3 Min. Read.
The secret is out! Buying Georgian real estate is a smart move. Here’s how you can benefit. First of all, investing in the Georgian property market is an easy process. Invest in dollars: don’t fret about exchange rates or inflation. Also the ROI is higher and the price index is lower; low property tax and income tax. Did we mention increased capital gains! And your Georgian residential permit will be an asset when the country enters the European Union. Tbilisi and Batumi are legit tourist destinations, along with other Georgian regions gaining in popularity within the travel industry. Your money can go a long way in this emerging and lucrative real estate market – before you buy, you need to know what to consider when investing in Georgia.
What Buyers Need To Consider
Below are DazHomes’ top real estate tips based on our experience in the Georgian property market.
1. Market Research: Get Help!
Before you buy any property, do your homework. Here are two ways to get started. Work with a reputable real estate agent who knows the current market and shows you suitable options based on your investment criteria. Whether you are looking to invest in residential or commercial, an agent can help you with a market analysis, for example investigate similar type properties recently bought or sold to guide your purchase decision. Additionally, once you have your eye on a house or building, you should hire a certified evaluator to assess the property. It’s a small price to pay to make sure your investment is legit. On the low end, the cost to evaluate a small apartment (50 to 100 sq.m) is about $30 to $40 USD.
2. Property Comparisons: Eyes On It!
It’s hard to try-before-you-buy when it comes to a property, but it is recommended you get in as many doors as possible to look at your potential investment in person. Being on-site will help you to understand the value of the property and the surrounding community assets. If your schedule allows, make time for hands-on research. If not, ask your agent or the developer about VR options. Try and see as many properties as possible, this will be a big help in the long run.
3. Identify Local Assets: What Are The Crowd Pleasers!
This to-do ties in with the one above: while you are on-site looking at your potential investment you need to also have a look around the neighbourhood. Identify local assets that are going to have a positive impact on the value of your property purchase. In the case of a residential property, is there a school or hospital nearby? Can you walk easily to shops, cafes and open green spaces? In the case of a business property, is it located near tourist attractions, popular bars and restaurants and public transit?
4. Environmental Factors: Something Smells Funny!
In the case of a residential investment, investigating the potential living environment is essential. Before you put money down, research the sounds, smells and sights of the neighbourhood. If possible, talk to the neighbours, ask them what they like and don’t like about the neighbourhood. Find out what is in close proximity to your investment; is there a smelly factory or noisy nightclub nearby? One recommendation is to stay locally for a few nights in an Airbnb, and see for yourself what the community vibe is all about. Expat Facebook groups are also another way to get first-hand feedback on what a community is really like to live in.
5. Home Inspection: Is That Water On The Floor?
Not every home is exactly the way we want it to be. Sometimes a property may require repairs and sometimes it may need a significant renovation. It is recommended that you hire a certified inspector or architect who can assess building structure and provide information on the condition of pipes, wiring, supports, the roof, etc – all the things that are going to impact expenses and potential alterations. Do this before you purchase any property you are interested in, it may save you from paying for repairs after the deal has already been done.
6. Hire A Lawyer: Avoid Potential Risk!
It is strongly recommended you hire a lawyer before making any property investments. Here’s how a legal expert can help you. They perform title searches, uncover any pending property lawsuits or debt connected to the property. They will help you mitigate any potential risk and negotiate for you in the case of new developments or claims. And importantly, a lawyer will prepare and review essential documents like the sales purchase agreement, title transfer and mortgage agreement.
7. Payment Considerations: Money Moves!
Here’s another reason why you need to work with a reputable and knowledgeable real estate agent or firm – your money. Your agent should be able to direct you to the most suitable bank and also advise you on the best approach to purchasing the property you want. The following are considerations you should investigate with the help of your agent and your bank. Ask: is it profitable to buy the property leveraged or unleveraged? What are the mortgage terms and interest rate? Identify all the potential payment scenarios, for example: earn out, installment or mortgage. Do you know about any pending permits or ongoing building the owner has not completed – how will this impact purchase price? By working with experts you can determine the right purchase price and ensure financial liquidity down the line.
8. Tax Considerations: Don’t Avoid Tax Talk!
This is important especially if you are buying in a country that has different tax rules and structures than your own. You need to get educated; arrange a tax consultation with a reputable property tax consultant. Here’s a few things you will be discussing: the VAT and property tax percentage for Georgia; and property income tax, especially if you plan to have any economic activity generated from your property (i.e., LTD / LLC).
9. Renovation Considerations: Wanna Knock Down A Wall?
Hopefully you followed the advice in tip #5 and hired a certified inspector or architect to assess your potential home’s structure, including an honest appraisal on the condition of pipes, wiring, supports, etc – all the things that will impact the cost and timeline of a home renovation. Once you have a certified assessment it is advised you gather estimates on how much renovation work will cost. This should also include an estimate of how long a job(s) will take to complete. You need to ask yourself if you will get the finances from the bank or cover them out of your own pocket. It is strongly advised that you speak with all your consulting experts – your real estate agent, your inspector, your lawyer – and find out what they know about local builders who do renovation work. Gather as much information as possible before you start any renovation work on a property. Use your community of experts to get the best referrals and job quotes.
10. DazHomes Real Estate Checklist: Let’s Review!
We work with top experts in the Georgian real estate market and we consider our Daz lawyer to be one of the best in the country. Here’s a checklist of things they emphasised for this blog post as very important when making a property investment in Georgia.
We hope you will take these tips with you when you’re searching for your forever home or dream investment.
- Use a reputable realtor
- Check the validity of the title to the property; pay the purchase price to Seller only upon getting title to the property
- Check whether the property is subject to administrative proceedings at City Hall
- Check whether the property has an occupancy permit
- Hire a surveyor for checking the precise size of the property
- Hire local legal counsel for checking litigation risks
- Check whether the property is under a tax lien, tax pledge, tax mortgage, a lien or a mortgage; check whether the Seller is under a lien
- Use local legal counsel at all stages of negotiating with the Seller(s), Lenders (if any), notaries, etc. For example, Seller to vacate the property before signing the sale-purchase agreement
- Consider involving a local bank for financing/co-financing
- Hire an auditor and a lawyer for tax planning
- Use a design engineer for checking the sustainability of a building
DazHomes can help you with your property search in Georgia. We can provide professional advice on investing and connect you with sellers, developers and real estate experts. You are invited to contact our Customer Happiness Department – tell us how we can assist you today: https://dazhomes.com/contact/.
By Sonja Andic for DazHomes.