Where to buy rental property profitably in 2025

Montenegro is the best country for investment in 2025. According to the Montenegrin Statistics Office (MONSTAT), it demonstrates stable economic growth and where real estate remains relatively affordable by European standards, with prices below those of EU member states, making property purchases now an extremely attractive opportunity.

According to surveys conducted by our real estate agency, GoMonte, Russians are actively purchasing real estate in Montenegro based on the following five factors: a mild Mediterranean climate; a simplified residence permit process; a visa-free regime; relative affordability compared to other EU countries; and a growing tourist flow.

Therefore, buying real estate in Montenegro for rental purposes in 2025 is profitable, as it not only provides a stable passive rental income but also high asset liquidity, capital protection from inflation, and the opportunity to use the property for personal vacations several months a year.

In this article, we will examine the criteria for the attractiveness of the foreign market. If you're looking for affordable seaside property abroad, check out our catalog of properties in Montenegro: gomonte.me.

You can also schedule a consultation with our Montenegro real estate lawyer if you have questions about purchase and sale transactions: +382 69 777 680 Viber/WhatsApp/Telegram

1. How to Choose a Country for Investing in Overseas Real Estate in 2025

Today, the global housing market is experiencing a unique situation, with many countries around the world offering attractive investment opportunities, whether through developing tourism sectors, robust residence permit programs through home purchase, or favorable tax regimes. This section of the article will help you systematize your approach to choosing a jurisdiction and assess the risks.

Choosing a jurisdiction for investing in overseas real estate requires systematic analysis, not simply following tourist preferences. To maximize your returns and minimize risks on your investments in 2025, it's important to consistently evaluate the following factors:

1.1. Macroeconomic Factors and Country Stability

• Evaluate the country's economic growth rate and, especially important for the rental business, the dynamics of tourist flow. There's a direct correlation between a country's economic development and housing demand: increased tourism ensures high occupancy rates, while GDP growth guarantees higher purchasing power and prices.
• Evaluate inflation, the stability of the local currency, or the use of the euro. Countries with the euro or a stable pegged currency protect your capital from sharp exchange rate fluctuations, while high inflation can quickly devalue rental income.
• The level of legislative predictability is critical. EU/NATO membership or candidate status is important because it reduces legal and political risks by ensuring the legal system complies with European standards.

1.2. Analyze the real estate market for liquidity and profitability

These criteria determine how much you can earn and how quickly you can recoup your capital.

• Compare prices and the average price per square meter with neighboring countries and within the region. Look for markets with lower prices but higher growth potential due to upcoming infrastructure projects.
• Calculate the price-to-rent ratio. This metric allows you to assess the speed of return on investment. The lower the ratio, the faster the income will cover the cost of the property, which is especially important for investors focused on passive cash flow.
• Determine how quickly you can sell a rental asset if necessary. Liquidity often varies depending on the location: compare capital cities (high but stable demand), coastal areas (seasonal but high demand), and mountain areas (niche but year-round demand).

1.3. Legal and Tax Barriers

• Research how difficult the purchase process is for a foreigner. Review notary requirements, the need for special permits, and the general tax costs associated with property registration.
• Estimate the amount of transfer tax and annual property tax. Low ownership taxes and rental income significantly increase the ultimate return on investment.
• Consider the possibility of obtaining a residence permit or Golden Visa when purchasing real estate. For many investors, especially from Russia, this is a key additional incentive and increases the value of the asset.

1.4. Rental Business Risk Assessment

• Research short-term rental regulations: restrictions and licensing that may apply in tourist destinations. Some countries or cities impose a moratorium on daily rentals.
• Calculate operating costs and include utilities, maintenance, and management company fees. High bills can eat up a significant portion of your projected income.
• Identify your target audience: tourists, students, digital nomads, local residents, as this influences your choice of housing type and seasonality.
• Evaluate the stability of the local currency or the use of the euro. Countries with the euro or a stable pegged currency protect your capital from sharp exchange rate fluctuations.

2. The best country for real estate investment in 2025

Montenegro in 2025 offers the best combination of stability, liquidity, and migration advantages for Russian investors, standing out from other markets. It is among the top countries with a market with high rental returns and low taxes. Furthermore, it supports the trend toward "Green Real Estate" development and builds energy-efficient housing using high-quality building materials and solar panels. Below, we'll explain in more detail what Green Real Estate is.

