You want to buy an Airbnb in Prague. You’ve heard about eight percent returns, seen those Old Town views, and you’re wondering where to start. My name is Robin Petrásek, and I’m going to tell you exactly how this works – including the regulatory mess that might kill your investment before it starts.
Location determines about seventy percent of your Airbnb success. Here’s how that breaks down by area:
But here’s the problem. Walk down any Prague 1 street and you’ll see eight lockboxes on a single building. That’s eighty different Airbnbs competing for the same guests. Prague has about 8,250 active Airbnb listings, and over seventy-seven percent of guests are international. Competition is brutal, but demand is stronger.
My rule: if you can afford Prague 1, buy Prague 1. If not, buy as close as possible — good spots include the beginning of Žižkov near the center.
After analyzing hundreds of properties with partners managing over eighty units, here’s what nobody tells you. Small apartments lose.
Studios and one-bedrooms fight hotels and barely hit three to five percent yields. Three and four-bedrooms jump to four to six percent because families pay premium to stay together. Five and six-bedrooms hit six to eight percent yields because they’re incredibly rare and large groups will pay significantly more.
A beautiful six-bedroom in Prague 2 will outperform a tiny studio in Prague 1. Hotels can’t compete with space for families.
Premium furniture adds twenty percent to nightly rates. Castle views add twenty-five percent. River views another twenty percent. But these premiums only work in prime locations.
What kills investments? Being more than three kilometers from Old Town. Busy streets, poor transport, ugly exteriors. Insufficient hot water or heating issues destroy performance through bad ratings.
Prague 1 apartments cost 8 to 15 million crowns. Add 50,000 in transaction costs. Furnishing and renovations run 500,000 to 1.5 million.
Then the operational nightmare begins:
The government is done with the Wild West. Starting 2026, you need full registration in the eRÚIAN system. Fail to register? Fines up to 100,000 crowns.
You need a business license. You need fire safety certification costing 20,000 to 50,000 crowns. Emergency lighting, escape routes, extinguishers, smoke detectors.
Why? Currently forty to seventy percent of short-term rental income goes unreported, costing the state 800 million crowns annually. They want their cut.
Recent sale in Prague 3, Žižkov: 7.3 million purchase price, 50,000 in furnishing upgrades. Monthly rent of 54,000 crowns sounds like 8.8% ROI, right?
Wrong. Here’s where that money actually goes:
That 27,000 before taxes works out to 4.4% ROI — already a long way from the 8.8% it looked like on paper.
After taxes and health/social contributions, you’re down to three to three and a half percent net ROI. Quite different from that eight percent promise.
Here’s where dreams die. A 2021 regulation says if you use a flat for Airbnb, it should be classified as accommodation unit, not a flat. To be one hundred percent legal, you need to reclassify, which requires one hundred percent agreement from everyone in the building. With a mortgage? Impossible. The bank will never agree.
This is another gray zone. Lawyers argue whether the regulation is even legal. But building offices can impose sanctions up to 500,000 or 1 million crowns.
For prepared investors with cash, maybe yes. For the unprepared, it’s about to get expensive quickly. Wild West days are over. This is professional business requiring professional approach, professional management, professional compliance, and acceptance of gray zones that might explode.
Prague attracts 8 million tourists annually. Demand continues growing. Property appreciates. Even three to three and a half percent net return beats alternatives when you factor in appreciation.
But this isn’t passive income. This is hospitality business with two in the morning emergencies. Do it right or join investors wondering why their passive income feels like a part-time job while annoying neighbors who wish you’d just rent long-term.
Need help with Airbnb calculations or navigating Czech bureaucracy?
Reach out at robin@expatsfinance.cz or call +420 777 877 849.
Robin Petrásek Founder, Expats Finance
