Costs of Upkeep and Depreciation for Batumi Apartments
At first, investing in apartments for tourist rentals in Batumi real estate seems easy: buy a property, furnish it, and list it on sites like Airbnb and Booking. Guests start booking, you read their reviews, and you earn money. But in reality, it can be more complicated. Let's look at this process in more detail.
Getting Ready to Rent Out Your Property in Batumi
To rent out an apartment, you’ll need:
- Make refurbishments
- Purchase household appliances and kitchen utensils
- Provide 24/7 customer support
- Organize meeting and reception of guests
- Pay utility bills on time
- Provide cleaning and repairs
Apartment Management in Batumi
Popular tourist destinations often feature companies that handle apartment management, but this is not as widespread in Georgia. Investors here often need to enlist a host to manage their properties, typically for a fee ranging from 20 to 30% of the earnings, which covers cleaning as well. Nonetheless, the owner still pays the costs related to maintenance and depreciation.
Apartment Management Options in Batumi, Georgia
The investor’s terms:
- Manage independently, which means you need to be physically present all the time.
- Employing a professional manager is tough for foreigners in Georgia as they're usually found through word of mouth.
- Several property development firms provide management services through their companies with clear reports and low service costs. However, these companies often charge higher rates, typically ranging from 30 to 40%.
Advantages of Buying Apartments with a Management Company:
- Costs are significantly minimized;
- The management company itself finds clients;
- Reportings are always transparent;
- All taxes are paid by the management company (subtracted from income).
Disadvantages of Buying Apartments with a Management Company:
- In complexes where owners can rent out independently alongside a management company, the management firm often faces challenges. Many owners may begin undercutting prices, putting the management company at a disadvantage;
- Typically, management companies charge higher rates compared to hiring an individual host, averaging around 30-40%.
Pros and Cons of Investing in Batumi Real Estate Apartments
Pros:
- Low entry cost
- High employment during the season
Cons:
- Low occupancy out of season
- Low cost of room rental
Source: Galt & Taggart
Additional Maintenance Costs for Batumi Real Estate
Maintenance and Depreciation Costs
According to Airbnb super host Gvantsa Gokadze, the costs of running aparthotels in Batumi include:
- Cosmetic repairs: painting walls, replacing furniture if necessary, renovating the kitchen and restroom are carried out every 5 years if the construction of the complex is of good quality.
- Equipment repair: washing machine, TV, dishwasher, air conditioner, vacuum cleaner, iron, kettle, hair dryer - something consistently breaks down once a quarter.
- Pillow renewal: carried out annually.
- Dry cleaning of furniture and mattresses: carried out twice a year.
- Plumber: visits at least once a quarter.
- Electrician: visits once a year.
- Renewal of dishes and linen: carried out annually.
It's important to mention that the level of responsibility for maintaining rented accommodation versus your own residence varies. With short-term rentals, tenants change frequently, leading to more frequent wear and tear on equipment and furniture. These maintenance costs typically account for approximately 2-3% of the property's value annually.
Other Systematic Payments to Keep in Account:
- $50-100 rent for a studio of about 40 sq. per month depending on the season
- Service fees ($1-2 per sq.m.).
- Income tax - for 2024 - 5%
Total Costs of Owning and Renting Out Apartments in Batumi
The average cost of Batumi real estate for 2023 is $980 per sq.m.
An apartment with an area of 40 sq.m. will cost $39,200. Annual expenses:
- Maintenance and depreciation: 2% - $784
- Utility payments: $720
- Service fee: $720
- Total: $2,224 per year (5.6% of the cost) excluding the services of the management company or host.
Alternative: Investing in Hotel Rooms in Batumi
Pros:
- No additional expenses
- High occupancy and average check
Cons:
- High entry threshold
- The impossibility of free hotel accommodation (only with a discount)
New Project by Pontus Development: A Prime Opportunity in Batumi Real Estate Investment
Drawing upon analysis of the Batumi real estate investment market, Pontus Development strategically decides to launch a new exclusive project for investors in Batumi: investing in Georgia's first 5-star hotel from the UAE-based chain Rotana.
This project focuses solely on generating passive income through investment. Pontus Rotana Resort and Spa is set to debut in 2027, situated along the pristine shoreline of Gonio, Batumi. The hotel's amenities will cater to both tourists and business travelers, operating year-round with comprehensive infrastructure, including:
- Outdoor and indoor pool
- Several restaurants and bars, including a rooftop bar with panoramic views
- Wine boutique and cigar shop
- Spa area and gym
- Several conference rooms
- Private equipped beach
- Children's zone
In addition, this is the first Rotana in the world with a Casino. This project is available for investment, find more details on our Linkedin Post or contact us by WhatsApp.