Investment apartment in Warsaw with 9% ROI

Investment apartment in Warsaw with 9% ROI for sale – Passive income

I. PROPERTY DESCRIPTION

✓ Building from 2007. The fenced estate is located in the immediate vicinity of the shopping mall.
✓ Duplex apartment – floors 3 and 4 of 4
✓ Status: separate ownership, the option of using accelerated depreciation for tax settlements
✓ The apartment after a general renovation completed in December 2018.
✓ 8 single and 1 double room (from 7.9 to 11.5 sq m), bathroom with shower and toilet, bathroom with shower, separate toilet, shared kitchen, two spacious terraces (16 and 8 sq m) up to 5 rooms.
✓ The total area of the flat – 120 sq m
✓ The apartment includes a 5.5 sq m basement.
✓ 4 remote controls for the gates of the main property for comparison parking in an enclosed area

II. OPERATIONAL AND FINANCIAL DATA

✓ All rooms rented-out contracts until August 31, 2020.
✓ Total income: PLN 10,660 (PLN 9,040 rent + PLN 1,620 lump sum for utilities)
✓ Monthly costs: PLN 1,183 (rent to the cooperative including heating, garbage collection, advance payments for water – PLN 733, internet – PLN 50, electricity – PLN 200, cleaning – PLN 200)
Total monthly profit: PLN 9,477

III. DETAILED DESCRIPTION OF THE FLAT

✓ In each room, there is a sofa/ bed, desk, chair, wardrobe, bookshelves, trash bin, desk lamp, clothes dryer and mini-fridge.
✓ In order to provide greater comfort, some rooms have additional equipment in the form of dressers, cabinets, poufs, etc.
✓ One room is adapted for rent for two people (folding bed 140×190, triple wardrobe).
Apartment equipment:
✓ Oven, induction hob, microwave, dishwasher, fridge, kitchenware, washing machine, vacuum cleaner, iron, ironing board
✓ WiFi Internet 300 Mb / s
✓ Two terraces with hanging armchairs and garden furniture
✓ Bookcase with books and games for residents
✓ Basic fire protection kit: fire extinguisher, fire blanket, fire instructions, first aid kit

IV. LOCATION

✓ Metro Młociny – 5 min / UKSW – 9 min / AWF – 11 min
✓ Communication: trams 11, 33 / day buses 114, 116, 121, 171, 180, 203 / night buses N02, N43
✓ Just outside the house: Rossmann, Carrefour Express, bars, cafes, banks, pharmacy, post office.
✓ Near McDonald’s and gas station

V. GUIDANCE FOR THE INVESTOR ON FURTHER OPTIMIZATION OF PROFITS

1. The apartment is very well connected from the point of view of UKSW and
   AWF students – the 121 bus running in a door-to-door system is a ride to the
   university within 9-11 minutes. Due to the period in which the first
   recruitment took place (December – January) and the low tenant turnover in  September 2019, this group is not strongly represented among current tenants.
   During the next September recruitment, students of these universities (plus
   MUT) should be the main recipient of sales activities.
   2. A particularly interesting group of recipients are foreign students of the abovementioned universities and
   foreign trainees who showed great interest in the offer. They have much smaller
   budget restrictions than most students from Poland while expecting a high
   standard of housing. This offer is tailored to their needs.  It increase the profitability of the
   investment.
   3. From the point of view of the successful acquisition of foreign clients (not only UKSW or AWF students), it
   is important for the future Landlord to communicate with potential clients in
   fluent English. This issue may seem trivial, but it undoubtedly has a huge
   impact on the credibility of the offer, especially in a situation where foreign
   students make a decision to rent without viewing the rooms live (usually they
   are in their home country at the time). An interesting target group are
   employees of enterprises located at the national road No. 7 towards Gdańsk,
   including the Modlin Airport. They are mobile (renting a parking space for an
   additional fee) and financially independent. Some of them spend only a few
   nights a week in Warsaw, which results in lower consumption of utilities and
   exploitation of the apartment. We currently have two tenants working in these
   locations, initially, they were four people.
   5. An extremely important element of revenue optimization is the time to launch an offer on the market.
   The first recruitment was carried out in an extremely unfavorable period before
   and between the holidays, when the demand was low and prices below PLN 850
   dominated the market. It is worth noting that despite these adverse conditions,
   all rooms were rented in less than 4 weeks while maintaining a high price
   ceiling. The optimal moment to start selling the offer seems to be the
   beginning of August when the market begins to react to the approaching end of
   the holiday, which results in a much larger number of customers,
   disproportionate to the number of rooms offered in a good standard. Therefore,
   all current contracts are valid until August 31, 2020.
   6. The flat is distinguished by its quality and standard, as well as its original style. In practice, a
   visit of an interested party to an apartment is a high probability of concluding a contract. In addition, Urban Jungle style decor attracts people who value peace and contact with nature. This may sound trivial, however, this is our observation after the last recruitment.

VI. EVALUATION OF THE REVENUE OPTIMIZATION POTENTIAL

The estimated rental rates for individual rooms at the next season’s recruitment high vs. current rates (in
brackets)
Ivy (8 sq m) 1,140 PLN (1,080PLN)

Aloe (8.5 sq m) 1,140 PLN (1,120 PLN)

Cactus (9 sq m, balcony) 1,300 PLN (1,300 PLN)

Basil (11,5 sq m, balcony) PLN 1,280 (PLN 1,280)

Lemon balm (8 sq m) PLN 1,140 (PLN 1,140)

Eucalyptus (9.5 sq m) PLN 1,140 (PLN 1,120)

Mint (10,5 sq m, balcony) PLN 1,300 (PLN 1,280)

Monstera (8 sq m, balcony) PLN 1,240 (PLN 1,130)

Fikus (11 sq m, balcony) PLN 1,280 (PLN 1,210)
Total: PLN 9,280 plus a lump
sum for utilities PLN 1,620, which, after deducting costs of approx. PLN 1,183,
may result in approx. PLN 9,717 of profit per month.
Additional sources of income
may be renting a basement (about PLN 100-150), parking spaces on the property
(PLN 60-80 / item). In addition, it is possible to rent the Mint room for two,
which should increase the income by about PLN 150.

VII. OFFER

Price: 1 264 290 PLN
✓ Guaranteed return on investment (ROI) with current rental income: 9.00%
✓ WR with current revenues after taking into account management costs for the 2019/2020 season: 7.97%
✓ WR with current revenues after taking into account management costs in subsequent seasons: min. 61%
The above profitability ratios do not include the income for renting a basement,
parking spaces and the Mint room for two.

VIII. MANAGEMENT COSTS

✓ The monthly cost of property management is 12% of rental income (without a lump sum for utilities),  PLN 1,085 with current receipts
✓ The cost of management in the recruitment month is 50% of the rental income (without a lump sum for utilities), i.e. max. PLN 4,520 with current receipts (assuming that it rotates all 9 rooms at one time

Contact us to organize a viewing of the property and discuss all the details
regarding this sale offer.

Are you looking to buy, rent or invest in real estate in Poland?
Feel free to contact me!

Sergiusz

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+48 731 930 500

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