Green Real Estate is a concept encompassing residential, commercial, or industrial properties designed, constructed, and operated with minimal negative environmental impact. The key goal of Green Real Estate is to achieve energy efficiency and sustainable development.

Key characteristics of Green Real Estate:

• Use of highly efficient thermal insulation, modern ventilation and heating systems, and renewable energy sources (e.g., solar panels) to significantly reduce resource consumption.
• Use of environmentally friendly, locally sourced, or recycled building materials with a low carbon footprint.
• Implementation of rainwater harvesting and efficient water management systems.
• Use of non-toxic paints and finishing materials to improve the health of residents.
• Supporting the Green Real Estate Trend in Montenegro

Montenegro, constitutionally defined as an Ecological State, naturally supports the green real estate trend, integrating it into its strategic goals, particularly in tourism and new construction.

This trend is supported by the following aspects:

- The "Ecological State" national strategy is a fundamental principle that encourages stricter regulation of new construction, especially in protected areas, such as near national parks like Durmitor.

- In the process of harmonizing legislation with the EU, the country is implementing European energy efficiency standards (Energy Performance Certificates, EPCs). New construction projects are increasingly required to meet high insulation standards and use efficient heating and cooling systems.

- The state is developing eco-tourism. Most new hotels and tourist complexes, especially in mountainous areas (Žabljak, Kolašin) and in the north, are being built using local, natural materials (stone, wood) and with an emphasis on minimizing disturbance to the landscape. Such properties are marketed as "green" and "eco-hotels."

- Demand from foreign investors (including those targeting EU markets) for certified "green" projects is growing. Purchasing such real estate is seen as a sustainable investment with better long-term liquidity and lower operating costs.

- Unlike the dense development of the coast, investments in the north of the country (Žabljak, Kolašin) are primarily focused on sustainability and nature conservation (for example, the construction of small chalets and eco-villages), which fully aligns with the principles of Green Real Estate.

3. Why Montenegro is a profitable place for Russians to buy property abroad

The country's stability is ensured by its tight peg to the euro (absence of currency risks) and the country's final stage of EU accession, which guarantees legal predictability. Liquidity remains high thanks to the steadily growing tourist flow and its geographical attractiveness: properties are easily rented out short-term in the summer, while the similarity of mentality and Russian-speaking environment facilitate the search for tenants and subsequent resale.

A key migration advantage is the simplified and accessible process for obtaining a Montenegrin residence permit for the purchase of real estate of any value, making the country an ideal "springboard" for living and doing business in Europe.

Investing in rental property in Montenegro remains one of the most profitable areas in 2025, thanks to guaranteed rental demand from the influx of tourists from Western Europe and the CIS countries and the growing number of digital nomads, ensuring high and stable demand for short- and long-term rentals throughout the year.

The significant Russian-speaking population among tourists and residents makes it easier for Russian investors to find tenants and, equally important, manage the property (communication, monitoring, and maintenance) without the need to engage expensive foreign management companies.

4. Payback Period for Investments in Montenegro

A realistic average annual ROI (Return on Investment) from renting out real estate in Montenegro typically ranges from 5% to 8% per annum. Most experts cite 5% to 7% for coastal properties and 6% to 8% for liquid properties in the north rented year-round.

The ROI is a metric that measures the profitability of your real estate investment. In the rental business, it is the percentage of annual net income (after deducting all operating expenses) to the total investment (purchase price + renovation costs + taxes and fees upon closing).

A "realistic" figure is one that is achieved through conservative planning, taking into account:

• Seasonal vacancy: The property is not rented 365 days a year.
• All operating expenses: Taxes, utilities, maintenance, management company fees, and a repair fund.

What Determines ROI in Montenegro?

The average annual ROI depends on many factors, which can be divided into four main groups:

1. Location. Properties within walking distance of the sea (Budva, Becici) or near ski resorts (Kolašin) have the highest ROI. Properties in non-tourist or remote areas yield a low ROI.

