If you want the best value for money in Europe, forget Eastern and Central Europe. That was pre-Covid. Gone are the days of Romania, Bulgaria, Montenegro, Poland, Hungary etc. being “great value for money.” In some cases they have become more expensive than Western Europe, but with more safety, lower taxes and a more “European vibe.”
The new hotspot in terms of affordability is Southern Italy.
I travel all over the world, and I can tell you that the value for money in Sicily is mind boggling:
- Amazing restaurants and quality ingredients for cheap
- Sturdy first world infrastructure
- Very well-connected airports to every first and second-tier city in Europe as well as New York, Istanbul, etc.
- Ridiculously cheap real estate
I remember getting a haircut for €5 from a 70 year-old Sicilian barber with over half a century of experience.
It certainly beat my recent $5 haircut by a Cambodian teenager, $7 haircut by a semi-inebriated Mexican gentleman, or $50 haircut by a 19-year old Kurdish fellow in Switzerland.
Sicily real estate is a safe bet
Though real estate prices have started ticking up, I wouldn’t say that Sicilian real estate will make you rich. However, it’s a solid, safe option to add to one’s portfolio.
If executed well, you can achieve net yields after taxes and expenses of 5%-6% on Airbnb, a bit of capital appreciation, and more importantly a classically lovely lifestyle option.
Just be cognizant of the fact that exit liquidity is low in many areas. Selling takes time.
Many Europeans are moving South for sunshine and tax deals, and many anglos from the US, Canada, Australia, South Africa and New Zealand use their Sicily apartments or stone houses as a base for travel within Schengen thanks to the plentiful and affordable flights.
In this video with Shalise, we look at an old apartment and crunch the ROI numbers for a full renovation and Airbnb operation.
There are also massive government incentives for larger projects
What you see here below is a project Shalise is representing that is seeking a new investor.
This is a hospitality development in Sicily with approved plans for 74 guests, multiple historic buildings, 10 hectares of land, and approximately €1.8 million in tourism grant funding already secured.
This isn’t only about saving €1.8 million, but about saving years from the development timeline.
The permits are already in hand to create a luxury eco-village with a hotel, restaurant, private villa rentals and an equestrian facility.
All nestled in a tranquil river valley 10 minutes walk to Ragusa Ibla.
- Asking Price: €1.7 million
- Estimated Construction & Development Costs: €3.0 million
- Total Project Cost: €4.7 million
- Approved Tourism Grant: €1.8 million
- Net Capital Requirement: €2.9 million
Shalise lives in Sicily and can help you with your projects from A to Z. Feel free to get in touch with her for your Sicily property needs.
We discuss such matters in my consulting calls
International real estate isn’t always just about pure returns. There are often elements of diversification, ease of management, residencies, citizenships, lifestyle, taxes, dating, family, estate planning that need to be taken into account. It can get very personal.
We offer true 360 consulting that isn’t just based on numbers but that also takes into account a holistic view of the investment being discussed. Clients are often surprised by how detailed our pre-calls are.
More information on my Internationalization & Diversification Strategy Consulting.
To a World of Opportunities,
The Wandering Investor
Services in Italy:
Articles on Italy:
- Why invest in Siracusa (Syracuse) real estate in Sicily? Good ROI
- Village life in Sicily – the case for real estate, taxes and lifestyle
- Renovating Historical Property in Sicily: is it worth it?
If you want to read more such articles on other real estate markets in the world, go to the bottom of my International Real Estate Services page.
Subscribe to the PRIVATE LIST below to not miss out on future investment posts, and follow me on Instagram, X, LinkedIn, Telegram, Youtube, Facebook, and Rumble.
My favourite brokerage to invest in international stocks is IB. To find out more about this low-fee option with access to plenty of markets, click here.
If you want to discuss your internationalization and diversification plans, book a consulting session or send me an email.
Transcription of “Airbnb Investing in Sicily: Renovations and ROI case study”
LADISLAS MAURICE: Hello, Ladislas Maurice of The Wandering Investor. Today, we’re in beautiful Modica in Sicily and we’re going to be doing three things. So, first we’re going to go see an apartment and we’re going to be looking at the closing costs in detail here in Sicily. Two, we’re going to be looking at the detailed renovation costs in terms of estimates, and number three, we’ll be doing all of the return on investment figures if we were to put this apartment on Airbnb and we’ll be doing this together with Shalise, who has been here in Sicily and in Malta for the past seven years, right? Helping investors invest, renovate, and then put on Airbnb.
