Montenegro Rental Yields: 2026 Analysis

Understanding rental yields is crucial for property investors. Here's our detailed analysis of returns across Montenegro's main markets.

Average Gross Yields by Location

Budva - Short-term (Airbnb): 8-12% - Long-term: 5-7% - Best performers: Sea view apartments, Old Town

Tivat / Porto Montenegro - Short-term: 6-8% - Long-term: 4-6% - Best performers: Marina-view properties

Kotor - Short-term: 7-10% - Long-term: 4-5% - Best performers: Old Town apartments

Podgorica - Long-term only: 6-8% - Best performers: Central business district

Factors Affecting Yields

Property Type - 1-2 bedroom apartments outperform larger units - Sea views command 20-30% premiums - Ground floor less popular for short-term

Season - Peak season: June-August (90%+ occupancy possible) - Shoulder: May, September (60-80%) - Low: November-March (20-40%)

Costs to Consider

• Property management: 15-25% of rental income
• Cleaning/turnover: €30-50 per changeover
• Maintenance reserve: 5-10% of income
• Tax: 15% of net rental income

Note: Rental income is taxed at 15% (not 9% as sometimes cited).

Net Yield Calculation

Example: €200,000 apartment in Budva

Gross annual rental: €16,000 (8% gross)

Costs: - Management (20%): €3,200 - Maintenance (10%): €1,600 - Property tax: €400

Net before income tax: €10,800 Income tax (15%): €1,620 Net after tax: €9,180

Net yield: 4.6%

Investment Strategy

For maximum returns, focus on 1-2 bedroom apartments in walkable locations with sea views. Professional management is essential for short-term rentals.

Short-Term vs Long-Term

Short-Term (Airbnb/Booking) Pros: - Higher gross yields - Flexibility for personal use - Euro pricing

Cons: - Seasonal fluctuations - Higher management costs - More wear and tear

Long-Term Pros: - Stable income - Lower management burden - Better tenants typically

Cons: - Lower gross yields - Less flexibility - Local market rates

Emerging Markets

Bar & Ulcinj - Lower entry prices - Growing tourism - 6-9% gross yields achievable

Herceg Novi - Undervalued market - Strong winter community - 5-8% gross yields

Tax Compliance

Requirements: - Register property for rental - Declare all rental income - Pay 15% tax on net income - File annual tax return

Deductible Expenses: - Management fees - Maintenance and repairs - Insurance premiums - Depreciation (for businesses)

Working with a local accountant ensures compliance and maximises legitimate deductions.