given these circumstances, I wouldn’t get worked up—at least not at this point in time.
Have you ever considered reaching out to the "potential" seller to explain your parents’ situation and negotiate a right of first refusal with them? That might give you peace of mind; besides, nobody really knows what prices will be like in 10 to 15 years, so your current speculations won’t help much.
Best regards, Bauexperte
Bauexperte schrieb:
By the way, no one knows what will have to be paid in 10-15 years, so your number games today won’t get you anywhere 😉I think you misunderstood me. If anything, I would have tried to buy the apartment right away instead of waiting 10-15 years.