Are you interested in Poland, Polish real estate, and even investing in it? In this guide, we’re going to give you comprehensive information about how to make money on rental property investments in Poland.
How long does it take and what is the costs to renovate an apartment that you’ll earn money on? Yes, you read right. You can make money by buying an apartment in Poland. How do we know that? Because as Wellcome Home we’ve done it for quite some time now, and we know how to restore and rent it out. Also, Poland is the most promising investment market in Europe and your place can be here too! How come?
We explained that in detail in this article. If you like specific data and numbers, make sure to check it out, but spoiler alert: YES, Polish real estate is worth investing in. But how to do it right? What to choose? Should you bet on new construction ready to finish or an old apartment to restore? There are many options. And this is where we step in to show you the possibilities.
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1. New Constructions vs Existing Housing. Polish Market Standards
Let us explain the difference between these two markets.
- “Rynek pierwotny” (Primary market) refers to new construction bought directly from the developer. There have been plenty of interesting new construction projects in Katowice recently.
- “Rynek wtórny” (literally the secondary market) refers to existing housing that used to have tenants and require renovation. They are often located in old, historical buildings that may require a total renovation.
Existing properties are also located in newer buildings from past decades – from 70. to beginning of 21st century, that require less renovation or are even restored and ready to rent. But now we’re going to focus only on the properties that require full renovation. Why? Because we want them to be a good investment and we really want to make sure they meet the right rental standards. That’s why we strongly suggest focusing on something to renovate and finish. Ok, once we’ve agreed on that, let’s compare both possibilities.
2. What To Expect From New Construction In Poland?
There is a lot of new construction in Poland. Which is good, because you as an investor have a wide range of possibilities to choose from. What are their main features?
The apartments are way smaller than in older buildings – all the functions are “packed” in a smaller area. For example, the kitchen is open to the living room, which we think is quite a good solution we also like to do in our apartments.
The location is usually not in the very city center, but somewhere close. The building usually doesn’t just have residential units, but also some commercial spaces, parking (usually underground). Parking is a must for new construction. Such new buildings are made out of modern, eco-friendly materials, equipped with smart technologies so they are energy-saving and allow for lower maintenance costs (also for central heating). They also have elevators and almost every apartment has a balcony or small outside patio (when on the first floor).
What’s most important for you as an investor? That it doesn’t take long to finish the apartment as you buy it in the so-called developer’s standard (“stan deweloperski”). What does this standard include? We’ll explain in a minute.
Any cons? Well, new units are more expensive as everything is brand new and the finishing process is faster. Also, in most cases you have to wait for your apartment to be delivered as the construction process is still in progress and there may be delays. You can find new apartments that the developer is ready to sell, but they might not have the best layout or the best view (the best units are sold long before the construction process has concluded). It takes some time and experience to find a nice apartment.
3. Maybe An Existing Apartment Will Be A Better Option?
Sure, we know this market quite well so we know all the advantages:
- the location is just brilliant. Some of our apartments are located right next to the Katowice market square. It’s just unbeatable;
- the building itself may be a real gem. They happen to even have historical value. And their charm is something, just wow;
- the apartments have high ceilings and are spacious, with huge windows, stunning common areas, and even a few bedrooms. Such apartments can be easily divided into two separate rental units which is great for your investment;
- the apartment is available on the spot – you don’t have to wait until the construction is finished.
- some mechanical systems are a bit old, so they need more work;
- renovation process is simply more difficult and requires more experience;
- usually, there’s no lift nor dedicated parking spot;
- they lack modern systems, so the maintenance or heating may be more expensive.
Is that a problem? It depends on the designers and construction crew. An experienced team will know what to do and how to deal with all possible challenges to convert the apartment into something absolutely stunning.
4. New Construction Standards
Ok, let’s explain what we mean by “developer’s standard” and what you can expect when buying a new apartment in Poland.
The walls are plastered, but they need smoothing and painting, and flooring is ready to be installed. You get a front door (anti-theft), windows and window sills. You can expect complete plumbing systems, ventilation, electrical wiring, and central heating (mostly radiators, sometimes underfloor heating systems). If the design is simple, this standard doesn’t require a lot of work to complete. You can start setting the tiles, installing interior doors, and painting. Then lighting, kitchen cabinets, appliances and the finishing touches.
Is there any room for change? Usually you can change the layout or revise the mechanical systems, but it’s better to agree on that during the construction process.
5. How Much Does It Cost?
We know you won’t like it, but… it depends. New constructions prices vary by location, the construction standard, materials used, new technologies, smart home solutions, and the central heating system. Also, the higher the floor, the more expensive the apartment itself.
