This case study documents the acquisition of an existing short-term rental business in Riga, Latvia, with a focus on acquiring a fully operational Airbnb property with a proven income history.
The objective was to generate rental income from day one by purchasing an established operation rather than trying to turn a property into short-term rental.
The sections below outline the acquisition process, from defining investment criteria to reviewing performance during the first year of ownership.
1. Defining Buying Criteria
The process began with defining the target investment profile, including preferred property types, non-negotiable requirements, and an acceptable budget range.
A flexible budget of €150,000 to €300,000 was established to allow room for negotiation and varying deal structures.
The primary return target was a minimum pre-tax net yield of 7%, calculated after all operating costs and management fees. Immediate cash flow was a key requirement, which led to a focus on established Airbnb rentals rather than vacant or newly launched units.
The emphasis was placed not just on acquiring a property, but on acquiring a functioning rental business with an existing income track record.
2. Property Search and Tax Analysis
With the criteria in place, the property search began using AirDNA and local market listings. In total, several potential opportunities were identified:
- Four 1-bed apartments (bundle sale)
- One 1-bed apartment in Old Town (Vecriga)
- One 1-bed apartment in central Riga
- One 3-bed apartment in central Riga
Three of these properties were already operating successfully as short-term rentals, allowing sellers to provide detailed profit-and-loss statements. This data made it possible to assess historical performance and evaluate whether the target yield could be achieved.
At the same time, local legal advisors reviewed Latvia’s tax framework for non-resident property owners. Several taxation options were considered:
- Flat 10% tax on gross rental income (no deductions)
- Progressive income tax (20%–31%), with deductions for expenses and depreciation
- Company structure, with no corporate income tax on reinvested profits and a 20% dividend tax on distributed income
The company structure was selected as the most efficient option for this investment.
On a potential sale, capital gains would be subject to a 20% tax, with deductions allowed for acquisition and selling costs. In addition, an annual property tax of 1.5% applies, calculated on the cadastral value, which is typically well below market value. Closing costs, including notary, legal, and transfer fees, amounted to approximately 4% of the purchase price.
Short-term rental operations in Latvia are also subject to a fixed 12% VAT applicable to Airbnb and accommodation businesses. All of these taxes and costs were incorporated into the final yield calculations to ensure an accurate assessment of net returns.
3. Scheduling Viewings
Property viewings were scheduled following initial screening and analysis. Coordination with agents took some time to align schedules.
A full day was dedicated to visiting the shortlisted properties in person. While financial data provided a strong starting point, on-site visits offered additional insight into building quality, neighborhood dynamics, and operational practicality.
These visits helped validate assumptions made during the desk-based analysis and provided a clearer picture of what ongoing ownership and management would involve.
4. Offer, Negotiation and Due Diligence
An offer was submitted for the property with the strongest net yield profile: a ground-floor bundle of four 1-bedroom apartments already operating as short-term rentals.
The property benefited from a solid location, strong guest reviews, and consistent operating history. The initial asking price was €175,000.
Following approximately one week of negotiations, a final purchase price of €162,000 was agreed.
Key transaction steps included:
- 5% deposit transferred to a notary escrow account
- Review of historical rental income and expense records
- Analysis of guest reviews and occupancy trends
- Independent valuation by a local appraiser
5. Purchase Process and Notary Completion
After successful completion of due diligence, the transaction proceeded to closing.
An existing EU company was used for the acquisition, eliminating the need to establish a new Latvian entity. Purchasing as an individual is also permitted in Latvia, depending on residency and citizenship status, and should be evaluated on a case-by-case basis.
Standard KYC/AML checks were required to document the source of funds, a process that took approximately five days.
The final step involved attending the notary in Riga to execute the transaction. Documents were signed, funds transferred, and the sale was completed in person.
Approximately one month later, the official title deed was issued, confirming ownership:
On top of the €162,000 purchase price, yo also need to spend an additional €5,000 (around 4%) on notary fees, legal checks, due diligence, and stamp duty.
So the total upfront cost came to €167,000.
6. Rental Management and Monthly Distributions
To keep the investment largely hands-off, the existing property manager was retained. The manager had an established track record, including 70+ guest reviews and an average rating above 4.8.
The management agreement covered:
- Guest communication
- Check-ins and check-outs
- Cleaning
- Basic maintenance and repairs
Detailed monthly performance reports were provided, outlining revenue, expenses, and net profit. A 20% management fee was applied, reflecting the full-service nature of the arrangement.
A local accountant was also engaged at a cost of €100 per month to handle tax filings, dividend distributions, and regulatory compliance.
Rental Performance Update (2023 to 2025)
After covering all expenses, including management, cleaning, maintenance, insurance, property tax and other running costs, we ended up with a 52% profit from total revenue.
That’s roughly a 50:50 split between income and costs which is pretty typical cost for an Airbnb in Europe.
All in all, that works out to a pre-tax net yield of 8.4%, which comfortably exceeded our original target. Even if the yield goes down a bit, we are still well above the average in Europe or Riga.
Here's a monthly profit breakdown:
- Dec 2023: €504
- Jan 2024: €959
- Feb 2024: €702
- Mar 2024: €645
- Apr 2024: €1,806
- May 2024: €1,305
- Jun 2024: €2,765
- Jul 2024: €2,346
- Aug 2024: €1,382
- Sep 2024: €1,333
- Oct 2024: €962
- Nov 2024: €723
- Dec 2024: €1,529
- Jan 2025: €139
- Feb 2025: -€731
- Mar 2025: €655
- Apr 2025: €603
- May 2025: €2,144
- Jun 2025: €1,935
- Jul 2025: €2,161
- Aug 2025: €1,545
- Sep 2025: €1,209
Interested in Buying Real Estate in Latvia?
When evaluating real estate opportunities in Latvia (or anywhere in Europe), access to reliable market data and structured due diligence can materially reduce risk. This typically involves identifying suitable properties, reviewing historical performance, and verifying legal and tax considerations before proceeding.
Where needed, Global Property Guide can also assist with property sourcing, acquisition support, and independent due diligence, working alongside local professionals to help investors navigate the process more efficiently.
