In most countries, it is common to buy a house that is move-in-ready. In other words, it has all the walls, cabinets, floors, windows and doors already finished. In the country of Georgia, this is possible, but not the most desirable. Every year thousands of foreign investors are flocking to Georgia because of the historically high rates of return on real estate investments. And a unique, key difference, is the process of “Black Carcass” investing.
Black carcass real estate investing may come across as abnormal, strange, or even a complete culture shock to most western real estate buyers. But for those who have taken the time to learn about the opportunity and experience the end result, it is nothing less than incredible. Essentially, black carcass investing is the process of buying a raw concrete slab inside of a multi-story building and turning it into a fully finished, move-in-ready residential apartment.
There are several key factors that make this type of real estate investment attractive.
You literally have a clean slate, a blank slab of concrete on a floor of a high-rise building. You can build walls where you want, install any type of windows, doors, floors, lighting, cabinetry, or other design elements. You are free to use your own imagination and pour your own personality into every detail of the finished apartment. It is like building your own dream house, but on a much smaller scale and budget.
On the financial side of the equation, black carcass investing is highly attractive due to the ability to control every single cost from blank slab to move-in-ready apartment. And even better, a black carcass property normally sells for 40% to 60% of finished market value. Every day people purchase black carcass properties, finish them with ultra-posh luxury designs, and end up with prime residential properties worth up to two times their investment.
Batumi is a highly unique real estate market that is extremely attractive to income seeking real estate investors. The average vacation property in Batumi produces 15% to 30% annual return on total investment. It is quite common for people to get back 100% of their financial investment in 5 years or less. Batumi consistently produces one of the highest rates of return in the entire world for real estate investors. Compared to an average annual ROI (return on investment) of 8% in the USA, or 9% in Europe, or 7% in much of Asia, the average 20% annual ROI experienced in Batumi Georgia is almost unbelievable.
Georgia is one of the fastest growing economies on the planet. It is one of the safest countries in the world. It has one of the most stable, corruption free governments. The real estate market is consistently growing at over 20% per year. Real estate values are consistently growing at over 15% per year. Tourism is increasing at over 20% per year. And it is highly touted and ranked by the World Bank, United Nations, Transparency International, and many other major international organizations as one of the best places on earth to invest, do business, vacation, or retire.
Georgia is becoming known throughout the world as an extremely hospitable country. The people are naturally warm and friendly. The food is delicious. The culture is rich and vibrant. Art and music and dance are almost as common a part of daily life as breathing. And there are some of the most beautiful, raw, untouched mountains, forests, rivers, canyons, and beaches on earth. Even if you don’t invest in property in Georgia yourself, you definitely should come here for vacation, experience for yourself the reason millions of new tourists are coming here each year, and stay in a wonderful vacation rental property owned by a property investor.
Throughout Georgia there are numerous multi-story construction projects underway. A major focus of these projects is the city of Batumi. There are several reasons for this. Batumi is located in an incredible position right between gorgeous Caucasus mountains and several kilometers of beaches along the Black Sea. Batumi has casinos, every major hotel brand on earth, summer and winter sports, and everything tourists could desire, whether they prefer city life, sun tanning on the beach, hiking in the mountains, dolphin spotting, skiing, or white-water rafting. You name it, you can do it within 1 hour of Batumi.
Builders in Batumi are constructing multiple high-rise buildings. Each floor of every building has space for several residential apartments. These range in size from small studio flats to huge palatial penthouses. Investors can purchase properties as small as 20 square meters and up. Investors who are considering a property that can double as a vacation home normally purchase apartments that are 60 to 100 square meters. This allows for a comfortable and enjoyable place for friends and family while still producing a decent rate of rental income. Investors who are purely seeking rental income tend to purchase flats that are 30 to 50 square meters due to their high rate of return and peak demand during the tourist seasons.
So, how do you invest in black carcass real estate in Batumi?
Step One: pick the right builder and location
This is where a professional real estate investing consultant such as Batumi Paradise can help you a lot. At first-glance it may appear that any monkey can roll the dice with real estate in Batumi and come out a winner. But take notice. While Batumi is producing some of the best real estate investment profits on earth, it is not without risk. Extremely high profit potential is normally coupled with very high risk.
