How Much Will You Really Earn? Checking the True Profitability of Real Estate

How Much Will You Really Earn? Checking the True Profitability of Real Estate

When investors look at a project presentation, their eyes immediately catch the figure “Return — 12% per year.” It sounds convincing. But before making a decision, it’s important to understand what lies behind that number — because often it shows not real profit, but only an optimistic scenario on paper.

Not All Returns Are Equal

The first thing to clarify is the currency in which the return is calculated. Twelve percent in lari and twelve percent in dollars are very different figures. Exchange rate fluctuations can change your final profit dramatically.

The second — under what scenario was the percentage calculated. If the return is shown without considering downtime, taxes, management company fees, and maintenance costs, the real figure may turn out to be much lower.

That’s why a smart investor always requests calculations for two scenarios:

— Optimistic scenario — assuming full occupancy and a stable market;

— Realistic scenario — accounting for all expenses and possible gaps between tenants.

What the Real Return Consists Of

To assess how profitable an investment truly is, you need to look beyond the percentages and into the details:

• Liquidity: how quickly you can sell the property if needed.
• Management quality: who will handle rentals, reporting, and maintenance.
• Type of rental: short-term, mid-term, or long-term — this directly affects income and stability.
• Expenses and taxes: they always exist and must be included in the calculations.
• Investment goal: to preserve capital, earn passive income, or sell later at a higher price.

Why Realistic Calculations Matter

A good project withstands a “stress test” — even if demand decreases or expenses rise, profitability should remain positive. If the numbers work only under ideal conditions, that’s a clear signal that the risks are underestimated.

Profitability is not just a percentage in a presentation — it’s the result of a detailed calculation: by currency, scenario, expenses, and strategy.

If you want to understand how to evaluate a property’s return and calculate real numbers based on your goals, leave a request for a consultation — we’ll help you model your strategy and find the right investment property.