Investing in your first rental apartment: A to Z guide

Investments in real estate are among the most popular ways of making money in the Czech Republic. A rental apartment offers regular income, protection against inflation and long-term growth in value. But how to start? Where to buy? How much does it cost? And is it even worth it?

With this complete guide, we will guide you through the entire process – from deciding to invest, choosing a location and financing, to finding tenants and managing the property. We will use real examples from the Czech market, specific numbers and practical calculations.

Why invest in an apartment for rent

Advantages of investing in real estate

Regular income: Rent brings you a stable cash flow every month. The average gross rental yield in the Czech Republic varies between 3-6% per year of the real estate value.

Protection against inflation: The value of real estate and the amount of rent increase in the long term with inflation. While the money in the account loses value, the real estate maintains or increases it.

Mortgage leverage: Thanks to the mortgage, you can invest even without the full amount. With your own funds of 20-30% of the purchase price, you control the entire property and profit from the overall increase in its value.

Tax benefits: You can deduct maintenance costs, depreciation, mortgage interest and other expenses from rental income.

Risks that are not talked about

• Illiquidity - you will not sell the apartment overnight
• Non-paying tenant - can cost you months of income
• Unexpected repairs - can reduce profitability
• Market decline - property value can drop in the short term
• Legislative changes - rent regulation, tax changes

Step 1: Location analysis

Prague

Apartment prices (indicative, 2025):

• 1+kk (30 m²): 3 500,000–5,500,000 Kč
• 2+kk (50 m²): 5,000,000–8,000,000 Kč
• 3+kk (70 m²): 7,000,000–12,000,000 Kč

Rent:

• 1+kk: 14 000–20,000 Kč/month
• 2+kk: 18,000–28,000 Kč/month
• 3+kk: 22,000–35,000 Kč/month

Gross return: 3.5–5.0%

Advantages: High demand, low vacancy, stable rising prices. Disadvantages: High acquisition costs, lower profitability.

Brno

Apartment prices (indicative, 2025):

• 1+kk (30 m²): 2,500,000–4,000,000 Kč
• 2+kk (50 m²): 3,800,000–6,000 000 Kč
• 3+kk (70 m²): 5,000,000–8,000,000 Kč

Rent:

• 1+kk: 11,000–16,000 Kč/month
• 2+kk: 14,000–22,000 Kč/month
• 3+kk: Kč 18,000–28,000/month

Gross return: 4.0–5.5%

Advantages: Lower entry costs, university town with high demand, developing IT sector. Disadvantages: Smaller market than Prague, lower liquidity.

Regional cities

Cities like Ostrava, Plzeň, Olomouc or Liberec offer:

• Lower purchase prices (1+kk from 1,200,000 Kč)
• Higher gross yield (5-8%)
• But higher risk of vacancy
• Slower growth in real estate value

What to focus on when choosing a location

• Transport accessibility – public transport, train, highway
• Civic amenities – shops, schools, doctors
• Employers in the vicinity – industrial zones, offices, universities
• Demographic development – is the population increasing or decreasing?
• Planned development – new subway, bypass, development projects

Step 2: Financing

Own funds vs. mortgage

All from own funds:

• No interest, higher cash flow
• Lower risk
• But higher entry barrier and lower equity return

With mortgage:

• Lower equity input (20-30% of price)
• Leverage effect – higher equity return
• Interest is a tax-deductible expense
• Risk in the event of loss of rental income

Mortgage for an investment apartment

Terms and conditions of banks (indicative, 2025):

• LTV (loan-to-value ratio): max. 70-80%
• Interest rate: 4.5-6.0% p.a. (fixed 3–5 years)
• Maturity: 20–30 years
• Rental income: banks count 60–80% of the expected rent

Example of financing:

• Apartment price: 3,500,000 Kč
• Own funds (30%): 1,050,000 Kč
• Mortgage (70%): 2,450,000 Kč
• Interest rate: 5.0% p.a., maturity 25 years
• Monthly payment: approx. 14,300 Kč

Additional costs when buying

Don't forget about other costs:

• Property acquisition tax: abolished (from 2020)
• Real estate agency commission: 2-5% of the price (if you buy through RK)
• Legal services: Kč 10,000-25,000
• Property estimate: Kč 3,000-5,000
• Cadastre deposit fee: 2 Kč 000
• Bank fee for mortgage processing: Kč 0-5,000
• Property insurance: bank requirement

Total ancillary costs: approx. 3-7% of the property price

Step 3: Calculation of profitability

Gross yield

The simplest indicator - annual rent ratio to the property price.

