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In the world of real estate, most opportunities are not on the front page of property listings. Most cheap properties have some kind of “catch” – and it is exactly those catches that make them cheap. A basement unit. An apartment in very poor condition. A property with an unusual legal status. Or, like in this case study, a commercial premises that in theory does not qualify for residential rental.
And yet these are often the best investments – on one condition: you have to know how to solve a problem that seems unsolvable to others.
This article is exactly about such a case. A 41.53 sqm commercial premises on Pradzynskiego street in Lodz, ground floor, bought for 40,000 PLN in 2021. After the procedure of changing the function in the land and mortgage register and a renovation for 60,000 PLN, it became a fully-fledged apartment that has been rented continuously for 2,200 PLN plus utilities per month. That is a gross rental yield of more than 24% per year – one of the highest we have seen on the Lodz market.
This is a story about how, with a total investment of 100,000 PLN (plus a lot of knowledge, design decisions and administrative procedures), you can build an asset that performs much better than a classic apartment bought for the same amount.
In 2021, a client came to us who owned a commercial premises on Pradzynskiego in Lodz. The property was in his hands, but it generated practically no income – it was suitable neither for office rental (too small, unattractive layout) nor for residential rental (legal status). The client had a specific question in mind: is it possible to make something out of this, or is it better to sell below the purchase price?
We decided to take a closer look.
On the day of the inspection, the premises consisted of:
Nothing looked encouraging in the classic sense. Dark interiors, old finishes, no heating, only cold water, electrical installations not adapted for residential use, few windows, and one room had an unusual L-shape. But the location was right, the floor area was acceptable (41.53 sqm – more than a typical studio) and, most importantly, there was real potential for transformation into a fully-fledged apartment.
We showed the client the numbers. The plan was as follows: formally change the function of the premises from commercial to residential, renovate thoroughly, furnish it and rent it out. The client said “yes”. We got to work.
This is the first element that distinguishes this case study from the others. Before any renovation, the formal side had to be taken care of – otherwise the entire investment would not have made sense.
In Poland, changing the function of premises from commercial to residential is a procedure that requires:
It may sound complicated – and it was. The procedure took several months. But without this step, everything else would have made no sense – a commercial premises formally rented for residential purposes is a legally and fiscally risky area. The client did not want problems – and neither did we.
In the end, we obtained the certificate of independence of the residential premises and then carried out the change in the land and mortgage register. The premises formally became a residential unit. Only then did the renovation begin.
The client had a controlled budget and did not want to spend large amounts. Every renovation decision had to be justified by a cost/effect ratio. This forced creative solutions instead of standard ones. Six key decisions:
The smaller of the two utility rooms had a large built-in wardrobe, an unusual L-shape and small windows. The standard reaction: not suitable as a bedroom. Our decision: a bedroom indeed, plus a desk for work in one of the arms of the L. Small windows in a bedroom are not a problem – most of the time spent there is at night anyway.
On the floor there were unattractive tiles in a typical commercial-premises style. Replacing the tiles = a major floor renovation = high cost + weeks of work. Our decision: a carpet. Laid over the existing tiles, it warms the bedroom both visually and thermally, saves budget and time. After a year, the carpet can be replaced if it gets damaged – it is still cheaper than replacing the tiles.
The premises had no organized heating system. Bringing in gas heating = high installation cost + inspections + servicing. Our decision: radiant heaters (electric heating panels) installed in every room. Low initial investment, temperature control in each room separately, no need for annual inspections. For a 41 sqm apartment, this is the optimal cost solution.
There was only cold water in the premises. A classic vertical hot water boiler would have taken up a lot of space in the bathroom or hallway. We found a side-mounted boiler (a special construction), installed it in the entrance hall and hid it behind plasterboard cladding. Thanks to that the tenant has hot water and the boiler itself is not visible – it does not take up valuable living space.
There was no kitchen in the premises – only a bathroom. Adding a kitchen requires running water and drainage, which can be costly. An analysis of the existing installation showed that, at a low cost, drainage and water could be routed through the wall adjacent to the bathroom. That is where we planned the kitchen – as part of the living room (an open layout visually enlarges the space).
In the middle of the living room there was an unattractive structure protruding from the wall – probably with installations inside. It could not be dismantled without risk. Our decision: keep it, but incorporate it into the design. We extended the structure slightly for symmetry, added decorative wooden slats (a fashionable finishing element), hung a TV on top and placed decorations on a shelf. A technical problem turned into a design feature.
The bathroom and the entrance hall – both were in acceptable condition. The standard temptation: “since we are renovating anyway, let us do everything”. Our philosophy, however, is: do not spend money where it does not have a meaningful impact on the rent. The bathroom worked, it was tidy – period. The entrance hall the same. Those savings went where they really made a difference.
Before the contractor team got to work, a partner design studio prepared two layout versions. Each one included:
We showed the client both versions. Each one had a different kitchen layout, a different bedroom arrangement, different color accents. The client chose the one that best suited his budget and vision. This is the value of having a project from an architect – the client does not make decisions “blindly”, but seeing the real effect.
The renovation itself took two months. What was done during that time:
Total renovation cost: 60,000 PLN.
