Investment in real estate: division of apartments into studios

Who is a studio apartment suitable for?

Research from foreign and Ukrainian sources shows that small apartments are of great value, not only because of their beauty or rising housing prices. The greatest need to develop resources is near-dedicated universities or business centers, so students and specialists from other cities do not have to travel far to their place of work or study.

People who live alone (students) or young couples who spend most of their time at work like small housing. Such housing is less expensive than one-room flats. As a result, it is advantageous for investors. You may divide a large apartment into several studios if you acquire one. Furthermore, because small homes are measured in terms of area, they have low utility expenses.

Studio apartments are an excellent choice for renting out if you want to invest in real estate.

Pros of the strategy:

• Increasing rental value.
• Fast payback when renting.
• Opportunity to create passive income.

Cons of the strategy:

• Repair should be as compact and "smart" as possible and not just a beautiful picture.
• Significant initial investments are required, equal to the cost of the object and redevelopment.
• It needs to collaborate with the management firm.

Studio apartments from an investor's point of view

Consider an investment case.

Purpose: obtaining a permanent passive income.

Strategy: buying an apartment with a further breakdown into 2, 3, 4 studio apartments and renting them out.

Action plan:

1. Selection of an object: a specialist, an overseas real estate agent, will help determine the criteria for a sensible thing - with the best location, layout, and maximum income. You can search yourself and go around the objects, especially flying to another country, perhaps several times, spending a lot of time and effort.

For more than 8 years, our specialists have been working with developers and foreign partner agents, so we'll only present you with the most appealing choices.

2. Buying an apartment: for example, consider investing in real estate in Poland - the cost per square meter in the center of Warsaw is on average €3,500 (€2,650 - €4,400), in a residential area of ​​the city €2,200 (€1,750 - €2,900).

Buying at a low price is another essential success factor in this approach. In most cases, purchasing a "second fund" apartment from the owner costs 15-20% less than building a new facility.

For example, one studio (a kitchen area of 18 sq.m plus a bathroom) in a new building from the developer costs PLN 214,000 (about €50,000) in a residential area for comparison.

3. Refurbishment and division into several studios: a vital aspect of implementing the strategy is the correct layout. Convert a one-bathroom home into a two-bedroom apartment; you'll need to add plumbing fixtures (shower, toilet) in a different area and wire the oven and electric stove (since they are not part of the existing wiring).

Smart repairs should be planned so that as much living space remains, you can install a two-burner stove, a shower cabin, and a folding sofa instead of a bed. The critical point is a search for such an apartment so that when dividing it into several studios, each one has a window.

4. transferring each apartment to a management company and renting it out for the long term is more expensive: the advantage is that an apartment divided into studios brings in more money than if the apartment is rented out entirely to one tenant.

An apartment divided into studios brings in more money than if you rent the entire apartment to one tenant.

Let's assume we're looking for a 3-bedroom apartment in the middle of Warsaw, 300 meters from the subway.

If you rent the apartment to one renter, you may make 1,200 euros per month. This property is divided into three studios; each can be rented for 650 Euros. S a result, the income per month will be 38% higher, which will reduce the time it takes to pay back your funds.

More: when buying an apartment 3 + 1 (60 sq.m., worth 190 thousand €) and renting it out for 1,200 €, the payback period will be 14 years. Sing this scheme, considering the investment in repairs of 20 thousand €. The payback period will be decreased to 9 years. After nine years, you get an asset without investing your funds, but only by managing the facility.

Where is the best place to buy property to remodel?

The income guarantee in this plan is selecting a location with a steady demand for rent. When it comes to selling an apartment, this is also crucial. Its ideal location is near transportation hubs (metro stations, railway stations that link the city and its suburbs), prominent commercial areas, and schools.