Formula: Gross yield = (annual rent / purchase price) × 100

Example:

• Purchase price: 3,500,000 Kč
• Monthly rent: 15,000 Kč
• Annual rent: 180,000 Kč
• Gross yield: 5.14%

Net Yield

More realistic indicator - takes operating costs into account.

Formula: Net yield = ((annual rent - annual costs) / purchase price) × 100

Annual landlord costs:

• Property insurance: 3,000 Kč
• Maintenance and repairs (1% of the price): Kč 35,000
• Administration (if you outsource): Kč 0 (you manage yourself)
• Real estate tax: Kč 1,500
• Vacancy (1 month/year): Kč 15,000
• Total: Kč 54,500

Net income:

• Net income: 180,000 - 54,500 = 125,500 Kč
• Net return: 3.59%

Cash-on-Cash Return (return on equity)

If you are financing with a mortgage, you are interested in the return on your own money.

Example:

• Own investment: 1,050 Kč 000 + ancillary costs Kč 150,000 = Kč 1,200,000
• Annual net rental income: 125,500 Kč
• Annual mortgage payments: 171,600 Kč (14,300 × 12)
• Cash flow after repayment: 125,500 - 171,600 = -46 100 Kč

Caution! A negative cash flow does not mean a bad investment. The tenant pays your mortgage and the apartment increases in value. But you must be able to finance the negative cash flow.

Total return on investment

Includes:

• Cash flow from rental
• Mortgage repayments (equity growth)
• Growth in property value (historically 3-7% per year)

Step 4: Legal requirements

Before buying

• Check the title deed at the land registry real estate
• Check whether the property is not subject to liens, encumbrances or enforcement bank)
• Proposal for a deposit in the real estate register
• Transcript of energy and services

When renting

• Lease agreement (written)
• Transfer protocol with photo documentation
• Income tax registration (if you do not have it yet)
• Notification of the SVJ about the rental (if the statutes require it)
• Reporting obligation to the foreign police (if you rent to foreigners)

Step 5: Preparing the apartment for rent

Renovation and equipment

What to renovate:

• Painting (always)
• Floors (if damaged)
• Bathroom (key factor for tenants)
• Kitchen (basic appliances)
• Electrical installation (if outdated)

Renovation budget:

• Light renovation (painting, minor repairs): Kč 30,000–80,000
• Medium renovation (bathroom, kitchen): Kč 150,000–350,000
• Complete reconstruction: 400,000–800,000 Kč

Principle: Invest in quality, but don't overdo it. Luxury equipment in an average apartment will not increase the rent in proportion to the investment.

Apartment equipment

Minimum:

• Kitchen with stove and refrigerator
• Washing machine
• Lighting in all rooms

Standard (recommended):

• All above + dishwasher
• Built-in wardrobes
• Basic furniture (bed, table, chairs)

Furnished vs. unfurnished:

• Furnished apartment = higher rent (by 10-20%)
• But higher risk of damage and wear and tear
• For smaller apartments (1+kk), the equipment is worth it

Step 6: Determining the rent

Market research

• Check ads on Sreality, Bezrealitky, Bazoš
• Compare apartments of similar size, condition and locations
• Find out how quickly apartments in the area are rented
• Consider seasonality (summer = higher demand, January = lower)

Rent structure

Rent consists of:

• Net rent (landlord's income)
• Advances for services (energy, water, heat, waste)
• Possibly a fee to the SVJ

repair fundExample:

• Net rent: 15,000 Kč
• Advances for services: 3,500 Kč
• SVJ repair fund: 1 Kč 500
• Total monthly: Kč 20,000

Deposit

• The law allows up to 3x monthly rent
• Recommendation: 2–3x rent
• The deposit is returned after the end of the lease (after deduction of any damages and debts)
• The deposit must be interest-bearing (legal obligation)

Step 7: Tax obligations

Rental income tax

Rental income is taxed as income according to Section 9 of the Income Tax Act.

