Marco was sitting at his kitchen table on a Friday evening, scrolling through ImmoScout24. For months, he had been toying with the idea of buying an apartment as an investment property. Interest rates were low, his savings account was earning practically nothing, and a colleague had told him how he was "easily making 5% returns" with a studio apartment in Zurich. That evening, Marco found it: a 3.5-room apartment in Winterthur for CHF 620'000. Listed with a gross yield of 4.8%. That sounded good. Very good, even.

Six months later, Marco was sitting at the kitchen table again. This time not with excitement, but with a folder full of bills he had not expected. The apartment was bought, rented out, and yet the cashflow was negative. What had happened?

This story is based on real experiences from first-time investors in Switzerland. The details are anonymised, but the mistakes are typical. And that is exactly why it is worth walking through them.

The Tempting Gross Yield

Marco's first mistake was the most common one: he let the gross yield dazzle him. The listing showed CHF 29'760 in annual rental income on a purchase price of CHF 620'000. That works out to a 4.8% gross yield. At first glance, a solid number.

What Marco failed to consider: the gross yield is just a rough estimate. It ignores all the costs that stand between rental income and what actually lands in your account. And with an investment property, those costs are substantial.

If you want to understand the differences between gross yield, net yield, and return on equity in detail, read our comprehensive comparison of all three metrics. The short version: only the return on equity shows what you actually earn on your invested capital.

Mistake No. 1: The Forgotten Transaction Costs

Marco's calculation looked like this:

Purchase price: CHF 620'000
Annual rental income: CHF 29'760
Gross yield: 4.8%

What was missing:

Transaction costs: Transfer tax, notary fees, and land registry charges added up to around CHF 18'600 (roughly 3% of the purchase price). In some cantons, this figure is even higher.
Management costs: Marco wanted to manage the property himself. After three months of tenant enquiries, coordinating tradespeople, and doing the accounts, he hired a professional management company for CHF 1'800 per year.
Reserves: For maintenance and renovations, you should set aside 0.5 to 1% of the building insurance value annually. For Marco's apartment, that was around CHF 3'500 per year.
Building insurance and ancillary cost gaps: Not all ancillary costs can be fully passed on to tenants. Around CHF 1'200 per year remained with Marco.

Suddenly, his CHF 29'760 in rental income melted down to a net return of around CHF 23'260. The net yield was 3.6% instead of 4.8%. And that did not even include the mortgage burden.

Mistake No. 2: Not Checking the Tenant Structure

Marco had inspected the apartment, assessed the location, and reviewed the numbers. What he had not done: scrutinise the existing lease and tenant structure.

The apartment was rented to an elderly couple who had been living there for 14 years. The lease dated from a time with significantly lower rents. The current rent was around 15% below market level. Marco did not know this when he bought the property.

Even more problematic: when ownership changes in Switzerland, the tenant has the right to challenge the initial rent within 30 days of the handover. Had Marco tried to raise the rent immediately, the risk of a challenge would have been high.

The lesson: Always review the existing lease before buying. How does the current rent compare to the market? How long has the contract been running? Are there notice periods that could delay adjustments? Our purchase checklist for investment properties covers exactly these points.

Mistake No. 3: Only Getting One Financing Offer

Marco went to his regular bank, the one where he had held an account since his apprenticeship. He received an offer for a 5-year fixed-rate mortgage at 1.85%. That sounded reasonable, so he signed.

What Marco did not know: for investment properties, banks typically charge higher interest rates than for owner-occupied homes. And the conditions vary significantly between providers. An offer from an insurance company or another bank could have saved him 0.2 to 0.3 percentage points.

With a mortgage of CHF 465'000 (75% loan-to-value), a 0.25 percentage point difference amounts to around CHF 1'160 per year. Over the full 5-year term, that is CHF 5'800 that Marco could have saved.

Mistake No. 4: No Scenario Analysis

Marco had done his calculation on paper. One column for income, one for expenses. What he had not done: run different scenarios.

What happens if the apartment sits empty for two months? What if the heating system needs replacing in three years? What if interest rates are at 3.5% instead of 1.85% when the mortgage comes up for renewal?

The immometrics forecast calculator is built for exactly these questions. You enter your key figures and receive a complete cashflow forecast over 10, 20, or 30 years, with different scenarios for interest rate trends, vacancy, and value appreciation. That way, you can immediately see whether your investment still works even under unfavourable conditions.