Not all builders are alike. Some are well funded. Others are not. Some are more likely to complete their projects on time, some are not. Some have the capital and resources to ensure the finished project is of the highest quality and passes all government inspections, and some do not. Some are genuinely interested in building a quality property that has long-term durability, dependable infrastructure, and bankable future resale potential. Others are more interested in turning a quick buck by selling people a “pig with lipstick”.
Location is important, but not the only important factor. And, looks can be deceiving. Just because a building looks well built, in a nice location, and appears to be professionally managed, does not mean it is a good investment. One of the biggest mistakes people make with black carcass investments is to sink their money into a project that runs into long-term construction delays, government inspection issues, poor quality engineering and materials, or worse, fails before completion. Hundreds of investors have lost their entire investment purchasing “air” in a project that failed.
A highly experienced Batumi real estate investment consultancy such as Batumi Paradise can help you navigate these waters and cash in on massive profits. Before you consider black carcass investing you should take the time to meet with professional advisors who have a deep working knowledge of the local market and the participants in the market. When it comes to real estate investing, experience and deep-rooted relationships are invaluable. Expert advisors at a firm such as Batumi Paradise have these assets and other tools at their disposal. They can help ensure you avoid any mistakes and only make sound investments.
At Batumi Paradise we have multiple years of experience investing in vacation rental properties. We understand the optimal locations and the optimal building projects that will produce the best returns on your investment. Sometimes the best investment is a fancy project right on the beach, but most of the time it is not. A true professional investment advisor can steer you clear of properties that dazzle you with glitzy glam, but are in reality much worse investments than something a block or two away a bit less flashy but with much higher rates of return.
Step Two: choose the total area (square meters) for your apartment
This is a critically important step. If you are working with a professional investment consultant who is genuinely concerned with your financial well-being, you will have excellent guidance during this process. It is important to think objectively and not emotionally. Especially if this is an investment purely for income and resale potential.
Before you begin looking at actual properties, and visualizing the floorplan, design elements, and furnishings, you should sit and have a strong reality talk with a professional advisor. If you want a second home, or vacation home, that you will sometimes use yourself and share with your friends and family, then it is important you purchase a space large enough and located in an area where you can relax and enjoy it. A place you will feel comfortable and “at home”. Just understand up-front that second home properties generally produce lower investment returns.
If your purpose is purely income or resale potential, it is important you look objectively at a space that will have optimal rental demand during the peak 100 days of the tourist season. This is not necessarily a place you and your friends and family would want to stay for extended periods of time. It is not necessarily a place you would feel “at home”. Instead, it is better to focus on a property that would make a luxurious hotel-type room for stays no longer than one or two weeks. A larger than normal studio with a small kitchenette and sleeping for two to four adults.
At Batumi Paradise we have years of data and experience to draw from. We know the optimal size and location that produces optimal investment returns. Our data shows there is actually a “sweet spot” when it comes to square meters and a “sweet spot” when it comes to proximity to beach, mountain, and city attractions. If you are considering black carcass investment, it is wise to have an investing consultant in your corner who knows these “sweet spots”.
Step Three: choose a rent producing design and layout
This is the stage that is the most difficult for many investors. As when choosing size and location, it is very important to keep emotion and personal taste in check when designing a property for maximum profits. Often times investors visualize a space they would feel comfortable living within. They tend to choose countertops, cabinets, floorings, colors, and other design elements as if they are designing their own dream home. But this can be very harmful to the profit potential of the property.
If you are purchasing a second home, or a property that will be your own vacation get away that happens to generate a little bit of extra rental income, then it is ok to insert a lot more personal taste and personal wishes into the design. If your goal is to create maximum rental income and resale potential, then it is best to allow a professional designer full trust and control. There is a major difference between design for luxury vacation spaces and comfortable long-term living spaces. To really maximize your profit potential you should work with a company who has a great deal of experience and knowledge in proper ways to design a property for maximum income, such as Batumi Paradise.
Design is a part of the process where you can really maximize you profits, or really squander them. This is because costs can vary greatly. Everything from electrical wiring, to tile, to counter tops will have huge ranges in pricing. Again, the decisions should be made without emotion and keeping personal taste in check. And, as with other aspects, decisions will depend greatly upon whether the property is your own personal vacation space, or it is purely for rental income.
