Buying an AirBNB Property in Playa del Carmen

Is 5% good enough?

Just this morning I was chatting with a client about a property currently listed for sale in Playa del Carmen.

His questions centered around :
What is the ROI? How much money will I make? Etc.
These are valid and commonly asked questions, for sure.
In my company, we do our best to guide people through the process of choosing a condo with a holistic perspective.
If a client can use the property and enjoy it for part-time use or vacation use and also rent it out to cover the costs of ownership, that is ideal.

So How do I answer the hard-core question of “how much money will I make renting it out on Airbnb / VRBO?

There are sooooo many factors that can affect the net rental income of owners. For example:
How often it is used for personal use, what time of year it is used by owners, world events, local happenings, and the list goes on.

Also, historical use and info on a property is not always a valid question for future income. It can be a helpful tool but does not always tell the whole story. After all, how the previous owner used a property may not reflect at all how a new owner will use it.

Here comes the truth:

In all the spreadsheets I have seen in 20 years of income vs. expenses on rental condos there is a common value.
Generally speaking, an owner can reasonably expect a 5% ROI from vacation rental, with some owners use.
This NET is cash on a cash basis and considers income minus expenses like property management, operations of cleaning and laundry, utility bills HOA expenses, etc.

If you use it more, then the net income decreases, of course.
There are some properties that perform at a higher level and some that perform less than that, affected by things like the management company, the proximity to the beach, the rental reviews, the amenities, and more.

Generally speaking, when you see “ROI” promises of 13% or more, how do you feel? Does it make you want to rush out and buy that thing?

The old adage still holds true.
If it sounds too good to be true….

Talk to us and we will tell you “the truth, the whole truth, and nothing but the truth…”

Judi Shaw - Owner Broker at Living Riviera Maya Real Estate

Written by Judi Shaw

Owner/Broker at Living Riviera Maya Real Estate

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