How to calculate the return on your flat in Georgia: a self-assessment and a formula

Property rental market in Georgia

When it comes to rental property income in Georgia, it's important to realise that this market is booming. Let's understand why this is the case and what factors play a key role.

Income growth and interest in Georgia

In 2023, the total income from rental housing in Georgia reached 460 million GEL (approximately $172.6 million), an increase of 30% over the previous year. This growth is due to several factors:

• Tourism: In 2024, tourism revenues exceeded a record $4.4 billion. 5.8 million people visited Georgia, 4.1% more than a year earlier. This not only increases the demand for short-term rentals, but also contributes to rising home prices.
• Migration: In 2022, more than a third of those who came to Georgia were Russians, many of whom were looking for accommodation for rent. This created additional demand in the market.

Why Georgia?

Georgia attracts investors due to its stable economy и convenient location. In addition, the country offers relatively low rental taxes - only 5% of annual income. This makes property investment here particularly attractive.

Case in point

Take Anna, for example, who decided to invest in property in Tbilisi. She bought a flat for $100,000 and rents it out for $760 a month. This brings her around 8-10% annual income. For Anna, it has become a great way to diversify her investments and earn a steady income.

Investor interest

Taking all these factors into account, the rental market in Georgia continues to attract investors’ attention. Growing demand and an increase in the number of landlords are creating favourable conditions for investment in property. If you are considering investing in Georgia, now is the perfect time to explore this opportunity.

For more information on income and property investment in Georgia, you can visit official website of the Ministry of Finance of Georgia and read the latest reports and analyses.

How to compare your result: city-by-city benchmarks

To work out whether your income is reasonable, you need a benchmark. Below are approximate annual yield ranges typical for different property types. This is not a guarantee, but a starting point: the specific area, floor level and tenancy type will push the figure up or down.

• Tbilisi: around 12–13% per annum; in certain areas (for example, Isani and Didi Digomi) around 12.5%;
• Batumi: around 10% per annum, rising to as much as 10.8% in some areas, with marked seasonality;
• Kutaisi: around 9–10% per annum;
• Gudauri: 12–15% during the peak winter months through daily hire;
• Kakheti: approximately 8–10%, mainly during the wine-touring season.

If your result is significantly lower than the range for your city, please proceed to the diagnostic section below. A detailed analysis of the districts, figures and differences between sectors is set out in a separate article: Where in Georgia are rental incomes highest?.

New buildings vs secondary housing: comparison of rental yields

When it comes to rental yields in Georgia, the choice between new-build and second-hand properties has a direct impact on the figures. New-build properties require a larger initial investment: the price per square metre in new residential complexes can reach $1500, but modern refurbishments and amenities such as a swimming pool, a gym and security attract tenants, whilst luxury complexes can yield returns 2–3 times higher than the market average.

Second-hand properties are cheaper and can often be let straight away, so their return on investment is frequently slightly higher due to the low initial costs. You need to take into account any potential repairs, the need to replace furniture and the wear and tear on the building.

We have set out a detailed comparison of the pros and cons of the secondary market and new-build properties for buyers in a separate article: How to choose residential property in Georgia for investment.

Why your income is below the benchmark: a diagnosis

When you decide to invest in property in Georgia, it is important to consider many factors that can affect your rental income. Let's break down the main ones.

Location

Location is one of the most important factors in determining the rental income from rental property in Georgia. Choosing the right neighbourhood can significantly increase your profits and attract more tenants. In Tbilisi, for example, the Vake and Saburtalo districts are famous for their high demand due to their developed infrastructure and proximity to business centres. Here, a one-room flat can cost around $800 per monthThis makes these areas particularly attractive to investors.

In Batumi, on the other hand, flats with sea views or near the beach are always in high demand amongst tourists. This enables property owners to achieve higher returns through short-term lettings during the tourist season. Furthermore, in resort areas such as Gudauri, a location close to ski slopes can significantly increase rental rates during the winter months. Investors who choose such strategically important locations can expect a stable and high return.

Condition and repairs

The condition of your property and the quality of your renovations play a key role in attracting tenants and increasing your income. Freshly renovated and modern furnishings can significantly increase the appeal of your flat, allowing you to set a higher rent. For example, an interior renovation of approx. $5,000 could increase the rental rate by 10-15%. This is especially true in competitive neighbourhoods such as Vake in Tbilisi or the main streets of Batumi, where tenants are willing to pay more for comfort and style.

In addition, regularly updating and maintaining your flat prevents the need for major renovations in the future and keeps your property looking attractive. Installing modern appliances such as an air conditioner or dishwasher can add extra value. These improvements not only increase your bottom line, but also reduce downtime between tenants. Maintaining a high level of property condition makes your property more competitive in the market.

