The apartment is a 108 m², three‑bedroom unit on the beachfront promenade of Čiči, just outside Budva. It sits on a hill with sea views, a private terrace, and includes a garage space—an advantage in Montenegro where parking is scarce. The asking price is €295,000, furniture included.
Purchase and transaction costs
- Real‑estate transfer tax (pre‑owned property): 3 % of the purchase price
- Notary fees: €500‑€600 per contract
- Oral translation during signing: €50
- Written translation (optional): €250
- Legal/administrative assistance (e.g., tax payment, utility registration): €500
Total extra costs are roughly €1,500 (about 4 % of the purchase price). Negotiation on price can typically shave another 4‑5 % in Montenegro.
Rental income assumptions
The property is marketed for short‑term Airbnb rentals from May to October (peak season). Conservative occupancy and nightly‑rate estimates from a local Airbnb manager (115+ units under management) are:
| Month | Occupancy | Nightly rate | Approx. monthly revenue |
|---|---|---|---|
| May | 60 % | €165 | €2,970 |
| June | 80 % | €165 | €3,960 |
| July | 95 % | €220 | €6,280 |
| August | 95 % | €220 | €6,280 |
| September | 70 % | €180 | €3,780 |
| October | 50 % | €150 | €2,250 |
Peak‑season total (6 months): ≈ €25,520
Average monthly gross during peak months ≈ €4,250.
Low‑season rental potential
From November to April the property can be let on a monthly basis. Estimates:
- Conservative figure: €750 / month (reflects personal usage allowance)
- More realistic figure for a 108 m² beachfront unit: €1,000 / month
Assuming the higher figure, low‑season gross would be €6,000 for the six off‑peak months.
Ongoing operating costs
| Item | Cost (per month) |
|---|---|
| HOA/common charges | €0.20 / m² → ≈ €21 |
| Electricity | €55 |
| Water | €25 |
| Trash collection | €5 |
| Internet | €30 |
| Property tax (annual 0.25 % of value) | ≈ €800 / yr → €67 / mo |
| Maintenance reserve | ≈ €58 / mo (≈ €700 / yr) |
| Airbnb management fee | ~10 % of gross rental revenue (covers listing, bookings, check‑in/out, cleaning) |
| Misc. repairs & deposits (average) | ≈ €50 / mo |
Total fixed monthly expenses (excluding management fee) are roughly €250.
Net rental income and ROI
Using the conservative peak‑season revenue (€25,520) plus low‑season revenue at €750 / month (€4,500), the annual gross is ≈ €30,020.
Subtracting:
- Fixed expenses: €250 × 12 = €3,000
- Management fee (10 % of gross): €3,002
Pre‑tax net income: ≈ €24,000
Net yield (pre‑tax):
[
frac{€24,000}{€295,000} times 100 approx 8.1%
]
This figure assumes the property is rented as‑is, without any upgrades.
Key risks
- Nearby construction: A planned building could appear on the hill behind the property; permits are uncertain and could affect views or privacy.
- Under‑utilized interior: Current layout leaves bedroom space partially unused and the kitchen is closed‑plan, limiting guest capacity.
- Wear and tear: Beach‑front rentals experience higher cleaning and maintenance needs (e.g., sand, moisture, occasional damage).
- Seasonality: Income drops sharply outside the May‑October window; reliance on long‑term monthly rentals is needed to smooth cash flow.
Suggested upgrades to improve ROI
- Add a small outdoor Jacuzzi on the private terrace (estimated €8,000‑€9,000). Unique amenity can justify higher nightly rates and attract premium guests.
- Convert to an open‑plan kitchen/living area by removing the separating wall, creating a more modern Airbnb‑friendly layout.
- Install an additional single bed in the currently under‑used bedroom to increase capacity to 4‑5 guests.
- Upgrade the main bathroom shower to a space‑saving cabin; retain quality fixtures to keep costs modest.
- Refresh furniture and décor (new couch, dining table, linens, towels) to match the high‑end beachfront positioning.
- Consider a modest interior redesign (e.g., new lighting, fresh paint) to raise perceived value without a full renovation.
These improvements could raise the average nightly rate by €30‑€50 and improve occupancy, potentially pushing the net yield toward 10 % after accounting for the upgrade costs amortized over several years.
Decision considerations
- Cash flow: Even without upgrades, the property delivers an 8 % pre‑tax yield, which is strong compared to many European markets.
- Capital outlay: Initial purchase plus transaction costs ≈ €296,500. Adding the suggested upgrades could require an additional €15,000‑€20,000.
- Management: A local Airbnb operator handling bookings, cleaning, and guest communication can streamline remote ownership; their fee is roughly 10 % of revenue.
- Legal: Pre‑owned properties incur a 3 % transfer tax; remote purchases are possible via Power of Attorney, though on‑site inspection is advisable.
- Market trends: Growing interest from digital nomads (North America, UK, Australia) seeking non‑Schengen stays for a few months boosts off‑season demand.
Overall, the beachfront apartment near Budva offers a solid base yield with clear upside potential if the interior is modernised and a few premium amenities are added. Investors should weigh the modest renovation costs against the expected increase in nightly rates and occupancy before committing.