SHALISE: Exactly, yeah. So, today we’re going to go see a beautiful house in Modica. Modica in particular is one of the iconic Baroque towns in Southeast Sicily, which is a relatively high growing area, let’s say relatively for Sicily. But it is a really beautiful, vibrant town. There’s a lot of tourists who come here, but there’s also a lot of residents and there’s a foreign, there’s also a lot of foreign residents who have come and bought properties here as well. You’ll see a lot of beautiful features like the beautiful piazza behind us. There’s also quite a lot of bars and restaurants that keep it very vibrant all year round. Today, the house we’re going to go see is around 200 square meters. It’s also 200 years old and you’d be able to divide it into four separate apartments. So, it’s a really good potential for Airbnb. It needs a full renovation. Some work has already been done, for example, a new roof. We will check it out, but it you’re at something where you can really put your own personal touch on it so that you’ll really be able to create the perfect apartment for your Airbnb guests and possibly for yourself if you want to come stay as well.
LADISLAS MAURICE: All right, perfect. Let’s go check it out.
Actually, that’s really mean to make you go on this. It’s not how it works.
Visiting a 200 year old $140,000 house in Modica, Sicily
SHALISE: So this is the house here. You have all of this facade and a separate garage down there. So here you have a separate entrance from the street for one of the other apartments. And then this is the entrance to the main house.
LADISLAS MAURICE: Let’s go check it out.
SHALISE: So this is a separate entrance for the garage.
LADISLAS MAURICE: Okay, so what are we looking at here?
SHALISE: So this would easily become a separate unit. You have here another entrance, this is from the street, right now it’s serving as a garage, but you could easily create another loft space up here. So it’ll lend itself to this kind of artist loft area. Behind us here we have the downdrop for the pipes actually of the building. So, you could create a bathroom relatively easily here as well.
LADISLAS MAURICE: Cool. All right, so that’s one apartment. Or one of the little side units that are you were telling me they’re barely on the they’re barely counted on the title deed in terms of square meters?
SHALISE: Yes, essentially, when we saw the apartment originally on the listing, it said 140 square meters, but after seeing it in reality, I think it’s quite a lot bigger. So we’ve estimated everything on 200 to be a bit more conservative.
LADISLAS MAURICE: Yeah, so this is uh and this would be a second apartment.
SHALISE: Mhm.
LADISLAS MAURICE: So super bright, street access, easy. Okay. And now the nice unit is upstairs.
SHALISE: Mhm.
LADISLAS MAURICE: So Shalise, it’s I mean, you know, it’s, buying is easy, I like to say, but renovating is always a lot harder.
SHALISE: Definitely. Especially considering the prices in Sicily, you have many properties that are really attractive to people even in this kind of condition, but who maybe don’t have an understanding of how much capital is needed to really renovate a property like this.
Touring the main apartment of the house in Modica
LADISLAS MAURICE: All right, so this is the main apartment. The other ones were essentially the two free little bonus.
SHALISE: Exactly, yeah, exactly. So here we have a beautiful apartment. It’s around 200 square meters. It’s about 200 years old as well. And you have a lot of beautiful historic features, but they need a bit of renovating up here. Structurally, they redid the roof a few years ago, so that already helps to get you in a bit of a different price point. But considering all of the apertures that need to be redone, furniture, and also that you need to create four separate units, so that means four bathrooms, four kitchens, it becomes quite involved. So, normally just to redo an apartment, if you wanted as a single family home, I think you can calculate it more easily at around 900 euros per square meter. But considering that you want to make four apartments, I think something around 1100 per square meter is going to be a bit more realistic.
LADISLAS MAURICE: And they each have their own separate entrance, and it’s very organic, so it just it’ll really lends itself to this.
SHALISE: Yes.
LADISLAS MAURICE: So the purchase price is 140,000 euros. How much wiggle room is there?
