Case Study: Transforming an Old Tbilisi Apartment into an Airbnb Income Generator

Background

Old Tbilisi, with its winding streets, historic architecture, and strong tourist appeal, has become a hotspot for short‐term rentals. Neighborhoods like Sololaki, Vera, Mtatsminda, and the very Old Town itself attract visitors who want authentic Georgian charm. While many buildings here are aged, they offer good value per square meter and potential for high returns once renovated and managed well.

Acquisition

• Property type: 1-bedroom (45–55 m²) apartment in an old historic building in Old Tbilisi.

• Purchase price: approx. USD 90,000 (this aligns with the average 1-bedroom apartment prices in central Tbilisi districts.

• Additional costs at acquisition: legal fees, registration, broker commission, inspection: approximately USD 2,000-3,000.

Renovation & Furnishing

• Scope: Full renovation — updating structure (if needed), painting plaster, electrical/plumbing, modern kitchen and bathroom, fixtures/furnishings to high short-term rental standard.

• Cost estimate: For an apartment of ~50 m², renovation + furnishings might be USD 18,000 - 25,000, depending on material and furniture quality, and extent of structural work.

• Timeframe: 2-3 months, including design, permitting, renovation works, furniture & décor.

Renting on Airbnb through a Local Property Management Company

• Daily rate: USD 75-USD 95 (typical for a one‐bedroom, well-renovated historic apartment in Old Tbilisi).

• Occupancy rate: ~60-65% annual average with seasonal variation (higher in summer, lower in winter). With good management, marketing, and reviews, this is realistic.

• Annual gross income: If ADR is USD 85 × occupancy of 230 nights/year (≈63%) = USD 19,550 gross.

• Management fees & operating costs: property management (cleaning, check-in/out, maintenance), utilities, platform fees, furnishing amortization, taxes, perhaps about 25% of gross income.

• Net income: after costs, expect roughly USD 14,600/year, depending on how aggressive you are with pricing, seasonal variation, and how well you manage costs.

Financial Summary & Returns

• Purchase Price (incl everything) - USD ~92,500

• Renovation & Furnishing Cost - USD ~22,500

• Total Initial Investment - USD ~115,000

• Gross Annual Revenue - ~USD 19,550

• Annual Operating Costs (25%) - ~USD 4,900

• Estimated Net Annual Income - ~USD 14,650

• Gross Yield - ≈ 17% (19,550 ÷ 115,000)

• Net Yield - ≈ 12.7% (14,650 ÷ 115,000)

These returns are higher than what many long-term rentals in less touristic districts can offer, though they come with more hands-on work or reliance on the property manager. It also depends heavily on location, quality of renovation, guest experience, and good marketing & reviews.

Risks & Mitigations

• Seasonality: Demand fluctuates — summer and tourist-heavy months bring higher occupancy. Mitigation: Adjust pricing, minimum stays, and offer discounts in the low season.

• Regulation & local compliance: Ensure proper registration, safety and health standards, and local tax obligations. Use a reliable local property manager who knows the regulatory landscape.

• Maintenance / wear-and-tear: Short-term rentals see higher turnover. Use durable materials, schedule periodic inspections, and ensure quality housekeeping.

• Competition: Many listings in Tbilisi. To stand out: excellent decor/design, amenities (fast WiFi, air conditioning, clean furnishings), prompt guest communication, and high ratings.

Advantages of this Model for Potential Investors

1. Higher Returns vs Long-Term Rental
   The Airbnb/short-term model in tourist-friendly historic areas like Old Tbilisi typically yields gross returns of 15-18%, compared to long-term rental yields of around 6-10% in many districts.

2. Property Value Appreciation
   Historic central areas are seeing strong capital growth. Even before Airbnb income, the value of a renovated apartment in Old Town tends to rise faster than less central or less well-renovated ones. (Price per m² in Old Town / premium districts: USD 2,200-2,500 or more.)

3. Flexibility
   You can use the property for your own stays, adjust between short-term and long-term renting depending on demand or legal/regulatory changes. Having a local manager helps with that flexibility.

4. Low Barrier to Entry Compared to Other Markets
   Compared to many Western European or Gulf cities, real estate purchase costs are lower in Tbilisi’s historic zones for similar charm & proximity to services, meaning smaller initial investment for good ROI.

5. Passive Income with Local Management
   If you partner with a good property management company, much of the hands-on work (guest booking, cleaning, maintenance) can be outsourced. This makes it viable even for remote investors.

Conclusion & Key Takeaways

• Buying an old apartment in Old Tbilisi, renovating it well, and operating it as an Airbnb can produce net yields of 12%+ in favorable cases.

• The model requires upfront capital for purchase + renovation, good design and service, and efficient management.

• Seasonality, regulatory compliance, and quality are key levers: doing these well maximizes returns and reduces risk.

• For many foreign investors with moderate budgets, this model offers a compelling mix of capital appreciation + income, better than many pure long-term rental or “buy and hold” strategies in less tourist-centric areas.