What do experts say about investing in real estate? We are talking about it with Paweł Kuczera, president of Horyzont Inwestycje. We asked, among others about how his adventure with investing began, what the current market looks like and what is profitable to invest.
How did your adventure with investing in real estate start? Where did the idea to enter this business come from?
In the second half of 2018, I gave up my current business. Then I stood in a place where I didn't really know what I wanted to do. I was thinking for a long time which direction to choose, and finally I decided to add an advertisement on OLX. I wrote in it that I had a certain amount of capital that I could invest in the business. I indicated that I would find myself in a project that is already in progress, but I would also like to join something new. I described what I feel good about and what I would not like to do. I added an ad and… forgot about it for two months.
All this time I did not check what was going on with the advertisement, and when I opened it, I saw that I had received several hundred different offers. I decided to go over all the answers. It turned out that every few news there were proposals to enter the real estate market. At that time, I didn't know what flips and investment ready were. However, something told me that it is worth trying to start working in this area.
And the first investment and initial impressions? How was the idea of establishing the Investment Horizon born?
After placing the advertisement, I decided to meet people in Wrocław who were to introduce me to the real estate market. In fact, they explained to me what investing is about and presented a proposal to enter into cooperation. I agreed. We bought a studio apartment for PLN 80,000 in Wrocław. It was our first flip together. I didn't see the property before I bought it, I didn't know the condition of the apartment and how much work it requires. At first I was terrified and basically sure that I wouldn't get my money back. The apartment was in terrible condition. Everything needed a major overhaul, even the windows were broken, and there was an unpleasant smell inside. In fact, it looked like no one had lived there for over 10 years. I shared my concerns with my co-investors, but they assured me there was nothing to worry about. Then I found out what flipping is. 9 days from buying a studio apartment, we already had a line of people willing to buy an apartment. We earned nearly PLN 40,000 on it.
After the first successful flip, I wanted more. I gained knowledge and invested capital in new investments. With time, I also became interested in land, which turned out to be a very profitable investment. I decided to go a step further and not limit myself to Wrocław. I started operating in Warsaw and Krakow, and later all over Poland. This is how Horyzont Inwestycji was created.
The real estate market was going through a difficult period during the pandemic and many investors had serious concerns about its future. What has changed in the last two years?
I must admit that it was strange at the beginning of the pandemic. The market has changed a lot, and so has the attitudes of people. At one point we thought we would have to sell disposable gloves and disinfectants. In fact, there was even a moment when we did it! Everything slowed down a lot. March, April and May last year were difficult and we wondered if we would be able to get out of it alive. We had serious concerns about the future. We decided to wait out the worst period, and after a few months everything returned to normal.
First of all, when it comes to earning money from real estate investments, trends have changed and we have decided to adapt to them. People are looking for flats and houses that will provide them with the opportunity to work in the Home Office mode or allow their children to study remotely. That is why we choose houses with a garden, apartments with a balcony. Generally speaking - we invest in real estate that has the potential to be adapted to the needs of tenants in the event of another lockdown. A bedroom that will be large enough to also accommodate a wardrobe, at the same time can be used as an office, if it turns out that such large restrictions will come into force again. It is very important to adapt to the current market situation. Customers are looking for properties that will offer them this additional space, whether in the form of a balcony or a garden, and we try to adapt to them.
In that case, please tell me which areas of real estate investment are the most profitable today? What projects does Horyzont Inwestycji run?
Horyzont Inwestycji specializes in broadly understood real estate investing. We run a number of investments in the form of residential flips. We buy a property relatively cheaply to increase its value through renovation and sell it at a profit. We also do land flips and development investments that are equally profitable. In fact, it can be said that the most profitable, because here we start from the very beginning. We build and then we sell these properties. In the case of land, the situation is similar. We buy land, which we transform into building plots, thus increasing their value, and divide them into smaller plots. Land prepared in this way can be purchased from us by a developer, but of course there are also individual clients. We can also take care of the construction ourselves and sell the apartment in a developer standard or finish it turnkey, increasing its value once again. Short-term investments are usually less profitable, but it does not take long to multiply your capital. In turn, flips on land and development investments bring much higher profits. However, the whole process, i.e. from the moment of purchase to sale, is much longer.
In the near future we will be starting another development project in Krakow. Within a month, we receive a building permit for 26 terraced apartments. Our goal is modern apartments, adapted to current expectations. Ultimately, customers will be able to buy flats on the ground floor and on the first floor, or the entire vertical, i.e. up and down. Perhaps, if there are people willing, we will finish these turnkey apartments in various versions to reach the widest possible group of customers.
Many people think that investing is not for them. They don't know how to start and where to get knowledge from. It is often said that you need a lot of capital to enter the market. Is it really so? Or maybe everyone can invest?
The real estate market is for everyone who wants to start operating in it. Horyzonty Inwestycji services are intended for all investors. We cooperate with people with a capital of PLN 20,000 and those who have much larger amounts and build entire housing estates with us. We do not compare investors and we do not categorize them. Anyone who wants to cooperate with us can do so, because our goal is to adapt the product to the needs. If the investor has a capital of PLN 50,000,000, we will find him an investment where he will be able to invest the money. For example, we will buy him an apartment for PLN 300,000, and we will spend his capital on renovation. In short - we will make investments together, and we divide the profits depending on the capital involved.
We define the rules of cooperation very strictly at the beginning to avoid any misunderstandings and show investors how everything will go. We provide a complete business plan and financial calculation in which we detail what and how much it will cost, how long the investment will take and how it will be performed. We also provide all investment parameters in the form of planned profits, thanks to which the investor can find out how much he is able to earn while making a decision.
There are many ways to invest with the Investment Horizon. There is a loan agreement, the purchase of shares in a special purpose vehicle, buying real estate for own account, i.e. security on a mortgage, and many other aspects that we have in our services.
I am very pleased that I could give another interview regarding investing in real estate. I noticed that there is more and more interest in this regard. I greet all readers and invite you to cooperate with Horyzont Inwestycji.