For comparison, a standard renovation of a 41 sqm apartment from a developer-state condition in 2021 cost 80,000-100,000 PLN. Our investment fitted well below that ceiling, even though we started from a more difficult point (a commercial premises without heating, without hot water, without a kitchen). This is the result of designing for budget constraints, not for an unlimited wallet.
An open space of the living room with a kitchenette and dining area – the heart of the apartment. Light colors, oak accents, a green carpet and a slat wall on which the TV was mounted.
The bedroom in the version with a desk – for a tenant who needs space for remote work. A 140 cm bed, a panel wall in muted green as the headboard, a soft carpet on the floor.
The hallway with the original clinker-brick floor – intentionally preserved because it gives character to the interior. The side-mounted boiler hidden under the ceiling behind plasterboard cladding.
A functional bathroom, in the state left by the previous owner – shower cabin, washbasin with a wooden cabinet, mirror in a wooden frame. It worked, it was tidy – period.
After two months the apartment was ready. We took the photos. We posted the listing. It was rented quickly.
Rent: 2,200 PLN plus utilities per month. That gave the following numbers:
| Item | Amount |
|---|---|
| Purchase price of the premises (2021) | 40,000 PLN |
| Renovation and adaptation (with offices and project) | 60,000 PLN |
| Total investment | 100,000 PLN |
| Monthly rent | 2,200 PLN |
| Annual rent (at ~12 months of rental) | ~26,400 PLN |
| Gross yield | ~26% |
A comment on these numbers: 26% is the gross yield, that is before rental tax (8.5% lump sum), management costs and minor repairs. The realistic net yield in Polish conditions: about 20-22%. That is several times higher than from a classic apartment bought for the same amount.
And this is not a “paper” return from a single year. The apartment has been rented continuously since the end of 2021, that is for more than four years. During that period the client has received from rent about 100,000 PLN of revenue – so the entire initial investment has already been returned, from rent alone, regardless of the value of the asset.
If you are considering non-obvious real estate investments or you have in your hands a property that you do not know how to put to use, here are five conclusions from this case study:
1. A cheap unit with a “catch” can be the best investment. A 41 sqm commercial premises for 40,000 PLN sounds like a bargain – and it was. But only for someone who knew how to formally and technically transform it into an apartment. Price alone does not make an investment – it is the combination of price and the knowledge of how to realize the potential.
2. Administrative procedures are part of the investment. Changing the function of a unit from commercial to residential is not a piece of bureaucracy to avoid – it is a concrete element of value that you add to the property. Without it, further actions would have made no sense. A well-planned administrative procedure is often 20-30% of the success of an investment in non-typical units.
3. Every technical problem has a solution – you just need to know which one. No heating? Radiant heaters. No hot water? A side-mounted boiler hidden behind plasterboard. An immovable built-in? Slats and a TV. An unusual bedroom shape? Everything fits if it is planned well. Every problem that “makes” an investment “impossible” has its solution – but the solution requires experience.
4. You do not have to renovate everything. The bathroom and the entrance hall were left practically untouched. They did not generate additional rent, so it was not worth investing in them. A smart renovation is one that optimizes spending against return, not one that “does everything from scratch”.
5. High yields do not come from magic – they come from know-how. A 26% annual return is not typical for the real estate market. A classic investment apartment yields 6-9%. But for a combination of a low purchase price + formal procedure + technical adaptation + design – such numbers are realistic. These are investments that require knowledge and work, but they deliver results that you cannot achieve “by buying an apartment in a block”.
Every property has its story and its potential. Some are obvious – a two-room apartment in a block, ready to be rented. Others are less obvious, but they deliver much higher returns for those who can solve specific problems. The commercial premises on Pradzynskiego was such a case – for most owners a property without prospects, for us a project that, after a full transformation, generates 26% per year.
We help clients with both types of investments. The standard ones – from choosing an apartment, through negotiations, to renting and management. And the non-standard ones – like adaptations of commercial premises, divisions of large apartments, transformations of spaces that at first glance do not seem suitable for rental. Every such project requires its own know-how, its own architectural and legal team, its own financial strategy.
If you are considering an investment in a non-typical property in Lodz or Warsaw – or you already have a unit that you do not know how to use – book a free consultation. We will assess the potential, suggest the procedure, show real numbers. Without sugarcoating, without selling pipe dreams – just a concrete analysis of what can be done and what it will cost.
And if you already own an apartment and need help managing it – check out our management packages. Three levels of protection adjusted to different needs of property owners.
The apartment on Pradzynskiego is one of hundreds of examples. Every property under our care has its story – and its owner, for whom we work.
Author: Konrad Kopczynski
The above description is a case study of a specific property and does not constitute investment recommendation, legal, tax or construction advice. Changing the function of a unit from commercial to residential requires an individual analysis of the legal, technical and administrative status of the specific property. The procedure requires obtaining a certificate of independence of the residential premises and making a change in the land and mortgage register, and in some cases may require a change in the local zoning plan or obtaining a decision on building conditions. Before undertaking such an investment, consult a lawyer, an architect and the office competent for real estate matters in the given location.
