When buying property in Montenegro for rental purposes, it is important to look beyond the view, distance to the sea and purchase price. The key question is how the property will generate income throughout the year: who will rent it, how many months it will be occupied, what rate is realistic in summer and off-season, and how much will go to taxes, maintenance and management.
Calculating rental yield
The average gross yield on residential property in Montenegro is usually around 5–6% per year. According to Global Property Guide, the national average in Q4 2025 was 5.59%. In popular tourist locations, short-term rentals can generate 6–10% gross yield, but only with strong occupancy, proper management and a reasonable purchase price. For long-term rentals, the usual benchmark is closer to 4–6% per year.
However, it is important to calculate the real return, not the promised one. For example, if an apartment bought for 180,000 euros brings in 10,800 euros per year, the gross yield is 6%. After taxes, utilities, cleaning, repairs, internet and management fees, the net income may fall to 7,800–8,300 euros, or 4.3–4.6% per year.
Seasonality has a major impact on the result. Montenegro’s coast earns most of its rental income from June to September, so yield should not be calculated based on August rates alone. If an apartment rents for 120 euros per night but is occupied for only 75 nights a year, the gross income will be 9,000 euros. Off-season rentals can improve the result, but they should be factored in carefully.
Property type
The type of property also matters. Studios and smaller apartments often show a higher percentage yield: they are cheaper to buy, find tenants faster and are easier to manage. One- and two-bedroom apartments are suitable for families and longer stays, but because of the higher purchase price they need to be calculated separately.
Residential complexes with a pool, reception, parking or a management company may be easier to rent out, especially to foreign tenants. But service charges reduce net profit, so they need to be included in the calculation before the purchase, not after.
Villas work differently. They are usually not the best option for maximum rental yield, but rather a way to invest in a high-quality asset. A villa has a higher entry price, higher costs and a smaller pool of potential tenants, but a good property in a strong location can preserve liquidity and grow in value.
Purchase price
The purchase price is just as important as the rental rate. If an apartment costs 150,000 euros and brings in 9,000 euros per year, the gross yield is 6%. If the same property is bought for 190,000 euros, the yield falls to 4.7% with the same rental income.
Buying at an early stage of construction can offer a lower entry price. In a good location and with a reliable developer, an investor can earn not only from rental income after completion, but also from the increase in the property’s value. But this option requires especially careful checks: documents, permits, deadlines, the developer’s reputation and the terms of the contract.
Choosing the location
For tourist rentals, the key factors are the beach, easy access to the sea, restaurants and shops nearby, parking, views, transport links, and the condition of the building and entrance. For long-term rentals, everyday infrastructure matters more: shops, schools, healthcare, transport, parking, heating or air conditioning.
Budva and the Budva Riviera have strong summer demand, but competition is also high. Bar is better suited to long-term rentals: it has active city life, infrastructure and demand not only from tourists. Tivat has a higher entry price, but Porto Montenegro, the marina and an international audience support demand for quality property. Kotor and Boka Kotorska are attractive for seasonal tourist rentals, but access, parking and the condition of the building are especially important there.
Costs
Costs need to be calculated in advance. They include annual property tax, utilities, internet, cleaning, minor repairs, management fees and complex maintenance. Annual property tax is usually 0.25–0.6% of the assessed value of the property, which is usually lower than the market value and helps reduce the tax burden. Rental income for individuals is taxed at 15%, but the final tax base depends on expenses and the accounting method. There is also a standard 30% expense deduction if actual expenses are not documented. In practice, this means the tax is calculated not on the full rental income, but on 70% of it.
Before buying, it is worth calculating three scenarios: cautious, average and optimistic. If a property looks profitable only in the optimistic scenario, that is a risk.
Montebook real estate agency helps buyers choose property in Montenegro not only by price and view, but also according to their real objective: rental income, personal use, resale or capital preservation.
Our catalogue includes apartments, flats, houses and land plots in different cities of Montenegro. We can offer current options and help compare them from the point of view of purchase, rental potential and future use.
Back
