Investing in Georgian Apartments: Applying Principles for Long-Term Rental Success

March 11, 2023

4 min read

Investing in Georgian Apartments: Applying Principles for Long-Term Rental Success
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I have three apartments in Georgia, two in Tbilisi and one in Batumi. These units are not perfect, but they helped me learn principles for how to make better investments in long-term Georgian rentals. I chose every apartment for myself. It is a good enough strategy to start with since you are less likely to accept poor trade-offs, and later you will find other people with similar preferences ready to rent your apartment.

I came to Georgia to buy my first home two and a half years ago. Before that, I'd been frugally living in my parent's small apartment at the edge of Minsk, saving towards the 60k I would need to buy my first home. My two requirements for the property came from previous inconveniences. I just wanted enough space to work and sleep in different rooms while being close enough to central areas. While my first Georgian apartment fulfilled these conditions, I had an office in the same room with a kitchen and living room, so it became uncomfortable as I started living with my girlfriend. Also, the kitchen was small for people preferring cooking over going out.

So I've saved money, and after two years started looking for another apartment to resolve the inconveniences of the first flat. It took two months to find a half-renovated place and three months to prepare it for living. If you are curious about my troubling experience finishing the renovation in Georgia, check out this video. While it is a comfortable place, it is not the best investment since you won't rent a 100 squire meter apartment twice the price of a 50 squire meter one.

I only spent four months in that place since I got tired of Tbilisi and wanted to explore Batumi as an alternative location for living. You can check another video to learn why I chose the seaside over the capital. The Batumi flat also has issues: there are three balconies for a two small bedroom apartment, the renovation and furniture are old and need a rework, and one elevator is not enough for the building with so many flats.

Even though every apartment I've described has problems, I believe they all have been good enough investments. They made me look at apartments as a subscription-based product, and to make the most out of that product, we need to pick a target customer. We can rent Georgian apartments to lonely digital nomads, local families, or groups of roommates, yet I think it's better to focus on ex-pat couples working remotely. They have more money to spend on a better-quality apartment while being a more reliable long-term client.

With the target customer in mind, we are better suited for making a specification for our next rental investment. A remotely working couple wants to live in a good neighborhood close to central areas, but not that close that they have air and noise pollution. The apartment should have enough natural light with good views from windows and balconies. They want a big comfortable kitchen, a good bathroom, a bedroom with a big bed and quality mattress, and simply a good enough renovation. Finally, most landlords fail to understand that they also need tables and chairs to work on computers.

While we can fulfill some of these needs by taking any apartment and buying furniture or doing a renovation, there are certain things we can't fix. And those are the ones we should not compromise on when we invest in an apartment. Flats with flows could be cheaper than the market price, but we will receive less rent, making it a worse investment in the long term.

First, we should never buy in an inferior location, like a high-traffic area, a place close to factories, a depressing neighborhood, or an area missing necessary infrastructure nearby. Second, it should be in a decent building. If it's in poor condition already, it is less likely to get better with time. Third, it should have at least some view from the windows or balconies. People won't prefer looking into a parallel building or having a dump outside. Fourth, it should have a good floorplan, enough space for a kitchen and bathroom, and no strangely-shaped rooms. Fulfill as many of these criteria, and you will have a solid real estate portfolio.

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