Buying eight units of "old, dilapidated small apartments"—is there a trap?

Ask AI · What’s unique about Yuanzi’s investment logic for buying at the bottom in old, run-down small apartments?

Recently, a Chengdu vlogger named Yuanzi’s experience of snapping up eight “old, run-down small apartments” has sparked heated discussion in the real estate community.

At a time when most people are becoming more cautious about buying homes, Yuanzi’s counter-cyclical move looks especially aggressive. In an interview with the media, she said that after deciding to buy a home in January 2025, she contacted nearly all mainstream real estate agencies within Chengdu’s Second Ring Road and locked her target on small units with a total price of 400,000—500,000 yuan. Within a month, she viewed nearly 20 listings and quickly secured six units—“even a flat that I didn’t even look at, I just bought it straight away.” As of January 2026, she had bought a total of eight homes in Chengdu.

In fact, more than ten years ago, there was a wave in China in which investors focused on buying “old, run-down small apartments.” Everyone believed housing prices would keep rising, so they bought low-priced small units—typically homes with more than ten years of age—located in the core areas of cities, then waited for appreciation and flipped for profit. Today, in some first-tier and provincial capital cities, “old, run-down small apartments” are drawing attention again, but the logic is clearly different, with the main driver shifting more toward rental yield.

Rent can cover the mortgage payment

The main reason Yuanzi bought “old, run-down small apartments” in bulk is that she entered the market when Chengdu home prices were low in early 2025, enabling her to generate stable income through renting. A broker told her, “Rent can offset the mortgage payment, and you can also make money.” Before her, in 2024, a group of property speculators from Wenzhou had already been buying homes in Chengdu in volume. Yuanzi told the media that for her eight properties, she needs to repay the bank loan of about 140,000 yuan per month. But the rent she receives is about 210,000 yuan—covering not only the bank loan interest, but also generating a compounded return of nearly 10%.

Yuanzi’s approach is not a one-off. In cities such as Zhengzhou and Chongqing, some investors have also achieved “buy with rent to pay the loan” by purchasing low-priced “old, run-down small apartments.” In February this year, the self-media outlet 《Zhengzhou Real Estate》 mentioned that a Zhengzhou vlogger selected some small-unit listings in Jinshui District and Zhengdong New Area that were in excellent locations and in urgent-sale situations. They negotiated to drive the price down, bought them outright with cash, then spent 20,000—30,000 yuan on renovations before renting them out. For a one-bedroom unit with a total price around 500,000 yuan, the monthly rent could reach 2,300 yuan, with a rent-to-price ratio of about 5.5%.

Recently, signs of a recovery have appeared in the Shanghai real estate market. On March 7, Shanghai’s secondhand home daily online signature count reached 1,324 units; after 315 days, it once again broke 1,300. According to data from Shanghai’s online real estate records, as of March 22, the cumulative number of secondhand home transactions in Shanghai for the third month alone had reached 21,443 units. Combined with the “turn-of-the-month tailwind” effect near month-end, Shanghai’s March transaction volume is expected to exceed 30,000 units. In addition, Shanghai’s secondhand home online signature system has experienced multiple stutters and crashes due to an extremely large instantaneous traffic volume. Gao Yuzhao, a real estate agent at Lianjia who has been working in Shanghai for more than a decade, told 《China News Weekly》 that during this round of market rebound, there are also some individual investors in Shanghai who are snapping up “old, run-down small apartments” at the bottom.

“Right now, some people’s ‘buying at the bottom’ looks more like a wealth-management approach,” Gao Yuzhao said in an interview with 《China News Weekly》. He added that the underlying reasons are that interest rates have continued falling and deposit returns have been declining. In Shanghai, some “old, run-down small apartments” have return rates exceeding 3%, which is higher than bank deposits and some fixed-income wealth-management products.

The rent-to-price ratio is a commonly used indicator for assessing the condition of the real estate market. Simply put, it measures how much return a home generates from renting, usually calculated as annual rent divided by the total purchase price. Internationally, a reasonable rent-to-price ratio is generally between 1:200 and 1:300—that is, recouping the home’s purchase cost over 200—300 months, corresponding to an annualized rental yield of 4%—6%.