Many investors make huge design and construction mistakes, and the funny thing is that these mistakes come from two different directions. Some people tend to make design choices with personal taste and emotion involved. This can lead them to over spend and over style an apartment they intend for purely rental income. Other investors tend to make design and construction choices purely financially. This can lead them to under spend and end up with a property that looks cheap and is filled with poor quality.
A quality investment advisor will help you avoid costly design and construction mistakes. At Batumi Paradise, we have a great deal of experience designing and managing profitable properties. We have designed and finished so many apartments we cannot keep count of them anymore. And we have learned extremely valuable lessons.
There are certain places where you should only consider the very best possible materials and labor. There are areas where you can control costs. And there are areas where middle-ground and “average” quality are perfect choices.
If you are investing in black carcass real estate for the purpose of owning an income generating property that will also have excellent resale potential, then it is vital you make correct design and construction choices. Poor choices will result in constant repair and maintenance issues. Or, worse, overspending on items that will negate future profits. It is very helpful to constantly remind yourself that durability and neutrality are key decision-making ingredients.
Let’s take for example electrical wiring, fuse boxes, and outlets. The price ranges on these items are enormous. Most investors are tempted to cut costs in places such as electrical and plumbing because they are told cheaper materials are “good enough” by contractors and suppliers. And this may be true in some cases. But if your property is going to essentially be a hotel-type apartment with hundreds of different types of people using hundreds of different types of electrical gadgets checking in and out and in and out of your property every few days, you need to invest in higher than “average” quality.
The same is true for faucets, certain plumbing materials, water heating systems, and cooking appliances. Our construction team at Batumi Paradise can tell you countless stories of investors who contracted us to fix their “broken” investments. You cannot believe how often people invested huge sums into design elements such as fancy ceiling decorations, fancy light fixtures, and fancy furniture while putting in cheap plumbing, cheap faucets, cheap electrical wiring, and cheap flooring. Then they act shocked when they are plagued by constant repair and maintenance costs.
Let’s think logically for a minute. If hundreds of different people are going to be checking in an out and in and out of your property over the next several years, where are the places that will be “worn and torn” the most? Hundreds of people walking on the floors, some in shoes, some not. Hundreds of people washing their hands, taking showers, and cleaning dishes. Hundreds of people sleeping on the beds, going in and out of the doors, and going out on the balcony.
Are these hundreds of people walking on the ceiling? Are they flopping around on the walls? Do you think they appreciate and care for your fancy furniture as if it is their very own at their own home? Are they spending hours admiring or protecting some fancy painting or chandelier? No. They are renting a vacation room. They are going in and out and in and out, all day long. They are flopping on the sofa, rolling around on the bed, lounging on the balcony, and taking longer than normal showers more often than normal.
Over and over again we see apartments where the owner invested a lot of money on custom ceiling decor and installed cheap flooring. Over and over we see cheap, worthless shower and sink faucets, and a cheap, low-quality plastic shower cabinet, right next to expensive decorative lighting and a fancy toilet. And we cannot count the times we have seen bold bright colors and trendy design elements that appeal to only 3% or 4% of the tourists coming to Batumi.
When choosing the design for your investment property, it is highly important you invest properly where you need durability. It is more important to have working faucets and working appliances than trendy, fancy items that do not function. A built-in tiled shower that does not leak is worth ten times more than a cheap, leaky, moldy plastic shower cabinet, and will save you massively when it comes to repairs, cleaning, and maintenance. When making design choices, if in doubt, there are three words you should remember: “neutral”, “moderate”, and “earth-tones”.
If you genuinely want to maximize your return on investment, you should be sure to work with a professional designer. Unless you are an expert who has been creating design spaces for successful hotels for quite some time, you are far better to put your emotions and personal taste aside and let a investment property designer do their job. You will be rewarded greatly in the long-term. A professional vacation real estate investing company such as Batumi Paradise help you make profitable and intelligent design and construction choices.
Step Four: hire a quality construction and finishing crew
This is the stage where price is never as important as quality. It is more important to hire contractors with the right experience, knowledge, and skills. In Batum, there is a great deal of risk when choosing a contractor. There is very little regulation when it comes to private remodeling. So, just about anyone can become a “contractor” and start doing electrical, plumbing, tile, flooring, or other design and construction work. Whether someone quotes a very high or very low price has almost zero relation to whether or not they can actually do the job, or do it with any reasonable quality.
