Untapped Potential of the Czech Residential Market?

If you buy badly, neither management nor timing will usually save it. Where is the value of residential real estate created today? When does it make sense to hold an asset, and when should you consider selling? In this interview with Tomáš Schmied, you will also discover where the biggest investment opportunities in the residential market lie today.

Where is value in residential real estate in the Czech Republic really being created today – through acquisition, management, or timing of the sale?

In all three areas, but acquisition is always the foundation. If you buy badly, neither management nor timing will usually save it. Value is created through acquisition discipline, day-to-day work with the property, and the ability to recognise when it makes sense to hold an asset and when it is economically right to consider divestment.

How do you recognise a “good building” with strong appreciation potential?

I mainly look at the location, technical condition, tenant structure, rental levels in relation to the market, and the legal status. A good building does not have to be perfect. In fact, it is often most interesting when it has a clearly identifiable problem that we know how to solve – whether in management, operations, tenant relationships, technical condition, or energy efficiency.

Is rental income generating more profit today, or is it the growth in property prices themselves?

Rental income is the foundation of stability, while price growth is an added benefit. However, we do not build our strategy around rising property prices, because for us that would be speculation. We take a conservative approach and focus primarily on what we can influence ourselves – the quality of the acquisition, management, and active work with the property. If the market rises, that is a welcome bonus. We aim to achieve above-average returns compared to standard real estate funds through our own activity.

Are we at the peak of the real estate cycle, or does the market still have room to grow?

The residential market is highly local. For our purposes, we see Prague as relatively overheated, which is why we focus more on regions and properties with a specific story. In my view, the Czech market still has long-term potential. In terms of pricing and the overall structure of housing, we are not yet where mature Western markets are, and the shift towards rental housing will continue.

What is the biggest difference between a traditional developer and a fund such as Tandem OPF?

A developer creates a project from the ground up and therefore carries the risks associated with permits, construction, costs, and future sales. Tandem OPF is built on a more conservative approach. We do not buy a vision on paper, but completed and fully operational apartment buildings that are already generating income today. We always look for projects that make sense in their current state, while also offering potential upside through better management, technical improvements, or operational optimisation.

How has your investment strategy changed over the past two to three years?

We have become more disciplined. Money has become more expensive, investors are more cautious, and transactions have to make sense on their own merits. It is no longer enough to believe that market growth will cover mistakes. We focus far more on cash flow, operating costs, technical condition, and the ability of an asset to perform even under more challenging conditions.

Where do you currently see the greatest untapped potential in the Czech Republic?

In regional cities and in older apartment buildings that have not been professionally managed for a long time. Not every regional property is a good investment, but with the right selection, there are interesting opportunities to be found. It is often not about a fashionable address, but about the combination of price, yield, and the specific improvements that can be made to the property.

Does it make more sense to invest in older buildings or in new developments?

Both can make sense, but we are stronger when it comes to older, fully functioning apartment buildings. With those, we are better able to identify value, risks, and room for improvement. A new development may be attractive, but it is usually far more dependent on development processes, permits, construction, and the sales market.

How quickly can an investor in Tandem expect returns?

Tandem OPF is more of a boutique fund. We are not trying to turn it into a mass-market product. It is suitable for investors seeking longer-term exposure to residential real estate, who do not want to deal with property management themselves and understand that value is created over time. On the other hand, it is not a product for someone expecting quick speculation, immediate liquidity, or guaranteed returns without risk.

Why is entry into the fund set at higher investment levels?

It is a qualified investors’ fund. We see investors more as partners and want to work with people who understand the nature of this investment, its time horizon, and its risks. We ourselves have also invested significantly in the fund – it is our own “skin in the game”. Of the fund’s assets, which exceed CZK 1 billion in value, roughly one third consists of the founders’ capital. Tandem OPF is a boutique fund for a limited circle of partners. We are also preparing a more accessible product, but that is a topic for another time.

Do you think about money differently now than you did at the start of your career?

Earlier in life, people tend to focus more on returns. Over time, they pay more attention to risk, control, and the quality of decision-making. Money is not just a tool for growth, but also a responsibility – especially when you are working not only with your own capital, but with investors’ capital as well.

What advice would you give to someone who wants to build wealth systematically?

Do not try to become wealthy through a single decision. Wealth is built through a combination of discipline, time, and the ability to avoid major mistakes. It is important to understand what you are investing in, to have realistic expectations, and to use common sense. Sometimes a simple calculation is enough to uncover a risk that may look sophisticated in a presentation but makes no economic sense in reality.

What is your personal definition of a good investment beyond the numbers?

A good investment is one I understand, where I can clearly define the risks, and where I know why it should still work even if the market does not move in the ideal direction. Numbers are important, but they are not enough on their own. What matters is logic, control over risk, and the ability to actively influence the outcome.

The fund is a qualified investor fund pursuant to Act No. 240/2013 Coll. Its shareholder may only be a qualified investor within the meaning of Section 272 of this Act. The value of an investment in the fund may fall as well as rise, and the return of the originally invested amount is not guaranteed. The fund’s past performance does not guarantee the same or higher performance in the future.