Real Estate Investments in Georgia

8 Steps to Purchase a Property in Georgia

 
Written by Emil Goncharov

So you completed market research and came to the conclusion that you want to invest in real estate in Georgia and maybe even decided which city you want to invest in and what type of deal you are looking for (flip/short term rental/long term rental and more). You feel a bit unsure about dealing with the language barrier and don't familiar with all local laws and bureaucracy?

The truth is that the process is neither long nor complicated but it is important to take care of all the necessary steps and make sure that we are being careful of traps and risks during the purchase process. In order to make it easier for you throughout the process, we have prepared a complete guide with all the steps to purchase a property in Georgia if you are a foreigner.


 

Image by saba khvedelidze

Image by Saba Khvedelidze

 8 Steps to Buying a Property in Georgia

  1. Property Selection - The type of transaction we want to execute should target the searches for the most suitable property and area. Searching for an online property will limit your success as the Georgian properties sites are not always easy and most importantly, would not show the most attractive properties as most of the population doesn't tend to advertise their properties online. The way to be exposed to the best properties is to get a good local realtor who is familiar with the local market and the area relevant to your potential investment (keep in mind that only the seller is the one who pays the realtor and not you).

  2. Negotiation - Suppose you have found 2 potential assets and you have to choose one of them, the negotiation stage may be the one that will determine who the "winning" asset is. Note that if the locals identify you as a potential foreign investor (especially those who do not speak the language) they may change the price or trick difficulties during the negotiation but at the same time, because you are a foreigner, there is plenty of room for negotiation (you should come with someone who will control the negotiation in their language). Beyond the price, this is the moment to decide on the method of payment and when it will be made. It is very important to decide on this in advance because purchases had already canceled due to a lack of decision on the timing of payments (do you first pay and then transfer the apartment in your name or vice versa? Do you transfer the entire amount before transferring registration or only part?). This should be done right especially if you don't buy a new apartment in a new project. Don't forget to make sure the seller is paying all utility bills up to the purchase date so you won't get any surprises after the purchase.

  3. Bank account set up in Georgia - Once you have decided that you are going to complete a purchase and chose a particular property, you must open a bank account to make the payment for the property as well as to pay future bills, property management fees, and more. We have prepared a guide for you to open a bank account in the next article. We advise you to take of it in advance as it takes some time to set up a new operational account in Georgia (about 4-7 days).

  4. Real estate purchase contract - the purchase contract will be created for you by a realtor (not recommended) or an attorney (highly recommended). The purchase contract is usually very simple and may even be written on one page. Usually, for foreign investors, the contract will be written in 2 languages. A local language and a language that the investor understands like English or Russian.

  5. Going to government offices to change the name of the owner - after the purchase, you must visit the governmental offices and change all utility bills in your name (or the name of your local contact). The transfer must be handled with the water company, the gas company, the electricity company, the cable company, and the Internet company. After you will finish the process you can pay the new utility bills using the app of the bank but the notifications of the new utility bills can only reach a Georgian number for all we know (management company or local contact will take care of it). All payments can be made using the bank website on the Internet (in English), even without the help of a local contact.

  6. Renovation and furniture - If you bought an apartment in a new project, there is a high probability that you purchased it in a white frame condition, which requires a mostly renovation in order to bring the apartment to a ready-for-sale/rent condition (Read about different property types in Georgia here). Even if you decide to buy a house in the city center, you will probably need to do a small renovation to make it more attractive and different from the competition of most apartments in the market. It is important to find a professional and reliable team to carry out the work and control the entire process.

  7. Find the right tenant/buyer - The apartment is finally ready for rent and you want to find the right tenant/buyer to complete the process. Whether you are planning to rent the apartment for a short term, long term, or sell it in a Flip deal, you will need to contact a Georgian real estate agent to take care of it. Realtors tend to take 3% -5% of the purchase price in the case of sale or 1-month rent in case of rent. Please notice that there is currently no need for a realtor to get a diploma or a professional document to serve as a real estate agent.