Generally the process of taking an apartment from a blank black carcass to a fully move-in-ready luxury apartment should take 90 to 100 days. But, this depends on the contractor. And our experience is that a busy contractor who says they are too busy to get the job done too fast is probably a better one to hire than one sitting around doing nothing and claiming they can finish your project in 30 to 60 days. There is a reason a busy contractor is busy…
The contractor who actually performs your construction and design work is the absolute most important decision you will make. They are the make-it or break-it factor when it comes to how well your apartment will hold up to the daily wear and tear of tourists checking in and out of your property. They are also the most important factor behind the resale market potential of your investment.
Therefore, it is critically important you hire the right work. A professional real estate investment advisor, such as Batumi Paradise, can make this a painless decision. As a matter of fact, very few businesses in Georgia can offer the exceptional contract and design work you can find at Batumi Paradise. This is because over the past several years I have personally selected and personally organized a force of highly skilled, highly experienced, and superbly trained design and construction personnel. Investors who work with Batumi Paradise have one of the best finishing crews in Georgia at their disposal. And this is invaluable when it comes to increasing the potential for return on your investment.
Step Five: list your property with revenue producing property manager
What good is it to have a great property, in a great location, with a wonderful design and floorplan, if nobody knows about it or rents it? After all, tourist rental income is the main reason most people invest in black carcass real estate in Batumi. So, once you have your property rent-ready, you have a few choices to make. Will you live in Batumi and manage the property yourself? Or will you rely on a listing and managing agent to market, clean, maintain, and protect your property interests for you?
There are many ways to own and manage property in Batumi. You can move to Batumi and go through the process yourself, and even market and manage the property personally. You can travel to Batumi for the purpose of finding a property and hire people to finish it and manage it for you after you return to your home country. Or, you can select, purchase, own, and manage your properties without ever even coming to Georgia.
At Batumi Paradise, the great majority of our clients have never even been to Georgia. Much less Batumi. Most of them have done the entire investment process remotely. They contacted us online, had virtual meetings with our investment advisors, took virtual tours of properties, and made design and construction choices remotely. It is actually quite rare at Batumi Paradise when a client comes to Georgia and works with us in person.
There are a great many realtors, property management, and tourist management companies in Georgia. Tourism accounts for more than 40% of the GDP of the entire country. So there are a lot of people ready and willing to help you market and rent out your property. And most of them will do a fairly good job for you. However, language and certain other expectations may be a bit of a barrier for many western investors, especially English speakers. Things are done a lot differently in Georgia, so if you choose a standard local company to manage your property, you should expect to be disappointed in areas such as customer service, maintenance, and cleaning, especially compared with western standards.
While tourism is growing strongly in Georgia, and all factors point to continued growth, it is still an ex-soviet country whose average citizen is not even remotely trained or experienced in western standards of guest services, cleanliness, up-keep, and problem solving. They are highly accustomed to lower-tier Russian and Central Asian tourists. Because of this there is huge opportunity for investors who wish to target European and American and other “western” tourists, and who have the ability to deliver the services these guests expect.
I am a world-traveler from Texas USA. I have travelled to over 150 countries in my lifetime and been an international business man and investor for decades. I have personally assembled a staff who have worked in highly demanding properties in the USA, France, London, and other western countries. We know western guest services standards and we know how to market to and exceed the expectations of these tourists. We have an in-house property management team that is trained and educated and fully capable of managing your property for you at the highest levels of exceptional expectations.
I often say to our team that our goal is to offer a better hotel room with better guest services than Hilton or Sheraton, but at a much, much lower price. Achieving this goal can only result in growing, dependable tourist clients and happy, profiting investor clients. By helping people make the most profitable black carcass investments possible, and by finishing them to the best quality at the most reasonable cost, and by managing these properties better than a Hilton or Sheraton hotel, we achieve our most important objective: we don’t have investor clients, we have lifetime partners and friends.
If you are interested in making an investment in black carcass real estate in Batumi, you should contact Batumi Paradise. Shoot us an email or fill out the contact form on our website. We would be happy to set up a free initial consultation with you, either in person or virtually. Our highly professional staff is exceptionally skilled and experienced. We are ready to do everything humanly possible to help you make the most profitable black carcass real estate investment possible.
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