Fill out the form and we will contact you to discuss how to earn more from your property.
Two key lessons of real estate investing flow from this story – lessons to remember whether you are starting with 40 thousand, 100 thousand, or with a portfolio of 10 apartments.
Lesson one: the purchase price matters. If you overpay at the start – it will be very hard to recover later. Regardless of how well you rent it, how effectively you manage, how long you hold the investment. The purchase price is the foundation of the entire calculation.
Lesson two: a mortgage can work wonders – if you know how to manage it. In good hands, with an adequate safety buffer, a mortgage turns 40 thousand of your own money into 160 thousand of net value over 5 years. In bad hands, without forethought, a mortgage turns an investment into stress and negative cashflow.
This is a story about how these two lessons translated into concrete numbers. An apartment on Zeligowskiego in Lodz, purchased in March 2021, financed with a mortgage. Five years later – a completely different situation than at the start.
In March 2021, a client came to us with a simple question: is 40 thousand zloty enough to start investing in apartments?
We hear this question from young couples and people who have just saved up their first more serious money. It is often accompanied by the doubt: “maybe I should first save up 100 thousand to buy without a mortgage?”. Or: “maybe first buy a small studio for cash, and only then think about something bigger?”.
The answer is not the same for everyone, but in this client’s case the situation was as follows:
Down payment: 40,000 PLN (saved over several years)
Mortgage capacity: approx. 160,000 PLN (stable employment, good income)
Goal: first investment apartment, as simple as possible, no renovation
Strategy: long-term rental, passive income
Together this gave a budget of about 200 thousand zloty for the entire transaction. That is a narrow range – in Lodz in 2021 you could only buy a very specific type of apartment for that amount. You had to search carefully.
After several weeks of searching we found an offer that met all the criteria. An apartment on Zeligowskiego street in Lodz, 9th floor, 42.98 sqm. Two rooms, a bathroom, a separate kitchen, a hallway, a balcony with a really nice view. Plus a large, fenced area around the building, where you could easily park a car, plus a storage unit.
Stylistically the apartment showed its age – a typical Lodz studio or two-room flat from the previous decade. But: clean, well-kept, ready for immediate rental. No need for renovation. No need to replace anything beyond minor cosmetic items.
Asking price: 210 thousand. After negotiations: 200,000 PLN.
And here comes the first important moment. We commissioned an appraisal report – mandatory with a mortgage. Market value according to the appraisal: about 230 thousand PLN.
That meant the client bought below market value. From the bank’s perspective this translates into better mortgage terms (LTV is lower than the price suggests). From an investment perspective – a paper profit at the moment of purchase. 30 thousand “earned” before the tenant even moved in.
This is the value of the first lesson – the purchase price matters. You could have bought for 210 thousand. You could have bought for 220. You could have accepted the appraisal price – 230. Each of those options would still be “reasonable”. But only the purchase at 200 thousand gave the client a buffer from day one.
With 40 thousand of down payment and a price of 200k, the client needed a mortgage of 160 thousand zloty. Spread over 30 years, at the then-current interest rates (the lowest in decades), it gave a monthly installment of 623 PLN.
We rented the apartment quickly – a 9th-floor location with a balcony, ready to move in, in a neighborhood with good transport access – it found a tenant in the first month. Rent: 1,300 PLN plus utilities.
What did this mean financially at the start?
| Item | Monthly amount |
|---|---|
| Rental income (to client) | +1,300 PLN |
| Mortgage installment | -623 PLN |
| Gross cashflow | +677 PLN |
It was an almost ideal situation. Rental income fully covered the mortgage installment and almost 700 PLN of monthly surplus remained. The client had passive income, the apartment was paying for itself, and the asset value was growing with the market.
A quick note about the 677 PLN figure: this is gross cashflow, before deducting the rental income tax (flat rate 8.5%, about 110 PLN per month), any management costs, minor repairs, insurance. Real net cashflow in such a calculation is about 400-500 PLN per month. Still concrete passive income – but it is important to understand the difference from the start between “rent minus installment” and “clean income that arrives in my account”.
Here comes the second lesson and the second takeaway from this investment.
In 2022-2023 interest rates in Poland rose sharply. From the lowest levels in history to levels not seen for 15 years. For our client this meant a concrete change: the mortgage installment rose from 623 PLN to about 1,300 PLN per month.
A radical change to the investment economics. Let us check:
| Item | Rates 2021 | Rates 2023 |
|---|---|---|
| Mortgage installment | 623 PLN | 1,300 PLN |
| Rental income | 1,300 PLN | 1,500 PLN |
| Gross cashflow | +677 PLN | +200 PLN |
Cashflow dropped from 677 PLN to 200 PLN. After deducting tax and costs – practically zero. During the period of high rates the investment stopped generating current income.
Was the client in trouble? No – and that is precisely the heart of the second lesson. The buffer was built into the plan from the start.
When we designed this investment in 2021, we anticipated that interest rates would rise. We did not know exactly when or how high, but we knew that historically low levels would not last long. That is why we advised the client on exactly the budget and mortgage that could withstand a doubling of the installment without generating a loss.
If the client had bought the apartment for 230 thousand (the appraisal price) instead of 200 thousand, the scenario would have looked completely different. Higher mortgage = higher installment = with the rate hike the investment would have started losing current income. The client would have had to top up the apartment from his own budget.