SHALISE: So it’s something that we help with quite a lot is obviously determining how long the property’s been on the market, obviously how eager the buy the seller is to sell. Uh and so it’s something that we can definitely negotiate. Everything is negotiable in Sicily.
LADISLAS MAURICE: It’s also negotiable because it’s a low liquidity market. So it’s easy to buy, it’s easy to negotiate when you buy, but when you’re trying to sell, it becomes harder. This being said, I think there’s more liquidity for renovated units than unrenovated units like this.
SHALISE: It’s about the same, I would say for both because I think renovated obviously comes at a bit of a higher price point that can be a little bit less accessible for people, like especially local people, or something unrenovated, maybe that comes a bit lower. They might be willing to perhaps dissect the renovation into many stages and do it a bit piecemeal or even do it themselves, or perhaps they come in without an idea and understanding of how much renovation capital is required, and then they get themselves into trouble, which is something that we really try to avoid by estimating everything really clearly from the beginning.
LADISLAS MAURICE: Yeah, it’s a risk here.
SHALISE: For sure.
Closing costs and real estate purchase taxes in Sicily
LADISLAS MAURICE: Cool. Can we go through the closing costs in detail?
SHALISE: Yes. So for this property, we’ve estimated 26,000 approximately for closing costs. So that will include the purchase tax, which is 9%. That’s on the higher side, so that’s for a second property, not for your primary residence. And it’s also calculated on the cadastral value, which is not always the same as the purchase price. So, typically, once you see these kind of very low priced properties around 20,000, you can expect the 9% to be calculated on a bit of a higher value, which is to do with the market averages for that type of property. This one in particular, I think is quite well priced for the condition, and perhaps the cadastral value might be calculated slightly higher, maybe on 160 or 180,000, but this is confirmed at the notary. You can also have the auction to declare it as your primary residence. There are some cases of people doing that. Obviously, we don’t always recommend it if you’re not actually intending to make this your primary residence. But in that case, you would pay only 2%. You have to sign a declaration, however, that says that within six months you will move here and become tax resident and formal resident of Sicily.
LADISLAS MAURICE: But then the enforcement is relatively weak.
SHALISE: In general, yes. So, and, in the case that you don’t move here, technically you should declare that and then you pay only the difference in tax, so you would pay then 7% difference in tax but no fines as of 2025 today.
LADISLAS MAURICE: Okay, all right. So, in your numbers you put 9% to be conservative?
SHALISE: Exactly. I think it’s always better to calculate when we’re looking at costs to be more conservative and same for when we look at revenues so that we have a bit of a buffer in between.
The next thing to consider in the closing costs is the notary fee. It’s around 2%. It depends exactly on the property, but typically 2% is the market average. You also have the agency fee. In this case, we calculated 4% plus 22% VAT, that’s on the 4%. But in some cases the agency might charge a bit of a flat fee. It depends obviously on the market value of the property and of the agency themselves. Then you have the lawyer as well, who will come and draft the agreement for you. She will do all of the due diligence and all the searches on the property to make sure that it’s legal, which is very important in Sicily, especially when you’re coming from abroad. She’s English-speaking and she will also do a power of attorney, so in the case that clients don’t want to come here physically to be present for the deed signing, she’s able to do that for you.
LADISLAS MAURICE: The lawyer fee is not cheap, 3,000 euros. This being said, there’s always a cheaper lawyer. And when you’re a foreigner entering a market, uh you just don’t want to deal with local lawyers that don’t speak English, that are cheaper, that don’t understand the challenges that foreigners face, that assume that you just kind of understand everything. Uh so it’s important again to just go with a lawyer that understands the issues and all of the matters that foreigners don’t understand when going into a deal like this.
SHALISE: Yes, and she’s also real estate but also tax specialized, so she can give a bit more advice on individual tax situations as well.
Then the last cost that we have associated in the closing is the architect fee, so in the case that there needs to be done any kind of planning permissions or any sanctioning of any illegalities on the property, you have a buffer of around 2,000 for that.
LADISLAS MAURICE: So the total price to acquire the apartment would be?
SHALISE: You have 140,000 asking price plus 26,000 closing, so it’s coming around 165,000.
