Investment properties are the most popular asset class for Swiss investors — but calculating the yield is more complex than many people think. Gross yield, net yield and cash-on-cash return can differ considerably. Anyone who looks only at the gross yield often faces nasty surprises.
The three yield metrics
1. Gross yield
The simplest metric: annual rental income divided by the purchase price.
Formula: Gross yield = (annual rental income / purchase price) × 100
Example: CHF 120'000 rent / CHF 3'000'000 purchase price = 4.0% gross yield
The catch: the gross yield ignores all costs — it is a first indicator, but not a decision-making criterion.
2. Net yield
The more relevant metric: rental income less operating costs, divided by the purchase price.
Formula: Net yield = ((rental income - operating costs) / purchase price) × 100
Typical operating costs:
- Management: 3-5% of rent
- Maintenance/repairs: 5-8% of rent
- Insurance: 1-2% of rent
- Vacancy reserve: 2-5% (residential) or 5-10% (commercial)
- Renewal provisions: 2-5%
Rule of thumb: operating costs amount to 12-18% of the gross rent.
Example: CHF 120'000 - 15% = CHF 102'000 / CHF 3'000'000 = 3.4% net yield
3. Cashflow yield (cash-on-cash return)
The metric for leveraged investors: cashflow after interest, relative to the equity deployed.
Formula: Cashflow yield = (net rent - interest costs) / equity × 100
Example: CHF 102'000 net rent - CHF 37'800 interest costs (CHF 2.1M × 1.8%) = CHF 64'200 cashflow / CHF 900'000 equity = 7.1% cashflow yield
Location comparison: yields by region
| Region | Gross yield (apartment building) | Net yield | Vacancy rate | Price trend |
|---|---|---|---|---|
| City of Zurich | 2.5-3.5% | 1.8-2.5% | 0.5-1% | Rising |
| Zug | 2.8-3.8% | 2.0-2.8% | 1-2% | Stable to rising |
| Lucerne | 3.2-4.2% | 2.3-3.2% | 1.5-3% | Stable |
| Aargau/Solothurn | 4.0-5.5% | 3.0-4.2% | 3-6% | Stable |
| Bern agglomeration | 3.5-4.5% | 2.5-3.5% | 2-4% | Stable |
→ Calculate the yield for your property
5 risks with investment properties
- Vacancy: Even one month of vacancy in a four-unit building costs around 8% of the annual rent of one unit
- Unforeseen refurbishments: roof, heating, pipework — easily CHF 50'000-200'000
- Interest rate rises: +1% interest on a CHF 2M mortgage = CHF 20'000/year less cashflow
- Tenant risks: payment defaults, legal disputes, problem tenants
- Regulatory changes: tenancy law, abolition of the imputed rental value, energy regulations
Checklist: before buying an investment property
- Calculate the gross yield (target: at least 3.5% in cities, 4.5% in rural areas)
- Calculate the net yield with realistic costs (→ yield calculator)
- Check lease terms and tenant quality
- Analyse the condition report and refurbishment needs (→ GEAK article)
- Check the municipality's vacancy rate
- Clarify development potential (rezoning, densification)
- Calculate the tax implications (imputed rental value, real estate tax)
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As of April 2026. All information without obligation.