The real estate market is said to be a “gold mine” for investors with wallets of varying thickness. Taking into consideration the number of investment possibilities that it offers, one cannot disagree this market is where money is put by celebrities, businesspeople, athletes, as well as beginner investors, who set out on their investment journey by renting apartments, sub-renting garages, or purchasing, renovating, and reselling properties.

How to effectively multiply capital on the real estate market and what to expect from it? What to look for and what to avoid? Answers to these and many more questions will be provided by Tomasz Wiśniewski, Vice President of the Board of Pracownia Finansowa Sp. z o.o.
Property rental is considered a passive income source, although the number of steps that you must take before you make money off it makes this name seem doubtful. It is said that before you purchase one property, you must see a hundred of them; then, you must check everything twice, obtain funding and this is just the beginning of the long way to rental. Very often, the property must be renovated, clients must be found, conditions must be negotiated, rent and utilities must be settled, and sometimes vacancy costs must be covered, etc. What is more, one such property cannot be a major source of income only an additional one. To earn sums that would allow you to live off this business, you need at least a few properties, which means the multiplication of the enumerated activities; therefore, it quickly transpires that our seemingly passive income requires much commitment, often equal to at least a part-time job.

Even more complicated and time-consuming are development activities or so-called flips, that is purchase, renovation, and resale while our seemingly passive rental distracts us from our daily responsibilities, these activities are a full-time job. Therefore, the clients of companies offering participation in civil investments are people who do not have much time or consciously decide to choose a passive source of income to have more time for themselves. There are also clients who used to be closely involved in the construction industry and now, knowing this market segment inside out, realize how demanding it is and thus decide to have someone else exercise direct supervision over the investment.

While taking investment decisions, you should consider “how much you do not earn,” that is how much you lose by taking care of the investment by yourself. You should also ask yourself how much ROI there should be so that it is profitable for you to take care of it on your own. The answer to this question attracts many investors successful businesspeople, aware of the attractiveness of real estate investments and unwilling to give up on them, who put their money in good hands, obtaining high rates of return, themselves focusing on other areas.

Now, it is time for some math. If PLN 100,000 are multiplied at a rate of 10% a year, every year adding interest to the capital, after 10 years you will have PLN 259,374, but as much as PLN 672,749 after 20 years, and PLN 1,744,940 after 30 years! The interest itself (10%) would give you PLN 174,494 a year, that is a “salary” of PLN 14,541 per month. With inflation at 2%, that is with real 8% of profit per year, the purchasing power of this money will amount to nearly PLN 8,400 per month. If after a year you decide that it is better for you to sell the apartment that only causes you trouble and support your company with PLN 100,000, after 30 years you will have almost PLN 3.5 million. At present, there are companies in the market that offer civil investments allowing you to obtain this rate of return in a completely passive way.

By asking yourself the question contained in the title, you should think whether you would rather multiply your money actively or passively. Would you like to explore the ins and outs of the development industry or profit from this “forever green” market, pursuing your passions and talents in the business in which you already have succeeded?