Is it difficult to become a rentier in Poland?

How to invest capital so that it brings stable income in the long run? Discover the opportunities offered by investing in the commercial real estate market.

A rentier is a person who can cover his or her life costs in full with passive income, i.e. funds generated by invested capital. Therefore, this type of investment should meet several framework conditions.

Passive income of a rentier must be:

  • High enough – it’s obviously a very individual matter, but let’s assume, for simplicity, that today in Poland the bare minimum is PLN 5-6 thousand monthly.
  • Regular – as a rule, the rentier does not need to work for a living, which means that capital investments should provide him or her with a systematic inflow of funds.
  • Stable in the long term – it is the foundation of financial security. In the case of the rentier, the investment is not just a source of additional but basic income.

In addition, it is good if the investment requires only minimal service and involvement of the investor. Only in this situation can we say that capital really “works” for us. Secondly, the investment should also allow for long-term multiplication of capital.


What opportunities do investments in the financial markets give?

Bank deposits are a stable form of investment, but on the other hand, it is rather storage of capital. It’s not just that interest rates are record low today. It is worth remembering that their level is always in close relation to the level of inflation. This means that the nominal increase in interest rates will not bring a real higher passive income from a bank deposit. Relatively small profits can also be expected when investing in cash funds, money market or bonds.

Higher profits – at least potentially – can be generated by investments on the stock exchange. Here, however, the risk clearly increases, and playing on the stock markets also requires a lot of analytical knowledge and great involvement. What is also important: even if we can count on profits from stock exchange operations or dividends from company shares held, it is difficult to talk about long-term regularity and stability (this also applies to investment funds operating on stock markets).

From the point of view of rentiers, investing in financial markets is worth considering only when they have a certain surplus of capital, they want to diversify their portfolio and, above all, are willing to take a certain risk.


The real estate market gives better prospects

All this means that in recent years more and more investors are withdrawing money from the financial markets, looking for better opportunities in the real estate market, mostly the housing market. Here, the potential gains seem more certain and, taking into account the current market situation, relatively high.

Does investing capital in an apartment (or apartments) for rent allow in the long run to think about obtaining a passive income suitable for a rentier? Suppose we have PLN 700,000 available. Such capital should be enough to purchase even a 4-room apartment in Wrocław, Kraków, Poznań or Gdańsk, together with finishing and full furnishing, though not in an “upper shelf” location. In the case of residential real estate, currently, we can count on a return rate of 4-5% annually. However, it will only be the case if the flat is rented immediately and for a full 12 months.

In practice, however, it is necessary to take into account vacancy periods. This introduces an uncertain element to the calculation. In addition, you need to solve various current problems (e.g. repair any defects).There is also an additional problem: if the tenant stops paying the rent, the Polish law practically does not protect the landlord.


What opportunities do investments in commercial real estate give?

  • First of all, in their case the rate of return, depending on the form of investment, reaches from 6 to 8.5% per annum – it is therefore clearly higher than in the case of housing investments.
  • The purchase of commercial real estate usually requires capital at the level of approx. PLN 0.5 million – PLN 1 million if assuming the possibility of crediting.
  • Depending on the investment model, at the beginning, PLN 50,000 is enough (such possibilities are provided by joint or indirect investments). It means that you can compose your investment portfolio much easier and more flexibly than in the case of residential real estate.
  • Contracts for renting space in commercial real estate are concluded for a longer period of time – even for 5-15 years (we refer here primarily to chain tenants), with the possibility of extension. Such an investment ensures regular income in a longer, predictable perspective.
  • Prices of commercial real estate are constantly growing at a dynamic pace and it appears that they will continue to grow in the future. Optimism can be based, among others, on increases in Germany or the United Kingdom, that is in developed markets.
  • One commercial unit can bring higher passive income than even a few apartments, and at the same time, it will generate much less involvement of the investor. 

Is it difficult to become a rentier in Poland today?

Obtaining a sufficiently high and stable passive income depends on many factors. In a situation where we have at our disposal capital in the range of PLN 0.5-1 million, there are already forms of investing with a rate of return that allows you to seriously consider it. In the case of capital at a lower level, an idea that is definitely worth considering is investment in commercial real estate because it gives the opportunity to systematically build the expected passive income step by step, without the need to count on luck.


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