30 August, 2022 seen 19Tbilisi by night is very beautiful. Time after time I love to take out my DLSR camera and tripod to experiment with…
This is the topic I first encountered many many years ago, well actually back in these days it was more about buying a property in Tbilisi and renting it out with the option of selling the property in a few years with profit.
Throughout the years I've been contacted by investors from all around the world (literally from Italy to Australia and Brazil) interested in Tbilisi rental market. My simple question always has been - what is the return on investment? ROI?
As a person with a strong belief in the stock market, I have never really understood what the point of renting out is, as long as the apartment is not for free, left as an inheritance. Dealing with tenants, changing linens? Too much hassle for too little money!
In the stock market, there are plenty of REITs paying out divided up to 8-10% annually (the stock market doesn't mean it is safe of course)
I've been investing with many good REIT's - my personal favorite - O (Realty Income) and Baltic Horizon Fund
It was in early Spring 2022, I met a Latvian girl, she said she was renting for subletting in Tbilisi on Airbnb, refurbishing a little bit, and then again renting out for the short-term on Airbnb only. My first question was - what is your ROI?
And I got an astonishing answer - about double. About double? Wow, I thought. My next question was -so is it all about location, location, location?
Again, she said, no they don't actually have prime locations and returns are just amazing. I was thunderstruck.
At the end of April I visited Batumi for a short vacation, just out of the curiosity I contacted a few developers there and was mesmerized by the offer available in Batumi. In the end, I didn't buy anything, but if I would have that free cash I would buy.
A few weeks later, another friend invited me to visit his guest house in Kakheti, we spent a nice evening drinking chacha, talking politics, life, and business and I learned that he is actually renting the place for $500/mo and turned into a small village hotel. For the money paid I would just be happy and live in such a villa without turning it into anything, but as we have business and school for the kiddo in Tbilisi, we cannot just relocate to some village in Kakheti, though from the work perspective, nothing much would actually change.
Slowly I concluded - I should give it a try and launch the Tbilisi Airbnb project. I don't have any property in Tbilisi, so I decided I will go the rent-to-let route, for my first project I've decided not to set the rental prices too high and I'm looking for something to rent for $250-$300/mo just to get my feet wet. if I will manage to take 100% yield (before expenses) I will be very happy already, If I will break even I will take notes and look at how to improve. In case I will be under the water after 6 months - I will pause this project and exit it with financial losses but hopefully with some valuable experience gained.
As much as I would like to start this project tomorrow (just before the start of the Summer season in Tbilisi) I will have to wait until September, as we are planning to leave Georgia for this Summer.
I have this feeling it is going to be a hot Fall, with lot of dealing with real estate agents, dealing with the owners, and setting up actual marketing can promotion for Airbnb rentals.