What's up with those ads for real estate investment from 10k CHF?

[jamesf123]

On the one hand, it's obviously made to be attractive. I am aware that - even without involving strangers - a group of people investing into a real estate project is almost guaranteed to be fucked up in some way.

Edit:
Just to avoid confusion: these are not obvious scam ads like "65 year old pensioner earns 7000 per month" or whatever, I'm talking about companies that appear legitimate, like e.g. Foxstone, Le Bijou (they do however pop up in online ads a lot).
They specifically say that they invest in projects in Switzerland. So no questionable low-cost foreign stuff.

But for these ads: what's the catch? Has there been an investigation or an article about their practices? When they first appeared like 5 years ago I thought that was a scam that's going to go away, but now if I search for it, it seems to all be even more widespread?

Any experience here with this?

 

[hesmyrock]

@jamesf123 This.
I don't see any benefit in crowdinvesting into real estate if you can just buy REITS that trade with high volume.

 

[jamesf123]

@hesmyrock I thought REITS have been very much underperforming and are kind of over?

Also, aren't you an actual co-owner (of an AG or whatever) of the building project in a "clean" crowd investing project?

 

[xefere]

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This post was mass deleted and anonymized with Redact

 

[hesmyrock]

@jamesf123 Yeah, REITS show about the average performance of such projects. You might be invested in 2 projects with 10% and 2 projects that file for bankruptcy, averaging in 5% before taxes

Also, aren't you an actual co-owner (of an AG or whatever) of the building project in a "clean" crowd investing project?

Yes you usually are. (Or maybe you get participation contracts then you are not) But there is not really a benefit from it, except that you are the very last in the row who gets his money back in the case of a bankruptcy, which is very likely as they usually do this for each project

 

[jamesf123]

@hesmyrock Hold on, I thought REITs were more of a synthetic thing, where you invest in something that covers thousands of properties across a country or even multiple countries?

Theoretically I understand that those would be more diversified, but because of their wide base and dependence on "the economy" (i.e. whatever mood the US is in), aren't they kind of not great in the longer term? You are speculating that the US (or another country's) economy will be doing as well as it had been earlier, without the flexibility that stocks and the large funds that operate them would have to adjust their portfolio (in case things aren't going so well). Do I understand this correctly?

Whereas if you were to invest into an apartment building in Zurich, that's basically bulletproof (again, assuming the renovation etc goes as planned). Cause, well, pretty sure one good location in this town is going to be in demand under any circumstances bar WW3.

 

[hesmyrock]

@jamesf123 Honestly I do not invest in REITs at all and do not know how they exactly work.

But:

Whereas if you were to invest into an apartment building in Zurich, that's basically bulletproof (again, assuming the renovation etc goes as planned). Cause, well, pretty sure one good location in this town is going to be in demand under any circumstances bar WW3.

If there is a project in zurich this could be pretty cool.

Usually those companies invest in emerging markets like albania and so on because of better possible profits where there is a lack of regulatories and you barely have any chance to control things.

But yes, if there is a legit project in zurich an there are no specials fine prints in the contract this might be a pretty solid opportunity for an income stream.

 

[alesli]

@jamesf123 Probably a not very liquid investment, I guess

 

[tobiahjude99]

@jamesf123 Be wary of ads targeting you and especially when promising any kund of fixed interest rate.

These types of things often have ridiculously high fees and only really benefit the company organizinh it.
Same with private equity.

 

[jamesf123]

@tobiahjude99 Yeah, clearly it's one of those "too good to be true" things, but I'm trying to understand what is. I mean, theoretically speaking, crowdvesting would be a good idea, in a market where no one can really just renovate an apartment building alone.

So they lock you in and get you through fees or something? And then after all is said and done, the return is less than a normal VT portfolio?

 

[tobiahjude99]

@jamesf123 Im pretty confident the return after fees is lower than VT, for such a thing.

Also fully taxed, as most of the return should be from rent.

 

[jamesf123]

@tobiahjude99 Aha. Unlike international dividends, this would also have a higher tax burden, if it's for example considered a Swiss stock? Or in the worst case would even be taxed as income directly, as though it were rent? Haven't considered that.

 

[tobiahjude99]

@jamesf123 In the end any additional income is taxed as regular income. International dividends as well, when you declare them in your tax declaration.
Dividends from swiss stocks arent different btw. It‘s just that 35% that‘s deducted first, you have to claim back.

If you are still taxed at source international dividends arent taxed as income (up to like 2000 per ywar in ZH, then you have to do a full declaration and they are taxed as income)

But VT‘s return is mostly from price increase, so compared to the real estate way more tax efficient.

 

[kekinean]

@jamesf123 I guess it’s mainly because prices are high as well as interest rates so it’s much more difficult to sell it as a whole . Still I will go with a more recognized reit etf or a mutual fund if someone wants ch real estate exposure

 

[kingdomkey]

@kekinean Any swiss Reit etf that you would recommend / have exposure to? Whats ur experience with it?

 

[kekinean]

@kingdomkey I have the cs fiat fund but mainly because it has quite good diverse exposure . It all depends on what you want to have exposure too

 

[kingdomkey]

@kekinean Thanks. I’ll read thru their product catalog.

 

[kekinean]

@kingdomkey Go to Swissfunds.ch and select real estate there are quite a few other options as well

 

[kingdomkey]

@kekinean Just what i wanted. Thanks much my friend

 

[sqs1]

@jamesf123 I don't know which ads your are speaking about.

If you are speaking of one with "Where Rodger Feder invest" or something like that, yeah that's probably scam.

Some other product seem legit like Foxstone as they are always here after 3 years, even if I haven't study in detail or have experience with them.

But you shouldn't compare with REITS (those are spread on multiple object lowering risk, they are more liquid, they have a different structure of fee, they have agio). That's not the same class of asset.