The rental market today arouses emotions among all interested parties. Despite the pandemic, it is still a lucrative way of earning money. In the second quarter of 2020, the rental of an apartment below 35 m2 was 3 percent more expensive than last year (from the report of Expander and Rentier.io). Nevertheless, the current situation raises some concerns among market entrants. So how to safely and profitably allocate your capital? The renowned developer group Angel Poland provides an analysis of the current situation and recommendations.
The pandemic has temporarily disrupted the rental market. So far, the rising rental prices in March and April have fallen – it was related to lower demand for flats. Both students and people who had lost their jobs returned to their family homes, hence the situation allowed landlords to negotiate prices. This trend did not last long, and today we are recording prices higher than last year. Investing in real estate is still safe capital protection. How to start renting apartments to sleep well? This is due to several factors
Location, Location, Location
Having an attractive property in the city center, we can sleep in peace. Real estate specialists did not record any significant drops here.
We did not observe any sudden movements in the rental market in the desired locations. For example, in the Angel River apartment building located in the very center of Wrocław, at ul. Walońska, tenants willingly rent apartments for long terms, and in the event of termination of the contract, new ones are quickly found. Price bargains appeared rarely, and only in the initial phase of the lockdown – explains Natalia Sawicka, sales and marketing director at Angel Poland Group in Wrocław and a member of the Angel Management board.
When looking for an apartment for rent, we must therefore ensure its convenient location, preferably combining the proximity of main communication routes, green areas and broadly understood the business and academic facilities. Angel Poland Group, in its sales offer on the primary market in Wrocław, currently has flats in the Angel City apartment building under construction at ul. Walloon. The investment is located in Przedmieście Oławskie, right next to the picturesque promenade over the Oława River. In close proximity, there are the Wrocław market, shopping centers, office buildings and universities. It is a place for people who want to get the most out of city life, and investors with an attractive rate of return, with the certainty that the property value will increase over time.
The smaller apartment size attracts tenants
The smaller the apartment, the easier it is to find people willing to rent. Data from the annual NBP report confirm that apartments with one inhabitant constitute as much as 1/3 of Wrocław’s housing stock. This is due to the fact that the vast majority of the tenants are young people working or studying in Wrocław. For this reason, one- and two-room apartments are the most frequently chosen investment product. Young Wrocław residents prefer to pay extra for a small studio apartment than rent a room in a larger apartment if they have the financial possibility. Often, they are also decided by young couples, during their studies or just after, who dream of their first apartment together and independent of others.
The current stricter lending policy introduced by banks also contributes to the popularity of such a solution. The banks excluded a significant group of young people from the possibility of taking out a mortgage, who in such a situation will continue to supply the rental market.
In the case of renting this type of apartment, the profit forecasts are optimistic:
Our experience shows that the current real rate of return fluctuates around 5-6%. If we take into account that we currently have the lowest interest rates in history and inflation at the level of 3%, the investment in the rental market turns out to be an excellent capital investment, taking into account the fact that the apartment buyer benefits not only from the regularly paid rent but also with the passing of time – it earns due to the constantly growing real estate prices – explains Natalia Sawicka
Renting an apartment involves many processes in which we must participate as the owner of the premises. It can be time-consuming and requires some knowledge of the market. Therefore, it is safest to hand over organizational matters to specialists. Using the services of specialized entities that will provide comprehensive services from A to Z.
Profit all year round
Renting an apartment can be a profitable way to earn money, as the current statistics show. Even despite the difficulties of COVID in the spring, the market returned to normal very efficiently. Some people postponed their decision to buy a flat, which is why they continue to drive the rental market, and students are also returning. Wrocław is also a constantly developing city, where salaries are growing every year. There are more and more young people who are looking for a place to live here in connection with the move. However, we are talking about rental income assuming that the apartment is profitable throughout the year. If for some reason it is empty for a few months, the profits will be correspondingly lower, and this is what those who think about investing in the real estate market in the field of long-term rental are most afraid of at the moment.
According to the Mzuri group “Polish housing rental market in numbers”, Wrocław has the lowest vacancy rate in years, and rents are constantly growing. Nevertheless, the Angel Poland Group has prepared a special offer dedicated to individual investors who want to sleep peacefully, while their invested capital will generate profits:
As part of our newly created service – carried out by the successfully operating company Angel Management – we provide our clients who buy apartments in the Angel City investment at ul. Walońska guaranteed annual income up to PLN 33,000. We have many years of experience in the market and, as experts in this field, we are sure of the success of renting our premises. Our offer is addressed to people who enter the rental market and therefore have a lot of uncertainty – says Natalia Sawicka.
The limited offer of the development group is to guarantee the client that his apartment will be rented for the long term and that the continuity of rental income will be maintained for one year from handing over the keys to the finished apartment. Thus, the client receives a fixed amount every month, determined at the stage of purchasing the premises.
Guarantee of success
The solution proposed by the Angel Poland development group is a unique solution on a Wrocław scale. By using it, the customer only gains. The possible risk of the project is borne by the company.
We are not afraid of risk. Based on several years of experience in the real estate market, we know that as a developer, we win with the location and standard of our investments. Flats in Walońska are willingly rented for a long period of time, and the pandemic did not have a major impact on the situation on the rental market in the projects we have completed. With the current action in force, we want to show the unconvinced that investing in real estate and using the services of proven developers and property managers is an excellent protection of capital and minimizing unnecessary procedures – says Tomasz Karpiel, Chief Operating Officer of Angel Poland.
Angel Management, part of the Angel Poland development group, offers a wide range of apartments for rent in the center of Krakow and Wrocław. He represents the owners and provides them with the lease management service. The group addresses its offer only to owners of flats and apartments located in the Angel Poland Group investment. The service was announced in Wrocław by Angel Management at the end of April this year. and despite the pandemic period, the company has already rented over 30 apartments, and twice as many have been under comprehensive management.