Why Gross ROI Lies and Net ROI Matters
Many developers and agents present return projections based on gross income: "This property generates USD 2,000 weekly in high season." What they don't say is how much remains after platform commissions, property management, maintenance, taxes and vacancy periods. The gap between gross and net ROI can be 40–60%. This guide teaches you to calculate the number that actually matters.
The Net ROI Formula
Gross Annual Income = ADR × Occupancy Rate × Available Days
Net Annual Income = Gross Income − Total Operating Expenses
Net ROI = (Net Annual Income / Purchase Price) × 100
Key Operating Expenses to Deduct
- Property management: 20–30% of gross income for full-service management
- Platform fees (Airbnb/VRBO): 3–5% of gross
- Maintenance & repairs: 1–2% of property value annually
- HOA fees: USD 100–500/month depending on development
- Utilities: USD 150–400/month
- Insurance: USD 800–2,000/year
- Property tax (predial): USD 200–600/year
- Mexican income tax on rental income: 25% on gross for non-residents (no deductions)
- Bank trust (fideicomiso): USD 500–700/year for coastal properties
Real Case Study: Playa del Carmen 2BR
Purchase price: USD 220,000 | ADR: USD 130/night | Occupancy: 72% | Available days: 340
Gross income: USD 31,824 | Total operating expenses: ~USD 20,256 | Net income: USD 11,568 | Net ROI: 5.26%
Adding estimated annual appreciation of 8–9%, total return (yield + appreciation) reaches 13–14% annually.
Frequently Asked Questions
What occupancy rate is realistic in the Riviera Maya?
For well-managed properties in prime zones (5th Avenue, Hotel Zone, Aldea Zama), realistic annual occupancy runs 65–80%. High season (December-January, Easter, July-August) can exceed 90%.
Should I hire a property management company?
For non-resident owners, yes. The 20–25% management fee is offset by higher occupancy, better dynamic pricing and zero operational headaches. Top Riviera Maya PM firms achieve 10–15% higher occupancy than self-managed owners.
How are non-residents taxed on rental income in Mexico?
Non-residents pay 25% ISR on gross rental income (no expense deductions). Consulting a Mexican tax accountant is essential to optimize the structure — options like fiscal residency or corporate structures can significantly reduce the tax burden.
Want us to calculate the ROI on a specific property? At L'Agence MX we run the analysis for you. Email us at bonjour@lagencemx.com, WhatsApp at +52 56 3370 9470 or browse our listings at lagencemx.com.