2. Property Type

• Studios and one-bedroom apartments: Often show a higher ROI due to their low entry cost and high demand among couples and single travelers.
• Premium segment (villas): High rental invoices but also very high purchase prices, which can reduce the ROI percentage but guarantee capital preservation.
• Property Condition: The better the renovation and the more complete the amenities (air conditioning, Wi-Fi), the higher the rental rate and the lower the downtime.

3. Rental Strategy

• Short-term (daily): Provides the highest rental rate but requires ongoing investment in management and cleaning.
• Long-term (1 year and up): Provides stability and minimal management costs, but with a significantly lower rental rate.
• Management Company Services: If you hire a management company (which is recommended for remote management), their commission (usually 20%–30% of revenue) directly reduces your net ROI.
• Vacancy Rate: In resort areas, vacancy rates during the off-season can reach 60–70% (zero revenue), which dramatically reduces the average annual rate.

4. Financial and Tax Factors

• Purchase Price: The lower the entry price, the faster the payback and the higher the ROI.
• Taxes and Fees: Consider the annual property tax (0.25% to 1% of the cadastral value) and the rental income tax. Don't forget to include the real estate turnover tax (3%) and notary fees in the total investment amount upon purchase.

5. How to choose property to buy in Montenegro for rental purposes

Our agency's specialists have compiled a practical guide for you on choosing a liquid property for your rental business in Montenegro, including criteria for evaluating specific properties based on their rental potential and profitability.

To choose a property to buy in Montenegro, follow these four steps:

5.1. Evaluate the location

Proximity to the sea and beaches, as well as well-developed infrastructure, are important for short-term summer rentals (maximizing occupancy). Consider the presence of shops, restaurants, walking distance to key tourist attractions, as well as distance from airports (Tivat/Podgorica) and public transportation.

5.2. Research the property types and characteristics

• Studios and one-bedroom apartments are ideal for achieving a high ROI during the summer season.
• Two-bedroom apartments are better suited for long-term family rentals or vacation rentals.
• A sea or mountain view can increase rental rates by 20-30%.
• A swimming pool, parking, security, and a management company (increases tourist appeal).
• Conditioning and renovation require investment, but an attractive interior will increase demand.

5.3. Assess profitability

• Calculate the annual ROI (the net income method discussed above).
• Create a realistic occupancy forecast (e.g., 90 days in the summer and 60 days in the off-season).
• Estimate operating costs—utilities, annual taxes, and management fees.

5.4. Conduct a legal due diligence of the purchase and sale transaction

• Ensure that there are no encumbrances (Hipothèque) and that the construction is legal (Upotrebna dozvola).
• Execute a long-term or short-term lease agreement in accordance with Montenegrin law.

Contact our lawyers for legal support and a free consultation: +382 69 777 680 Viber/WhatsApp/Telegram

6. How to obtain a Montenegrin residence permit by purchasing real estate

One of the most reliable and popular ways for foreigners to legalize their status is by obtaining a Montenegrin residence permit by purchasing real estate. According to the Montenegrin Law on Foreigners (član 53), owning any real estate, regardless of its value or area, entitles you to apply for a temporary residence permit (TRP/boravišna dozvola).

This TRP is issued for one year and can be renewed annually as long as you remain the owner of the property. To successfully obtain the permit, you must provide a current real estate register (List nepokretnosti), proof of a clean criminal record, and proof of health insurance.

Therefore, when choosing a property for successful rental in Montenegro and maximum profitability, consider the following factors:

1. Seasonality and all-season suitability. In resort areas (Budva, Bay of Kotor), peak profitability occurs during the summer season. However, investments in properties focused on ski tourism (Kolašin, Žabljak) ensure high occupancy in winter, making the property practically suitable for all-season rentals.

2. Liquidity factor. Small properties (studios, one-bedroom apartments) within walking distance of the sea or key attractions offer the highest liquidity, as they have the highest return on investment and demand from tenants.

3. Competitive environment. In resort towns, not only location is important but also the quality of the property: the presence of modern renovations, a balcony/terrace, and, preferably, a swimming pool in the complex significantly increases rental rates and competitiveness.

Get advice from our specialists who will help you understand the legal intricacies of buying and selling and successfully conclude a transaction: +382 69 777 680 Viber/WhatsApp/Telegram