Two ways of applying expenses:

1. Flat-rate expenses (30%):

• Simple – you don't have to register expenses
• Advantageous if you have low actual costs
• You can deduct Kč 54,000 from income of 180,000 Kč with a flat rate

2. Actual expenses:

• You must register all documents
• Advantageous if the actual costs are higher
• Real estate depreciation, mortgage interest, repairs, insurance, administration

Real estate depreciation

You can depreciate the housing unit:

• Depreciation period: 30 years
• Equal depreciation:
• 1. year: 1.4% of the entry price
• Subsequent years: 3.4% of the entry price

Example:

• Purchase price (without land): 3,000,000 Kč
• Annual depreciation (from the 2nd year): 3,000,000 × 0.034 = 102,000 Kč

Depreciation is a tax-deductible expense that significantly reduces tax liability.

Social and health insurance

Rental income is not subject to social and health insurance (unlike business income). This is a significant advantage over the self-employed.

Real estate tax

• It is paid annually (until 5/31)
• The amount depends on the size, location and type of property
• Typically 500–3,000 Kč/year for an apartment

The most common mistakes of beginners

Mistake 1: Buy with your heart, not calculator

"I like that apartment" is not an investment strategy. Always calculate profitability and compare with alternatives. An apartment you like may not be a good investment.

Mistake 2: Underestimating costs

Include all costs in the calculation – maintenance, vacancy, insurance, taxes, administration. A gross return of 5% can shrink to 2-3% after deducting expenses.

Mistake 3: Zero Reserve

Always have a financial reserve of at least 3-6 monthly mortgage payments. The tenant may leave, the boiler may fail, the roof may leak.

Mistake 4: The wrong tenant

Don't underestimate the choice of tenant. Check registries, ask for references, verify income. One bad tenant can wipe out years of profits.

Mistake 5: Ignoring SVJ

Read SVJ bylaws, meeting minutes, and repair fund status before buying. The planned renovation for millions of crowns will significantly affect your investment.

Mistake 6: Too high rent

It is better to have an occupied apartment for 14,000 Kč than an empty apartment for 16,000 Kč. One month of vacancy wipes out a whole year's difference in rent.

Mistake 7: No Diversification

Don't have all your money in one property. If possible, diversify – different locations, different types of real estate, possibly combinations with other investments.

Practical calculation: Example of an investment in Brno

Parameters

• Apartment: 2+kk, 52 m², Brno-Žabovřesky
• Purchase price: Kč 4,200,000
• Renovation: 120,000 Kč
• Total investment: 4,320,000 Kč
• Own funds (30%): 1,296,000 Kč
• Mortgage (70%): 3,024,000 Kč (5% p.a., 25 years)
• Monthly installment: approx. 17,700 Kč

Income

• Monthly rent: Kč 16,500
• Annual rent (11 months of occupancy): Kč 181,500

Expenses

• Mortgage payments: Kč 212,400/year
• Insurance: Kč 3,000/year
• Maintenance: 20,000 Kč/year
• Property tax: 1,200 Kč/year
• Administration (own): 0 Kč
• Total expenses: 236,600 Kč/year

Cash flow

• Annual income: 181,500 Kč
• Annual expenses: 236,600 Kč
• Cash flow: -55,100 Kč/year (-4,592 Kč/month)

Total return

• Negative cash flow: -55,100 Kč
• Principal repayments (1st year): approx. +134,500 Kč/year**
• Return on equity: 10.4%

Even with a negative cash flow, the overall investment return is interesting due to the increase in value and repayment of the mortgage principal by the tenant.

Summary

Investing in your first rental apartment is a significant step that requires thorough preparation. Key points:

• Analyze the location – demand, prices, profitability, perspective
• Calculate realistically – include all costs including vacancy
• Finance responsibly – have a margin and don't overestimate your options
• Choose a quality tenant – check thoroughly
• Optimize taxes – use depreciation and real expenses
• Manage actively – regular maintenance protects your investment
• Think long-term – real estate is a marathon, not a sprint

With quality preparation and realistic expectations, an investment property can be a great tool for building long-term wealth. Don't forget - successful real estate investors don't make money on speculation, but on systematic work and patience.

How Grento can help you

Grento is the most comprehensive Czech real estate management platform that will help you manage your entire portfolio from the first apartment. Dashboard with an overview of profitability, occupancy and cash-flow. Try Grento for free and see for yourself.

> Czech-law scope and editorial note: Legal, tax, accounting, tenancy, service-charge, condominium, metrology, insurance and data-protection statements in this article refer to the Czech Republic and the rules effective for the relevant date. Figures and examples are illustrative, not legal or tax advice. Verify current rules with the relevant Czech authority or a qualified adviser.