Cap rate, cash-on-cash, and gross yield: which matters when
Gross yield is the simplest comparison metric: annual rent divided by purchase price. Cap rate adds operating expenses but excludes financing, it's the property-level return independent of how you fund it. Cash-on-cash divides pre-tax cash flow by the cash you actually deployed, so it captures the leverage effect. For a foreign Riviera Maya buyer, cash-on-cash is usually the most decision-relevant metric because financing structure varies widely (Mexican peso mortgage, home-country mortgage, all-cash) and changes the actual return profile.
Riviera Maya vacancy: the seasonality reality
The Riviera Maya STR market is highly seasonal. December through April is peak (often 80-90% occupancy at premium rates). May, June, September, and October are slow (30-50% occupancy at discount rates). The annual blended occupancy for a well-managed STR property is typically 55-70%. The calculator surfaces this as a 30% vacancy default, adjust upward for jungle properties (Tulum, Bacalar) and downward for hotel-zone condos with consistent business-traveler demand. Long-term leases (1-year contracts) are more stable: 5-10% vacancy is realistic.
Mexican rental income tax for non-residents
Foreign-resident landlords on Mexican rental property face two tax layers: a Mexican layer and a home-country layer. The Mexican layer is governed by Ley del ISR Article 121: 25% withholding on gross rental income (no expense deductions) OR 35% on indexed net income (after documented operating expenses, financing costs, and INPC inflation indexation). The 35% indexed regime typically wins for owners with documented expenses; the 25% gross regime wins for short-term holders or owners without paper-trail-level expense records. The home-country layer depends on your tax residency: Canadians and US persons get a foreign tax credit for Mexican tax paid. Always work with a cross-border tax advisor, this calculator's effectiveTaxRatePct slider is a deliberate approximation.
Why this is a projection, not a guarantee
Rental ROI projections depend on vacancy, rate growth, operating cost inflation, and appreciation, all of which are uncertain. The calculator's defaults reflect MWH's read of 2026 conditions but should not be taken as forward guarantees. Stress-test your scenario with vacancy at 50% and zero appreciation to see the floor. If the property still cash-flows under that scenario, you have margin of safety.