Let’s see some references for a 1-bedroom 35-45 sq m. unit in Katowice:
- the most prestigious locations (The Culture Zone or the city center) may cost from 8900 zł up to 15 000 zł;
- in the neighboring areas: 7500 zł – 10000 zł sq m.
As you many know from our different sources, in December 2022 the medium price in Katowice exceed 10 000 zł per sq m.
Investor pro-tip! The bigger the flat, the cheaper the price per sq m. It may be a good idea to buy one big apartment and divide it into two rental units.
On the existing market there are many different sizes to choose from, from 140-180 sq m, even up to 250 sq m. They are located in historical buildings, but usually require comprehensive renovation. Prices in Katowice are from 3100 zł to 7-9000 zł/sq m. Average price: 4700 zł/sq m. There are also pre-renovated units, at the developer’s standard, and they’re priced from 6200 zł/sq m.
6. How Much and How Long Does It Take To Finish A New Construction Unit?
Oh well, that’s another question with no exact reply, but we’ll try to give you average numbers based on our experience.
The timing depends primarily on whether, after receiving the keys, you can go in right away with a renovation team, or whether you are just starting the design process.
If your design plan is ready, a 1-bedroom apartment can be finished in 1,5-3 months time. We assume basic solutions and no delivery delays, so it’s crucial to manage the entire process and order the furniture, materials, and equipment in advance.
Price? We have been talking about a good rental standard, so let’s assume it’ll be from 2500 zł/sq m. For such a price we can renovate apartments for our customers and we’re referring to better quality materials, custom furniture, and individual design elements.
Can you do this cheaper? If you plan to set the tiles and the paint wall yourself, maybe… For 2000 zł you can afford an entry-level standard that won’t last long and will require repair or renovation sooner. And we suggest investing in the long-term. It pays off.
7. How Much And How Long Does It Take To Finish An Existing Unit?
We’ve restored almost 100 apartments (some of them really from scratch) so we have real numbers.
In the case of a single apartment in a well-maintained building (which doesn’t require a general renovation), we assume 2–4 months.
If it’s a historical building and a big apartment building which we want to split into a few smaller units, it may take around half a year. Here, we usually change the layout, such as move or add some walls.
Several apartments in one building plus a common space renovation may even take up to 1 year. A 4-floor building renovation, with its 16 independent apartments, common spaces, and a staircase took us a year.
The cost varies depending on the condition of the premises. A general renovation of an old, used apartment in a historical building, where we also have to install new mechanical systems, replace floors, redesign rooms, etc., is about 2500 zł/sq m extra to get to the developer’s standard. After that, the finishing costs are similar to what we already mentioned.
8. What Is Better? New Construction Or Existing Housing?
Both solutions may be a great investment plan. The only bad news for now is that, without knowing your situation, we cannot give you one answer. It depends on time, budget, expectations of return on investment, and which market you’re ready to invest in.
Here are some of the most important things to consider:
- in the case of existing units, it’ll be quite cheaper, but the renovation will take longer. It means you’ll start to get your money a little later. Also, some unexpected things may surprise you during the renovation;
- on the other hand, you’ll probably have to wait for a new construction unit several months (or years) so the difference compensates;
- existing homes have batter locations, so they may be more competitive for potential tenants;
- new apartments may be cheaper to maintain and require less fuss along the rental process.
9. Which Does a Potential Tenant Prefer?
From our experience: it doesn’t matter – new construction or an existing unit – as long as the rent is competitive. Considering the features of both possibilities, the key point is to know who your potential tenant is: students, and 20+ yo people just starting out will want a great location. They usually don’t need a parking spot as they don’t own a car: they work and go out in the city center, and use public transport.
Young families with kids will probably choose quiet areas next to parks, somewhere out of the center. They’ll look for parking and the lift. Seniors may also choose quiet and convenient locations, but they’re not your potential customer in Poland yet.
10. BONUS: a Turnkey Rental Apartment. Does It Pay Off?
Or maybe something rental ready? We mean an apartment that has already been renovated and furnished and includes an existing tenant.
Pros? You don’t lose time for the design and renovation, and you get a transparent offer – nothing will surprise you along the way. Such apartments are often already rented out, so you start earning money straight away.
Any risk? Yes, if you don’t know the renovation crew and the quality of their work. Also, the price per s qm is higher. Such a solution makes sense if you know the team, and you can be sure about their quality.
Also, the best idea is to find a partner that will take care of the entire process – from the renovation to rental management. In this case, the risk is on their side.
And you? What should you choose? For sure, a reliable partner that knows the local market, will prepare a competitive offer, and will guide you through the entire process. If you feel Poland and Katowice may be a good place, let us know.