What Marco Learned in the End

After one year as a landlord, Marco had learned his lesson. The apartment was not a bad purchase, but the return was significantly lower than expected. Here are his key takeaways:

1. The Gross Yield Is Just the Starting Point

It is useful for a quick comparison of properties, but not as a basis for decision-making. At a minimum, use the net yield, or better yet, the return on equity as your benchmark.

2. Transaction Costs Belong in the Calculation

Transfer tax, notary, land registry: depending on the canton, 2 to 5% of the purchase price comes on top. These costs reduce your return from day one.

3. Read the Lease Before You Sign

An existing tenancy can be an advantage (no vacancy) or a disadvantage (below-market rent, difficult to terminate). Check it before the purchase, not after.

4. Get at Least Three Financing Offers

Banks, insurance companies, pension funds: the conditions for investment properties vary widely. Every basis point you save flows directly into your cashflow.

5. Run Scenario Analyses

The best time for stress tests is before the purchase. What happens with vacancy? With rising interest rates? With an unexpected renovation? Those who answer these questions beforehand sleep better afterwards.

6. Build Reserves

Plan for maintenance reserves and unexpected expenses from the start. A good benchmark is 0.5 to 1% of the building insurance value per year.

The Calculation Marco Should Have Done

Let us look at what Marco's calculation should have looked like:

Income:

Annual rental income: CHF 29'760
Less 1 month vacancy reserve: CHF -2'480
Effective income: CHF 27'280

Expenses:

Mortgage interest (1.85% on CHF 465'000): CHF 8'603
Non-recoverable ancillary costs: CHF 1'200
Management: CHF 1'800
Maintenance reserves: CHF 3'500
Insurance: CHF 600
Total expenses: CHF 15'703

Cashflow before taxes: CHF 11'577

Return on equity: CHF 11'577 / CHF 173'600 (equity + transaction costs) = 6.7%

This calculation is more realistic. And it shows: the investment is fundamentally solid. Marco's problem was not the apartment, but his expectations. If you calculate with the wrong numbers, you are inevitably disappointed, even when the investment objectively works.

Want to run this calculation for your own property? The immometrics calculator does exactly that, including tax effects, amortisation, and long-term forecasts.

Who Should Consider a First Apartment as an Investment?

Not everyone is suited for property investment. It makes sense especially if:

You have sufficient equity (at least 25% of the purchase price plus transaction costs) without depleting your liquidity reserves.
You have a long investment horizon (at least 10 years). Real estate is not a short-term investment.
You are willing to engage with the topic of letting, or to hire a professional management company.
You can meet the affordability criteria even at higher interest rates.

If you meet these requirements, a condo as an investment property is a solid addition to your portfolio. Especially in Switzerland, where demand for rental apartments exceeds supply in most regions.

Marco's Verdict After Three Years

Today, three years after the purchase, Marco is satisfied with his decision. He has corrected the initial mistakes: he has a professional management company, builds reserves, and obtained three offers when renewing his mortgage. The rent was adjusted to market level after the long-term tenants moved out. The cashflow is now positive.

His advice to anyone thinking about their first purchase: "Take the time to calculate properly. Not the yield from the listing, but the real return including all costs. And run different scenarios. Then you will make an informed decision rather than an emotional one."

Frequently Asked Questions

How much equity do I need for an investment apartment in Switzerland?

For investment properties, banks typically require at least 25% equity (compared to 20% for owner-occupied homes). On top of that come transaction costs of 2 to 5% depending on the canton. For an apartment priced at CHF 600'000, you should plan for at least CHF 170'000 to CHF 180'000 in equity. Pension fund assets cannot be used to finance investment properties.

What return is realistic for a condo as an investment?

Gross yields in Switzerland typically range from 3% to 6%, depending on location and property type. After deducting all costs (ancillary costs, management, maintenance, vacancy), a net yield of 2% to 4% remains. The return on equity can be higher thanks to the leverage effect of the mortgage and often falls between 5% and 8%. Use the immometrics calculator to calculate the return for a specific property.

What are the most common mistakes when buying a first investment property?

The five most common mistakes are: looking only at the gross yield instead of the net yield, forgetting transaction costs, not reviewing the existing lease, getting only one financing offer, and not running scenario analyses with vacancy or interest rate increases. Our purchase checklist helps you avoid missing any of these points.

Should I manage the property myself or hire a professional manager?

That depends on your experience and available time. A professional management company typically costs 3 to 5% of the annual rental income. In return, they handle tenant searches, accounts, tradesperson coordination, and legal matters. Especially with your first property, professional management can prevent a lot of trouble and costly mistakes. From the second or third property onwards, many investors choose to take over part of the management themselves.

Your First Apartment as an Investment: A Real-World Experience Report