Additional services and facilities

Providing additional services and amenities can significantly increase your rental yield. Air conditioning, high speed internet and car parking make your property more attractive to tenants, especially in larger cities such as Tbilisi and Batumi. For example, installing air conditioning and providing internet can increase the rental rate by $50-$100 per month. This is especially important in resort areas where comfort and amenities play a key role in tenant selection.

Additionally, providing services such as housekeeping, shuttle service, or even access to a fitness room can be a deciding factor for tenants choosing between multiple options. These perks not only increase your bottom line, but also help minimise downtime between tenants. In the highly competitive Georgia property market, amenities like these can be your competitive advantage.

Seasonality and type of lease

Seasonality plays a significant role in the profitability of rental property in Georgia, especially in resort areas. In cities such as Batumi and Gudauri, rental demand increases sharply during the summer and winter months respectively. Short-term leases in this period can bring much more income. For example, daily rent in Batumi in summer can reach up to $30-$50 per daywhich at full utilisation during the season can give a yield of up to 12-15% per annum. In Gudauri, popular with skiers, the winter months are the peak season when tenants are willing to pay premium prices for proximity to the slopes.

Your choice of rental type also affects your income strategy. Long-term lease provides a stable and predictable income, which may be preferable for those who want to minimise risk and management effort. However, short-term rentals through platforms such as Airbnb can significantly increase returns through higher rates during peak seasons. This approach requires more management, but can be very profitable. It is recommended to consult professional agencies to choose the best rental strategy depending on the season and region.

Floor and view

The storey and the view from the window play an important role in determining the rental rate of your property. Flats on high floors with panoramic views, whether of the mountains or the sea, are always in high demand. In cities such as Batumi, a view of the Black Sea can increase the rental price by 10-20%. This is because renters, especially tourists, are willing to pay more for unique views and a sense of spaciousness.

In addition, high floors are usually associated with less noise and better lighting, which also increases their attractiveness. In Tbilisi, for example, flats on upper floors with views of the city or the Kura River are often more expensive. It is important to consider the presence of a lift and the condition of the entrances, as this can have a significant impact on the comfort of living. Investors who choose properties with good views can expect a higher income.

Taxes and additional expenses of the landlord

Investing in property in Georgia can be profitable, but it is important to consider all the costs involved, including taxes and additional costs. Let's look at what you should pay attention to.

Taxes on rent

In Georgia, the tax system for landlords is quite loyal. Individuals only pay 5% of annual income from officially declared rental payments. This is one of the lowest tax burdens in the region, which makes investments attractive.

Example: If your annual rental income is $6,000there'll be a tax $300.

Agency fees

If you decide to use an agency to manage your rental, keep in mind that they usually take a commission. This can be 10-15% from the lease payment.

Example: At the time of the lease $500 per month agency fee will be $50-$75.

Utility payments

Utility costs can vary depending on the size of the flat and the energy efficiency of the building. Typically these are:

Electricity, water, gas: from $20 to $50 per month for a studio flat.

These costs are often borne by the landlord if they are not included in the tenant's payment.

Other expenses

Home insurance: It is recommended that the property be insured. The cost may be $100-$200 per year.

Minor repairs: Between tenants, there may be costs for repairs, replacement of appliances or furniture.

In order to correctly estimate the net rental income, it is important to take into account all of the above costs. This will help you avoid unpleasant surprises and calculate accurately rental income from rental property in Georgia.

For more information on taxes and costs associated with rental property in Georgia, visit official website of the Tax Service of Georgia.

How to calculate profitability and return on investment

When you decide to invest in property in Georgia, understanding how to calculate returns and payback becomes key. Let's break down how to do it right.

Formula for calculating return on investment (ROI)

Return on Investment, or ROI (Return on Investment), shows how effectively your money is working for you. The formula is simple:

Return on Investment (ROI) = Annual rental amount / Price of the property × 100%

Example: If you're renting a flat for $500 per month (which amounts to $6,000 per year) and bought it for $100,000your yield will be:

$6,000 / $100,000 × 100% = 6%

Long-term vs daily rentals

Different rental strategies can result in different returns. Long-term rentals tend to be more stable, while daily rentals can be more profitable in season.

Long-term lease: The rates are usually 7-9% per annum. This is an approach for those looking for a stable income without frequent tenant changes.

Daily rental: May yield 10-15% due to high load during the season. For example, if you rent a flat for rent in Batumi in summer for $30 per dayand it's busy 200 days a year, it'll bring in $6,000. Remember that it is worth considering downtime when renting out a flat on a daily basis.

Return on investment

Payback shows how long it will take for your investment to start generating a net profit. It depends on profitability and additional costs.