  8. Property management - In some of the new and larger projects, the company that builds and sell the apartments will offer you maintenance and management services for the property (after you will complete the purchase) but in most cases, you will need to contact a local management company or at least find a local person to take care of any future problems in the apartment. The cost of this service ranges from 10%-20% of the monthly rent.

Image by Raul Petri
Image by Anna Sullivan

 

Risks to Consider in real estate investment in Georgia

  1. Property inspection before completing the purchase - One of the most important steps before buying a property in Georgia (whether it's in Tbilisi, Batumi, or anywhere else) is to complete a full property inspection including mortgages, accurate registration, property measurement (to know the actual property size as the documents not always correct), utility bills debts and more. This part is especially crucial for those who are interested in buying an older (second hand) property in Georgia right in the heart of the city center (old city). Proper and accurate registration of the property is very important for a future sale to avoid fines or other problems. The procedure takes two or three days and around $100-$300.

  2. Buying a property with a mortgage in Georgia- If you are considering buying a property in Georgia that has a mortgage against it, it is very important to be careful. The right way to deal with the situation is to pay the seller only the mortgage value, then the property will be registered in our name but with a warning note (warning note means that you won't be able to sell the property without the approval of the seller) in the name of the seller. The seller must then go to the bank and close the mortgage taken against the property with the first payment we already transferred. Once the seller will provide you a document from the bank showing that the mortgage was removed (you can check it even online with the property number). At this point, you will transfer the final payment that was left to the seller and he will take care of canceling the warning note registered before (takes about 1-2 days in the public service hall) so that eventually, the property will only be in your name without ant warning notes. It is highly recommended to complete this process using a local notary who will create the purchase contract and then, he will take care of registering the property in your name and will add the warning note in the seller name. The notary is directly connected with his computer to the government property registration system so it is done on the spot. The cost of the notary service is fixed by law and costs about $350.

  3. Purchase payments - While negotiating, it is important to determine the method of payment and the exact moment that every payment is being done together with the full registration process. There are several ways to do it but we would recommend you to decide on a first payment (let's say 50%) which after it, the property will be registered in the buyer name together with a warning note in the seller name (warning note means that you won't be able to sell the property without the approval of the seller). After this first part, the seller pays the rest (50% in our example), and then the seller cancels the warning note at the public service hall. After the process is completed, the buyer is now the sole owner of the property. Our best advice to make sure you are protected by the law, everything must be written and signed in a purchase contract and it is highly recommended to use the services of a local real estate attorney (though some of the people you will meet in Georgia during the process will tell you that a real estate transaction can be made without a lawyer).

  4. Property Renovation - Whether you bought a new property in a white/black/green frame condition (read about all types of properties in Georgia in this article) or an older property and you want to renovate it, it is important to choose a professional team who is familiar with the Georgian real estate market. Another important thing is to hire a reliable local person who will be in control of all parts of the renovation process including supervising the workers, material purchase and transportation, quality control, and communication. In addition, it is important to sign a contract containing all the work required and decide about the payment schedule. We will advise you to pay based on the completed work and try to avoid paying in advance to make sure you are on the safe side. 

Image by Anna Sullivan

?How can we help

Whether you are already a proud owner of a property or considering a real estate investment in Georgia, we are here to make your entire process easier. Starting from locating the most potential deal according to each investor profile, through full guidance to complete the purchase process, connecting you with local professionals to renovate and manage your property using a reliable local company (which also invests in real estate in Georgia). If you are still in the research phase and looking for quality information to make the right real estate investment in Georgia, we can guide you and share some crucial information to give you a better understanding of the Georgian real estate market in a consulting session.

 

Our Services
 

  1. Consultation session to share our knowledge about the Georgian real estate investments 

  2. Locating potential assets in Georgia (Tbilisi/Batumi) and help with negotiations

  3. Guidance with the purchase process using local professionals (attorneys, real estate agents, banks)

  4. Renovation and improvement of the property with a professional team including purchasing the best materials at the lowest prices in coordination with the buyer

  5. Tenant/buyer search for a property after it is ready to use

  6. Property management in terms of maintenance and utility bills

Thanks for your interest!

  • Whatsapp
  • Black Facebook Icon

May Interest You