Recently, the Shanghai E-HOUSE Real Estate Research Institute, based on publicly available data, compiled case-by-case rent-to-price ratios (yields) for “old, run-down small apartments” in cities such as Chengdu, Chongqing, Wuhan, Nanjing, Shenzhen, Shanghai, Beijing, and Guangzhou. The results show that in most cities, the ratio has already exceeded 2%, with Chengdu the highest at 3.8%, Chongqing at 3.2%, and Shanghai at about 2.45%.

Yan Yuejin, deputy director of the Shanghai E-HOUSE Real Estate Research Institute, believes that overall, these cities’ rent-to-price ratios (yields) have already outperformed deposit interest rates and are gradually approaching mortgage rates. He laid out the average rent-to-price ratios (yields) for several major cities: 2.67%, which is clearly higher than the 1.9% five-year time deposit rate, the 1.8% ten-year government bond yield, and the 2.0% three-year large certificate of deposit rate. At the same time, compared with the 3.06% mortgage rate, they are basically on par. This means that under a mortgage setup, rental income can basically cover the monthly mortgage payment.

Opportunities aren’t widespread

Although multiple individual cases have emerged, industry consensus is that this investment model doesn’t have broad applicability. Taking Yuanzi’s experience as an example, her returns are built on strict screening of properties.

In an interview, she said she systematically reviewed different submarkets, did on-site inspections, and carefully calculated the numbers. She only considered small homes priced in the 400,000—500,000 yuan range within the Second Ring Road. Only when the monthly rent falls in the 1,500—2,000 yuan range can the rent-to-price ratio (yield) reach 4.5% up to 5%.

Therefore, these properties have relatively stringent conditions: the total price has to be low enough, renovation investment needs to be minimal, they must be rentable quickly, and they must still have a certain degree of liquidity in the future. Yuanzi said that for the six properties she bought first—“each with a total price of 300,000—400,000 yuan; with a down payment of 50,000—80,000 yuan, you could get them. And because they all came with existing lease agreements, I didn’t put any money into renovation costs. Effectively, I only paid the down payment, taxes, and agency fees to get them, and altogether I spent around 500,000—600,000 yuan.”

In Gao Yuzhao’s view, in Shanghai, this kind of secondhand home isn’t common. Properties that can achieve a rent-to-price ratio above 3% and be comparable to wealth-management returns are mostly individual cases where owners are in a hurry to sell, and buyers are mainly people who have spare funds and are not in a rush to liquidate within 5—10 years. Based on what he observed from recent Shanghai secondhand home transactions, “old, run-down small apartments” account for a significant share among listings priced below 3,000,000 yuan, but there aren’t many speculators. Demand is mainly for self-occupancy, and some are also acquired by the government to be used for affordable housing.

A senior real estate agent added that behind the bottom-buying behavior in Chengdu cases there is another logic: expectations for urban renewal of old neighborhoods. Yuanzi also mentioned that as urban renewal advances, the location where she bought could potentially face demolition and relocation. “We basically used a very low unit price and low investment to buy the future of Chengdu.”

Multiple industry insiders warn that compared with returns, the risks of “old, run-down small apartments” cannot be ignored. Gao Yuzhao said that “old, run-down small apartments” generally face maintenance problems caused by aging building stock, such as issues with pipes and infrastructure—meaning ongoing maintenance costs are high. Moreover, tenants renting this type of property tend to have strong mobility. There could be vacancy periods and middlemen/agency fee expenses every year, which would affect returns.

A bigger uncertainty lies in the direction of home prices. He said that if you buy with cash, it can be seen as a form of wealth management. But if you enter with leverage and housing prices keep falling, losses would be amplified. In addition, selling old homes is difficult, and the difficulty of reselling and liquidating in the future is also higher.

Reporter: Yang Zhijie

(yangzhijie@chinanews.com.cn)

Editor: Min Jie