The real estate market has been considered a safe haven for capital for years. In practice, however the difference between a well-calculated investment and a project fraught with errors can mean tens or even hundreds of thousands of zlotys of lost potential. What is crucial is not individual decisions, but their consequences over time – and these, as practitioners point out, are most often underestimated already at the planning stage.
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Investment mistakes: location is still the most expensive
Contrary to appearances, location is not just a marketing slogan, but a factor that directly determines the investment result. In the case of apartments, this means primarily the level of rents and the pace of leasing.
– If an investor chooses a location with limited tenant demand, he or she enters the scenario of lower rents and greater sensitivity to vacancies – points out Jacek Piotr Kacprzyk, president of Kup i Mieszkaj.
The scale of the difference is measurable. Lower rents by PLN 500-800 per month mean a loss of PLN 6-10 thousand. PLN per year. In a 10-year horizon, it's already 60-100 thousand. PLN of lost revenue. Importantly, this is only part of the cost.
– This is not one big mistake, but a series of smaller losses that accumulate over time – adds the expert.
Location works even more directly in the hotel industry. Paweł Ryszkiewicz, president of the management board of the Belmonte Group, points out that in this segment, it affects not only the price, but above all, the occupancy rate.
— If the facility is built in a place that does not generate stable traffic, the operator works on lower revenues from day one. This cannot be compensated for with marketing or standards, he emphasizes.
In practice this means this permanent discrepancy between financial assumptions and reality.
Investment mistakes: overestimated rate of return
The second most common mistake is excessive optimism in calculating the rate of return. Investors often rely on “Excel” models that do not take into account market volatility.
– The most common mistake is confusing the model with reality. The market is changeable and operational – there are always deviations – says Kacprzyk.
Effect? An investment that was supposed to yield 6-7% on paper, in practice, comes down to 3-4%. This difference translates into several thousand. PLN less per year in the investor's pocket.
In the hotel industry, the problem is even more complex.
— Investors assume constant occupancy and repeatable results, while Hospitality is seasonal and changeable by nature – says Ryszkiewicz.
He adds that failure to take into account seasonality, operating costs and real occupancy levels leads to a situation in which “the rate of return begins to be irregular and lower than expected.”
It's fundamental the difference between expectations and the actual risk profile of the investment.
Investment mistakes: square footage, product and lack of fit
Not every property rents equally well — even in the same location. Product-market fit is key.
— Larger apartments often look attractive for purchase, but they generate lower profitability per square meter and have a narrower group of tenants, Kacprzyk points out.
The consequences are twofold: lower profitability per square meter and longer periods without a tenant. Each month of vacancy means a loss of several thousand. PLN, which irreversibly reduces the investment result.
Similar problems occur in hotel and commercial projects, where It is not only the concept but its execution that becomes crucial.
— Fit-out is the moment when an investment ceases to be a concept and begins to become an operational product. And this is where errors accumulate – emphasizes Piotr Kurleto Jr., vice president of Maxfliz.
The expert draws attention to two main scenarios: cost pressures leading to quality compromises and lack of coherence between design and subsequent operation.
“Any change at this stage affects durability, functionality and operating costs for the following years,” he adds.
In practice this means that design errors translate directly into lower revenues or higher operating costs.
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Investment mistakes: lack of diversification and concentration risk
Another underestimated risk is lack of diversification. Many investors concentrate their capital in one location or one project.
— An investment in one hotel facility is full exposure to one market – one location, one customer profile and one business cycle – says Ryszkiewicz.
In the case of apartments, the problem is similar, although less obvious. Several units in the same district may mean simultaneous vacancies if demand drops.
Losses in such a scenario may amount to several thousand. PLN within a few months.
Investment mistakes: second home and the illusion of high profits
Second home investments are a separate categorywhich are often perceived as an attractive alternative to long-term rental.
In practice, however, lower occupancy – at the level of 30-50 percent. — and higher operating costs make the real rate of return is only 2-4%.
This level is significantly lower than in the case of classic rental, but at the same time subject to greater variability.
Hidden cost of investment: time and operational efficiency
The most However, time remains an underestimated element. Many investors treat rentals as passive income, when in fact it is an operating activity.
— Tenant servicing, repairs, settlements – all this generates costs, even if they are not directly calculated – Kacprzyk notes.
With a larger portfolio, real estate management starts to feel like a part-time job. When converted into real time value, this may mean several thousand. PLN per month hidden cost.
— The key question is: how much does my man-hour cost? And is this the best use of my time – emphasizes the expert.
Delegating management outside lowers the rate of return, but at the same time it frees up time that can generate higher value elsewhere.
How much does a mistake really cost?
Analysis of the most common errors shows that We rarely deal with a one-time loss. Much more often they are repetitive, systemic underestimations that reduce investment performance year after year.
A bad location can cost up to PLN 100,000. PLN of lost income in a decade. Overestimated rate of return – several thousand. PLN per year. Vacancies, incorrect square footage or lack of diversification add thousands more.
The biggest problem, however, remains this most of these costs are not visible at the investment decision stage. And it is then – as experts unanimously emphasize – that the real profitability of the entire project is decided.