Calculation example: If your flat is bringing $6,000 per yearand you invested $80,000your payback will be approximately 13 years:

$80,000 / $6,000 = 13.3 years

Accounting for incremental costs

Don't forget to consider taxes, utilities and possible repair costs. For example, the rental tax in Georgia is 5% of annual income, which could reduce net income.

Tips for increasing profitability

1. Optimise costs: Find ways to reduce your utility and repair costs.
2. Improve conditions: Interior and technology upgrades can increase rents.
3. Analyse the market: Watch for changes in demand and adjust prices.

For more accurate calculation and analysis, use ROI property calculator to estimate the return on your investment.

Self-assessment checklist: workload, average rate, expenses, taxes, downtime

Before comparing your returns against a benchmark, gather your actual figures for the last 12 months. Go through the list:

• Loading: how many months (or, in the case of daily rentals, nights) the flat was actually occupied;
• Average rate: actual revenue for the year, divided by the number of months or nights paid for, rather than the price stated in the advert;
• Expenses: utility bills that you paid, minor repairs, replacement of furniture and appliances, insurance, and the agency’s or property manager’s commission;
• Taxes: The tax on rental income in Georgia for individuals is 5% of the declared income;
• Downtime: how long the flat stood empty between tenants and during the low season, and how much income this cost.

Once all five points have been completed, calculate the yield based on net income rather than the total rent specified in the lease: it is this figure that is compared with the city-specific benchmarks.

Example of a calculation for a single flat

Let’s take a hypothetical flat, purchased for $100,000 and let out for $500 per month (we’ll assume full occupancy from here on; please deduct any periods of vacancy separately):

• Gross income: $500 × 12 = $6,000 per year;
• Tax 5%: $300;
• The agency’s commission (for example, 5% of annual income): $300;
• Utility bills paid by the owner: approximately $600 per year;
• Insurance: around $150 per year (approximately $100–200).

Net income: $6,000 − $300 − $300 − $600 − $150 = $4,650 per year. The gross return is 6% ($6,000 / $100,000), whilst the net return is approximately 4,65% ($4,650 / $100,000). It is the net figure that you should compare yourself against; the gross figure should only be used if the benchmark is also stated before expenses. Use the ROI formula from the section above for your purchase price and your actual figures.

What to do if returns are below the norm

Increasing your rental property income in Georgia requires a strategic approach. Here are some practical tips to help you maximise your profits.

Formalisation and defence

1. Enter into a formal rental agreementThis protects your rights and simplifies tax accounting. Formalisation reduces the risks of conflicts with tenants.
2. Home insurance: It is recommended that you take out force majeure insurance. The cost of the insurance may be $100-$200 per yearbut it will give you peace of mind.

Renovation and furnishing

1. Maintaining excellent condition: Fresh renovations and modern furnishings increase rents. For example, investing in a bathroom or kitchen renovation can be fully justified by increasing the rental value.
2. Investments in technology: Installing new appliances such as an air conditioner or dishwasher can increase the appeal of your flat.

Location and choice of neighbourhood

1. Rent in areas of high demand: The city centre, new residential complexes and tourist areas are always a priority. For example, flats in the centre of Tbilisi and Batumi can bring on 10-20% more income.
2. Market Analysis: Regularly monitor changes in prices and demand. This will help you stay competitive.

Additional services

1. Turnkey services: Offer tenants additional services such as cleaning, shuttle service, paid internet or parking. These bonuses allow you to charge higher fees.
2. Flexible pricing: Change the rate depending on the season and demand. For example, daily rentals in Batumi in summer can bring much more.

Lease management

1. Professional agencies: Use agencies or online rental platforms. They will help you estimate the price and ensure occupancy.
2. Online platforms: Consider surrendering through Airbnb or similar services to increase profitability.

These steps will help you increase your rental income and make your property more attractive to tenants. Analyse the market regularly and adapt your strategy to stay ahead of the competition.

🔗 Useful links

1. Ministry of Finance of Georgia
   You can find up-to-date information on the state budget, tax policy, and the country's economic indicators, as well as access to public registers, reports, and legislation in the field of finance.
2. Analysis and statistics of profitability
   You can find detailed analysis and statistics on residential property yields around the world - from rental rates to tax burden and market trends.
3. ROI property calculator
   Convenient ROI calculator - tools for calculating the profitability of real estate in Georgia. With its help you can quickly assess the payback of the object, take into account the costs and predict the profit.
4. Official website of the Tax Service of Georgia
   Here you can file declarations, check your TIN, calculate taxes and access electronic services.
   

Conclusion

Investing in property in Georgia could prove to be a profitable option thanks to steady market growth and attractive terms for landlords. Given the variety of factors affecting rental income, it is important to take a careful approach to selection of an object and management strategies. Whether you opt for new-build properties or the secondary market, keep an eye on price trends and adapt your approach to remain competitive.