People often ask me what sort of real estate deals I get involved in. I’m a full time investor. I travel around the world and make long-term, mid-term, and short-term investments across asset classes. One of my favourite activities is flipping properties in markets I understand well. Montenegro is one of them, and here I’ll give you the exact numbers for a house flip.
This deal that my real estate agent and friend Peter Square Meter showed me is the type of project I would get involved in, if my cash was not tied up in other investments right now.
The numbers are attractive. You buy a horrible looking 300m2 brown-phase villa / failed construction project. The list price is €220,000 but I would go in there negotiating hard as such assets have low liquidity.
I would then add about €300,000 in renovations and back-taxes, which would be enough to make a stunning, contemporary villa out of it. I would then aim to flip it for €750,000 – €800,000. The whole operation would take about 18 months.
The villa is located in a gorgeous part of Lustica, a peninsula in the Bay of Kotor in Montenegro.
You can watch the video here
What are the challenges with such a house flip in Montenegro?
1. Inflation makes construction costs a bit unpredictable, but with €1,000 per m2 in the numbers you are more than fine for luxury finishings, a garage, €25,000 of back-taxes, and a swimming pool. For a normal construction project in the more affordable parts of Montenegro I would budget about €600 per m2. But here, we want proper luxury as this is where there is market under-supply.
2. I’d make sure to hire a static engineer to go have a look at the property first, to ensure the brown-phase is structurally sound.
3. Things can be a little slow in Montenegro. Peter Square Meter estimates this renovation project to take 9 months. I would rather go with 12 months in my timeline, adding another 2 to get started, and then a few months to sell. There is a severe under-supply of contemporary villas in Montenegro right now, so the exit should not be too complicated unless macro forces change the picture.
4. You’d have to be ok with the ambiguity of having to pay back-taxes to legalize the villa. Personally, I see this as a non-issue, but it must be highlighted.
If you are looking for real estate in the Bay of Kotor, Tivat, Herceg Novi, Lustica areas in Montenegro, do feel free to send Peter Square Meter an email: firstname.lastname@example.org.
In case you were to buy such a project for your own personal use, and not as a house flip, it would entitle you and your family to residency in Montenegro, more details here.
If you are going ahead with a project in Montenegro, feel free to get in touch with my team of real estate lawyers here.
If you want citizenship in Montenegro, and are willing to spend a lot of money, Ksenija can help you (here)
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If you want to discuss your internationalization and diversification plans, book a consulting session* or send me an email.
*a consulting session is a discussion about your portfolio and objectives. It does not constitute legal, financial, tax or investment advice.