Accurately calculating a property's Return on Investment (ROI) is crucial before starting to rent it out, whether for vacation rentals (Airbnb/Booking) or long-term stays. Here's a step-by-step guide on how to do it in 2025, outlining key variables and providing a clear comparison between both rental options.
What is real estate ROI?
ROI is a metric that tells you how profitable your real estate investment is. It is calculated as follows:
ROI (%) = [(Annual Revenue – Annual Expenses) / Total Investment] x 100
This value helps you compare options, make decisions, and project future earnings.
Key variables for calculating it correctly
Below, we show you the factors that most affect the ROI of a property in Mazatlán:
1. Occupation
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Holiday rentals: These tend to have higher turnover, but also higher rates. In areas like the Golden Zone or Marina, you can reach occupancy rates of 55-80% annually.
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Long-term rental: More stable employment. Generally 6-12 month contracts.
2. Maintenance expenses
Includes cleaning, minor repairs, and general services. Prices may be higher for beachfront properties due to humidity or salt air.
3. Administration and platforms
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If you use a management company, you should budget between 15% and 25% of your gross monthly income.
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In vacation rentals, platforms like Airbnb charge commissions of 3-15%.
4. Total Investment
Consider:
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Property price
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Deed and notary services
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Furnished
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Remodeling
Comparison: vacation rental vs. traditional rental
| Factor | Vacation Rental | Long-Term Rent |
|---|---|---|
| Occupation | 55–80% (variable by season) | 90–100% |
| Monthly income | Greater (per night) | Smaller but stable |
| Operating expenses | Higher levels (cleaning, management) | Lower |
| Potential profitability | 8%–14% annual | 4%–8% annual |
| Time required | More involvement or administrator | Low management fees once rented |
Additional tips to improve your ROI
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Purchase in areas with high projected appreciation (Historic Center, Marina, Cerritos).
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Invest in durable and attractive furniture.
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Automate administration and billing to reduce errors.
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Take advantage of tax deductions if you invoice income as a self-employed individual.
Conclusion
Calculating ROI not only helps you determine if a property is worthwhile, but it also allows you to optimize your investment strategy . Whether you're looking for consistent income or high returns, understanding these numbers will make all the difference.
Would you like us to analyze your property and help you calculate a personalized ROI?
💬 Contact us and we'll advise you free of charge!
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