How to make money with vacation rentals in Cancun: Tips for real estate investors

How to make money with vacation rentals in Cancun: Tips for real estate investors

Key points:

●      Location: Location is a critical factor for the profitability of a vacation rental property in Cancun. It should be located near tourist attractions and have easy access to basic services.

●      Real estate marketing: It is important to have an effective marketing strategy to attract tourists and good property management to ensure guest satisfaction.

●      ROI: It is essential to calculate the ROI before investing in a vacation rental property in Cancun. Operating costs and income should be considered to determine the profitability of the project.

Buying vacation rental properties in Cancun is a good investment. With stunning beaches, rich culture, and a vibrant nightlife, Cancun attracts visitors from all over the world. But to get the best results, you need to know the real estate market in Cancun and the current trends. Keep reading and discover how you can become a successful investor in vacation rental properties!

Cancun market analysis real estate

To successfully vacation rental property investment in Cancun, it is essential to understand the city's market analysis real estate. With the growing interest of visitors from around the world, Cancun has established itself as one of the most popular tourist destinations, which has generated a higher demand for vacation rental properties.

According to data from Mexico's Tourism Ministry, Cancun received more than 9.4 million tourists during the January-December 2022 period, and the vacation rental occupancy rates in Cancun was 75.9%. This indicates that the city has a high demand for accommodation and that investors can get a great return on investment (ROI) in vacation rental properties.

Real estate market predictions

When it comes to vacation rental property investment, it is essential to understand market trends and tourist demands. Some recent trends include the growing popularity of vacation rentals compared to hotels.

The 2022 trend report issued by Vrbo points out that there has been a trend towards long-term in vacation rental properties:

●      "Families are staying in vacation homes for longer; there has been a 68% increase in stays of 21 to 30 days on Vrbo.

●      Dateless searches increased 33% year-over-year, indicating that families don't necessarily have to go on vacation during school holidays or company holidays.

●      59% of respondents said they are more likely to take a two-week vacation, and 30% are more likely to take a gap year."

Also, due to the COVID-19 pandemic, many tourists now prefer to rent properties that offer them privacy, such as private outdoor areas with pools or gardens. Keep an eye on these trends when investing in real estate!

ROI and Actual Statistics

As an investor, it is important that you have a clear idea of what to expect in terms of return on investment (ROI) when investing in vacation rental properties in Cancun.

According to data from AirDNA, a vacation rental data analysis company, the average nightly price for a vacation rental property in Cancun is $84 USD, with an average occupancy rate of 70%.

If you purchase a property directly, calculating your ROI is quite simple.

Let's take our Arkana property purchased in cash as an example:

● You paid $280,000 USD in cash for the rental property.
● You collect $1,890 USD in rent each month with an occupancy rate of 70% at a value of $90 USD per night.
● One year later:

You earned $22,680 USD in rental income for that year.

However, there were expenses including utility bills, maintenance and cleaning, guest amenities, and property taxes for a total of $3,600 USD per year or $300 USD per month.

Your annual statement was $19,080 USD for the year ($22,680 USD - $3,600 USD)

To calculate the ROI of the property:

Divide the annual return ($19,080 USD) by the total investment amount of $280,000 USD.

ROI = $19,080 USD ÷ $280,000 USD = 0.068

Your ROI was 6.8%.

These statistics are only a general guide and may vary depending on several factors, such as location, size (the more rooms and bathrooms, the more you can charge per night), and the quality of the property, as well as the season and demand. However, they are a good starting point for understanding the earning potential of vacation rental properties in Cancun.

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Tips How to make more money with vacation rentals

Now that you know the real estate market in Cancun and have an idea of how much you can earn with a vacation rental property, it's important to know some tips to increase your rental income.

1. Set a competitive price: Make sure to research the prices of similar properties in the same area. Airdna offers an online tool that allows you to calculate average short-rental rates, occupancy rates, and income.
2. Provide additional amenities for your guests, such as free WiFi, a hydromassage bathtub, a pool, and self check-in. These amenities can help differentiate your property from others and attract more guests.
3. Pet Friendly: Properties that allow pets have 10 to 15% more income than those that do not.
4. Keep your property clean and well-maintained: Guests expect to have a clean and comfortable property during their stay. If you keep it in good condition, it's more likely that your guests will leave a positive review and recommend your property to others.
5. Use rental platforms like Airbnb, HomeAway, VRBO, etc. These platforms are an excellent way to reach more potential renters. Additionally, they offer security measures to protect both owners and guests.

Conclusion 

In summary, investing in vacation rental properties in Cancun is an excellent option for investors seeking to diversify their portfolio. With a privileged location, an attractive tropical climate, and a high flow of tourists year-round, Cancun offers a great opportunity to obtain a solid ROI.

However, it is important to keep in mind that the success of your investment will depend largely on how you manage your property. Ensuring a good marketing strategy and appropriate pricing, as well as providing an excellent guest experience, are key to maximizing your profits.

At eRealty, we are here to accompany you in your real estate investment career! Contact us for more information about our properties in Cancun and let us guide you towards financial success. Our team of experts is ready to provide you with personalized service and help you make the best investment decision!