On the currency issue, Croatia is an EU member and they're supposed to adopt the euro at some point.. I had to google, seems no date is set but they're aiming for it
https://www.reuters.com/article/us-croatia-euro/croatia-wants-to-adopt-euro-within-7-8-years-prime-minister-idUSKBN1CZ0Q5Still, the kuna is tied to the euro in many ways, I don't think it is likely those two can part ways in a manner that would mess up my math.
Also, more than 90% of my guests would be foreign tourists, meaning that the purchasing power of people earning kuna shouldn't have a major effect on my pricing.
In regard of how this calculation is done, mostly based on the current owner's last year's figures (this is a friend of a friend of a friend kind of situation).
I am thinking that they may be inflating the returns a little, as I don't think he would be selling it if it were really that simple. The story though is that he wants to sell it in order to get cash to renovate a couple more places he bought in decrepit condition which I can buy as it is probably difficult to get a mortgage for this in Croatia, interest rates are nowhere near as low as ours (4-5%) and if he made good money on this year last year he feels he can get even more out of having a couple of them.
The reason I feel this may be a good deal is also the fact that this price (2000€ per m2) seems fairly average for location and size (based on a casual glimpse of listings on our main real estate site), meaning that he is actually undervaluing the component of this being a fully functional business with great reviews on booking.com and airbnb.
Technically I am not a foreign landlord as I am a citizen there, plus it would mostly be rented out to tourists (this is on the coast and a major tourist destination)
Even though I feel it could ALWAYS be rented out to someone permanently for about 300€ per month which would not really make it a great investment, but it would still be a net gain for me.
So I feel I should buy it and try this out.
But of course, even though this is not really a significant portion of our yearly money flow (for reference, we earn about 150 000€ net per year, Luxembourg is an outlier when it comes to earning potential and cost of living in Europe) I am a bit nervous.