This is the practical value of both lessons together:
You bought cheap = you have a price buffer
You have a price buffer = higher monthly cashflow
Higher cashflow = you survive the rate hike
You survive the hike = you do not panic-sell at the bottom of the cycle
You hold the asset = you benefit from the increase in value
In 2025 the Monetary Policy Council started cutting interest rates. For our client this meant a drop in the installment to about 950 PLN per month. We updated the rent in the meantime to 1,500 PLN, in response to inflation and rising market rates.
Current situation:
| Item | Amount |
|---|---|
| Rental income | 1,500 PLN |
| Mortgage installment (after rate cuts) | ~950 PLN |
| Gross cashflow | ~550 PLN |
Cashflow returned to a sensible level. The investment is again generating positive passive income.
But the most interesting figure is elsewhere. The market value of the apartment in 2026 is around 310 thousand PLN (at current prices of about 7,200 PLN/sqm for similar apartments in this location). That is an increase of 55% from the purchase price (200k) and 35% from the 2021 appraisal (230k).
And here comes the third, most spectacular figure.
Standardly we talk about returns in the context of the entire asset value – i.e. how much the apartment grew. But for a leveraged investment the key figure is return on equity (ROE).
Let us check both measures:
First measure – return on apartment value:
| Item | Amount |
|---|---|
| Purchase price (2021) | 200,000 PLN |
| Value today (2026) | 310,000 PLN |
| Asset value increase | +110,000 PLN (+55%) |
A good number, but it does not show the full picture – because the client did not put down 200 thousand. He only put down 40 thousand.
Second measure – return on equity (ROE):
| Item | Amount |
|---|---|
| Down payment (2021) | 40,000 PLN |
| Apartment value today | 310,000 PLN |
| Remaining mortgage to pay off | ~150,000 PLN |
| Net equity value today | 160,000 PLN |
| Equity growth | +120,000 PLN (+300%) |
Plus accumulated rental cashflow over 5 years: about 25,000 PLN gross.
Total return on 40 thousand of down payment: about 145,000 PLN. In 5 years. From an apartment that the client practically did not handle himself, because we managed it for him.
A comment on these numbers: 300% in 5 years sounds spectacular – and it is spectacular. But this is not magic or some unique knowledge of Golden Square. It is the effect of financial leverage (the mortgage). A 55% increase in apartment value multiplied by ~5x leverage (40k of capital vs a 200k asset) gives a return on equity of ~250-300%.
This shows the power of mortgages in real estate investing. But the same leverage works the other way too. If the market dropped by 20%, the apartment value would fall to 160k, and the client’s equity would practically disappear (the mortgage would still need to be paid off). That is why pricing discipline and a financial buffer are so important.
If you are considering your first investment in a rental apartment – especially with a mortgage – here are five takeaways from this case study:
1. Do not wait until you save 100% in cash. 40 thousand of down payment + good mortgage capacity may be enough to enter the market. The time the money works is more important than the amount of money. Every year of delay is a year of potential asset value growth that you missed.
2. The purchase price is the foundation of everything. This client bought 30k below market value. Those 30k gave him a buffer that turned out to be crucial during the interest rate hike. Had he paid the “market price”, the investment would have generated losses during the difficult period.
3. For young couples and people at the start of their journey – a leveraged investment can be reasonable. Provided it is well thought out. Choosing an apartment where the rent covers the installment with a buffer for rate hikes is the foundation. Without that buffer – you do not enter.
4. Interest rates change. The 2022-2024 rate hike cycle surprised many investors who bought at the very bottom of the rates without a Plan B. Some had to sell apartments in panic, at the bottom of the cycle. The client from our case study weathered this period because he had a buffer built in from day one.
5. Leverage works both ways. 300% return on equity in 5 years sounds impressive – and it was. But the same leverage means that a 20% drop in apartment value at 5x leverage wipes out the entire equity. These are not investments you enter “any old way” and without a plan.
This case study is especially relevant for young couples and singles who are just saving their first money and thinking “when to start investing in an apartment”. We always answer: when you have a down payment, mortgage capacity and a thought-out strategy – now.
Contrary to popular belief, you do not need to have one hundred thousand saved up to start building a real estate portfolio. You need discipline, a good property valuation, a plan for market volatility – and often, a good advisor who will help you not make a beginner’s mistake.
The most common mistake we see in young investors: buying an apartment where the rent barely covers the mortgage installment under current conditions. The first significant rate change or a two-month vacancy is enough to turn the investment into a financial problem. That is why from the start we try to design investments that will withstand realistic, unfavorable scenarios – not just today’s.
Every apartment has its own story. Some are spectacular (like the transformation of a 15-meter ruin into a micro-apartment). Others are ordinary, but well thought out – like this investment on Zeligowskiego. In both cases the key is a professional team that will help you choose a good property, negotiate the price, plan the financing and manage the rental.
If you are considering your first investment in an apartment in Lodz or Warsaw – with or without a mortgage – book a free consultation. We will help you understand what to look for, how to negotiate, how to plan the cashflow. What we did for a client with a 40 thousand budget 5 years ago, today we do for hundreds of people at the start of their investment journey.
And if you already have an apartment and need help managing it – check out our management packages. Three levels of protection tailored to different owner needs.
The apartment on Zeligowskiego 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 credit advice. The decision to take out a mortgage and to choose an investment property requires an individual analysis of mortgage capacity, interest rate risk, life situation and the specific offer. Interest rates, real estate prices and rental rates may rise and fall. Historical investment results do not guarantee similar results in the future. Before making an investment decision, consult a mortgage advisor, tax advisor and lawyer.
