“Season + Off-Season” Scenario: How to Calculate Average Annual Returns

Introduction

The season + offseason scenario is common for resort and tourist properties. 🌊 Peak months bring higher rates and stronger demand, while off-peak months often show lower occupancy and reduced revenue. The investor's task is to calculate a realistic average annual yield that reflects both periods and associated costs.

Who this is for

• private investors buying rental apartments;
• owners mixing short-term and long-term rentals;
• anyone comparing properties with different seasonality.

The simple approach: calculate month by month 📅

The most reliable method is to estimate expected income for each of the 12 months, sum them up, subtract annual expenses and divide by the total investment. This produces a clear average annual return and helps to forecast cash flow across the year.

Formula in plain terms

1) Estimate expected net income for each month (before or after taxes depending on the analysis).
2) Sum the 12 monthly incomes = gross annual revenue.
3) Subtract annual expenses (taxes, management fees, utilities, repairs, commissions).
4) Divide net annual profit by invested capital (purchase + renovation + initial costs) → average annual yield.

In short: (sum of monthly incomes − yearly expenses) / invested capital.

Worked example with variables

• Let M1..M12 be monthly incomes.
• Annual gross = M1 + M2 + ... + M12.
• Annual expenses = E.
• Investment = I.
• Average annual yield = (M1 + ... + M12 − E) / I.

Tip: build three scenarios — conservative, base and optimistic — by adjusting monthly loads and rates. For instance, peak months might bring several times the off-peak income; reflect that in M values.

How to handle vacancies and downtime

• Model expected occupancy rates by month (e.g., low occupancy in off-season, high in peak).
• Translate occupancy into monthly income for short-term rentals by multiplying average daily rate by expected booked days.
• For long-term leases, factor possible gaps between tenants as reduced income months.

Account for costs and capital expenditures 🧾

Include:

• utilities and regular maintenance;
• management and platform fees;
• taxes and local charges;
• periodic repairs and furniture replacements;
• insurance and contingency funds.

Divide costs into monthly and annual items. Spread annual or irregular costs across months to smooth your cash flow view.

Risks and adjustments ✅

• Market prices and demand change — update your model periodically.
• Regulatory and tax changes can alter net yield.
• Competition and local development can affect occupancy.

Practical investor tips

• Recalculate scenarios every few months with fresh booking data.
• Keep a reserve for slow periods and unexpected repairs.
• Compare properties using the same month-by-month methodology.
• Consider hybrid strategies: long-term rentals for off-season stability and short-term for peak-season upside.

Conclusion and checklist

• Estimate monthly incomes;
• Include all expenses and vacancy assumptions;
• Build multiple scenarios and stress-test them;
• Use the resulting average annual yield to compare opportunities.

If you want, we can build a tailored model for your property and calculate realistic average annual yield considering seasonality. Start your search or ask for help here: https://buyhome.ge/en/search

Contact us for a friendly, no-pressure discussion — we'll help choose and calculate the best option for your needs. 🤝