Calculating Swiss rental yield correctly

A flat at CHF 800,000 rented at CHF 2,400 a month — sounds solid. But only the net yield tells the truth: rental income minus all costs, divided by the capital invested. Here is how professionals calculate, step by step.

Gross yield: the quick metric

Gross yield = annual rent ÷ purchase price. Example: CHF 2,400 × 12 = CHF 28,800 of rent, divided by CHF 800,000 = 3.6% gross. In Swiss cities 2.5–4% is normal; above that, examine substance and location closely.

Net yield: the honest metric

Deduct from income: charges at your expense, maintenance and provisions (rule of thumb: 0.5–1% of building value per year), management, insurance — and vacancy. Conservatively count one month of vacancy per year (about 8%). Example: CHF 28,800 minus CHF 2,400 vacancy minus CHF 4,000 maintenance minus CHF 1,500 management/insurance = CHF 20,900. Divided by CHF 800,000 = 2.6% net.

Equity yield: the leverage effect

With 35% equity (CHF 280,000) and a mortgage at 2% (CHF 10,400 interest on CHF 520,000), CHF 10,500 remains of CHF 20,900 net income. Against CHF 280,000 of equity that is 3.75% equity yield. Leverage amplifies gains — and losses from vacancy or rate rises. Always calculate the +1% rate scenario too.

Typical mistakes

• Forgetting purchase costs: notary, land registry and transfer tax (varies by canton) raise invested capital by 2–5%.
• Over-optimistic rent: compare with real listings, not hoped-for rents.
• Ignoring taxes: rental income is taxable; mortgage interest and maintenance are deductible.

City or suburbs? Two example properties

• Zurich city, 2.5 rooms, CHF 750,000: rent CHF 1,900/month = CHF 22,800/year → 3.0% gross. After about CHF 5,500 of costs, CHF 17,300 remains → 2.3% net. Safe, but dearly paid.
• Aargau suburbs, 3.5 rooms, CHF 620,000: rent CHF 1,750/month = CHF 21,000/year → 3.4% gross. After about CHF 4,500 of costs, CHF 16,500 remains → 2.7% net.
• Lesson: the suburbs often beat the city by 0.3–0.5 net points — with higher vacancy risk. Calculate both variants with identical assumptions.

Affordability: the banks' 33-percent rule

Banks only finance what you can durably afford:

• Imputed rate: calculated at about 5% mortgage interest — whatever the market rate is.
• Flat charges: plus about 1% of the purchase price per year for maintenance and charges.
• Rule: imputed costs ÷ gross income ≤ 33%. Example: CHF 800,000 price → about CHF 48,000 yearly costs → required income about CHF 145,000.
• Amortisation: down to two thirds of lending value within 15 years (direct or indirect via pillar 3a).

Mini case: renovation as yield turbo

Old flat CHF 550,000, rent CHF 1,500/month = CHF 18,000/year → 3.3% gross. Renovate kitchen and bath for CHF 60,000, lift rent to CHF 1,800: CHF 21,600/year on CHF 610,000 invested = 3.5% gross — and the substance rises too. But: plan vacancy during works, fixed artisan prices and permits. Rule: every franc invested should yield at least CHF 0.10 of annual rent, or the renovation eats the yield.

Check every property with our rental yield calculator, and clarify the tax side with SwissCalc's tax calculator.