An agent shows 10%. Four cost lines are missing. Here is what each one takes, and what is left.
The arithmetic in most listings is simple and wrong: monthly rent times twelve, divided by the asking price. It is not dishonest so much as incomplete — and the missing pieces are usually worth several percentage points.
The calculation you are shown
Rent of $500 a month against a price of $60,000 gives 10%. That number assumes the property is occupied every night of the year, costs nothing to run and pays no tax. None of those is true.
What is missing
**Vacancy.** No short-let property runs at 100%. A realistic annual occupancy for Tbilisi or Batumi is 65–80%. At 75%, that $6,000 of gross rent is already $4,500.
**Management.** Around 20% of rental income is the standard rate for running a let, and it is not optional for a remote owner. That is another $900.
**Service charge.** Payable every month of the year, including the empty ones. At $40 a month that is $480 that does not care whether anyone is staying.
**Insurance, repairs and tax.** Insurance rarely appears in advertised calculations at all. Furniture wears out, guests break things, cleaning between stays adds up — budget a reserve. Rental income is taxable, and the rate depends on your status.
What actually remains
Run those numbers through and the $6,000 headline becomes roughly $2,570 of net operating income. Against the real entry cost — the price plus purchase fees plus furnishing, call it $66,800 — that is about 3.8%, not 10%.
The gap between the advertised figure and the honest one is typically 3–5 percentage points. On this example it is over six.
The entry cost is understated too
Advertised yields divide by the sticker price. You did not pay the sticker price. You paid it plus notary, registration and agency fees, plus the cost of furnishing the property to a lettable standard — a line that is understated more often than any other, because it is spent after the deal closes and nobody is selling you anything at that point.
The number that tells you about risk
Beyond the yield itself, calculate the occupancy at which the property stops losing money. Fixed costs — service charge and insurance — are due whether or not anyone stays. If your district historically runs below that break-even occupancy, the purchase is fragile regardless of how good the headline looks.
FAQ
Is the advertised number a lie? Usually not — it is gross yield, which is a real metric, just not the one you live on. What occupancy should I assume? Something you can defend from the district's actual history, not the peak month. Where does tax fit? It applies to rental income; confirm the current rate for your status with a tax adviser.
How we help
Our calculator runs exactly this model — entry cost, vacancy, every operating line, and the advertised figure shown next to the honest one. Send us a listing and we will run it. Informational only, not tax advice; assumptions must be checked against the real market.