Renovation costs of a historical property in Modica, Sicily
LADISLAS MAURICE: Yeah, before negotiations. So again, pretty conservative here. Let’s go into renovations, your expertise.
SHALISE: So, renovations here are a little bit more extensive considering that you want to create four units, which is really great for the type of property that we have here. And so we’re estimating around 1,100 per square meter. It comes out to around 220,000 plus the design fee, which is around 25,000. So we’re looking at 245 approximately for renovation in total.
LADISLAS MAURICE: So that’s why I like to emphasize that when you go and look at property in in parts of Sicily like this, the price of the renovation matters more than the price of the house that you’re purchasing in in most cases if you’re going to be doing a good job. So it’s really important to work with someone who can not just show you properties and then tell you it’s going to be 500 euros a square meter per renovation, which it never is, uh but someone who can do both where you say, okay, this is going to be the price for, you know, the apartment, but then the renovation, if you want to do XYZ, this is going to be the total approximately, because the bigger decision is actually there.
SHALISE: Yes, certainly. And it’s really important to keep that in mind from the beginning. So when you look at properties, you don’t just look for how much you have in terms of being able to purchase the property, because you’re going to need to consider relatively high closing costs, but also renovation fee. When you consider buying a turn-key property, you can find in relatively okay condition, let’s say, but if your a primary goal is investment, it makes it a bit more complicated if you want to divide into further units. So you could find properties around 500,000 in similar renovated condition, in similar areas. However, considering you wanted to make multiple units, you would have to redo the renovation, so then you lose all the equity that you would gain if you would be able to do this renovation by yourself.
ROI of a real estate investment in Sicily
LADISLAS MAURICE: And can you help us explain your methodology with regards to calculating the return on investment for Airbnb specifically?
SHALISE: So, we scrape the data available, so we find market average, top 25% tole, and also the top 10% tile. In this case, we’re calculating just market average again to be conservative. We calculate the nightly rate spread across the year, the occupancy, so we get the revenue totals. From there, we calculate the host platform fees, so that’s Airbnb or booking.com fees, maintenance and property taxes as well, estimated across the year, plus the property manager, which we calculated on the higher side at around 15%.
So, when we’re looking at the figures, we’re looking at net figures, however, pre-tax. So, the tax situation depends on your individual choices. It can range from 21% per year up to 26, depending how many properties that you have and what kind of tax scheme you choose to enroll yourself in in Italy.
LADISLAS MAURICE: The whole tax discussion would be a whole other video and would take a long time. Taxes are a bit complicated, I mean, but once you have your CPA here, it’s fine. Looking at this, we get to a net rental yield of about 9% pre-tax, correct?
SHALISE: Yes.
LADISLAS MAURICE: Remove about two, 2.5 percentage points to get net of taxes. So about 6.5% net is doable with a property like this because it’s divided into four units. And one of the main advantages of investing in Italy is that it has a an extensive tax treaty network, which means that in many cases, depending on where you’re from, you can end up getting a full credit for the taxes that you paid in Italy or just pay taxes in Italy and not back home. Again, this is not a particularly complicated topic. You just need to have a CPA here, which Shalise can introduce you to, and then speak to your own accountant back home, make it work together. It’s quite simple. But when your country has a double tax treaty agreement with Italy, it makes a big difference at the end for the bottom line.
SHALISE: There are a lot of tax schemes available from the Italian government right now, but they’re mostly limited to people who are bringing their permanent residence to Italy, so it’s not really the case for most of our investors. But in that case, you do get quite a lot of tax credits. It’s something to consider when you’re doing these kind of renovations.
How to contact Shalise for help with purchasing real estate in Sicily
LADISLAS MAURICE: Fantastic. So, if you’re interested in investing in real estate here in Sicily or doing renovations, et cetera, do feel free to get in touch with Shalise. There is a link below. Shalise, thank you so much.
SHALISE: Thank you.
LADISLAS MAURICE: Thanks.
Make sure to download my free ebook, 12 Mistakes to Avoid when Investing in International Real Estate, which you can find on my website, link below, and feel free to follow me on Instagram @thewanderinginvestor. I look forward to hearing from you.
