Investing in Riviera Maya Condos: Vacation Rental vs Long-Term Rental

Investing in condos in the Riviera Maya — Playa del Carmen, Tulum, Puerto Morelos, Puerto Aventuras, Akumal and the corridor running up to Cancún — is a decision that almost always gets made on somebody else’s spreadsheet: the developer’s, or the property manager’s who wants the contract. This guide hands you your own. It compares, with method, the two business models that compete for the same apartment — nightly vacation rental through digital platforms and long-term residential leasing — and it does so without inventing market figures. Every number here is either a cited legal provision or an assumption explicitly declared as illustrative.

The differentiator is easy to state and hard to find: this guide explains where the occupancy and rate assumptions come from, which costs habitually disappear from the brochure, how the withholdings that Mexico’s tax authority (the Servicio de Administración Tributaria, or SAT) imposes on digital platforms actually work, what the Quintana Roo lodging tax taxes, what a condominium’s bylaws can prohibit, and how to build an honest side-by-side comparison using a worked example you can rebuild with your own inputs.

It is written for the buyer who acquires in order to rent — American, Canadian, British or Mexican — whether this is your first condo on the Riviera Maya or your third. If you are not yet clear on how title is held here — fideicomiso (bank trust), Mexican corporation or direct escritura (notarised deed) — read the guide on how to buy property in Mexico as a foreigner first and come back with your ownership structure settled, because the structure changes how the rental income is taxed.

Key takeaways for the reader in a hurry

• A vacation rental is an operating hospitality business that happens to use a condo; a long-term lease is a wealth-holding investment with a stable cash flow. The only thing they share is the asset.
• The two assumptions that decide the vacation-rental outcome are annual occupancy and average daily rate (ADR). Neither appears in the deed or the purchase contract: you have to estimate them from evidence.
• The most consistently underestimated costs are management fees, electricity for air conditioning, condominium fees, furniture replacement and low-season vacancy.
• On tax: platforms withhold income tax (ISR) and VAT (IVA) from the host (Ley del ISR, arts. 113-A to 113-D; Ley del IVA, arts. 18-B to 18-M); residential leasing is taxed under its own chapter (Ley del ISR, arts. 114 to 118) and is usually VAT-exempt when the unit is unfurnished housing (Ley del IVA, art. 20, fr. II).
• Quintana Roo levies its own state lodging tax, which platforms withhold when they process the payment, and it maintains a state registry of tourism service providers (RETUR-Q) whose applicability to your case you must confirm. Condominium bylaws can restrict or prohibit short stays outright.
• In this guide’s illustrative example, the vacation model wins narrowly on prudent assumptions and loses at low occupancy. That sensitivity — not the average — is the information worth having.

Two business models, described without romance

Start with what each model actually is, because a good share of the disappointment on the Riviera Maya comes from buying a condo as a store of wealth and ending up, without meaning to, running a very small hotel.

Vacation rental: a one-bedroom hotel

In the vacation model the owner sells nights. Every booking means an arrival, a departure, a clean, a set of linens and towels, restocked consumables, a conversation with the guest and a review that affects the next booking. Income depends on the Quintana Roo tourism calendar, on immediate competition — other units in the same building, hotels along the corridor, whole houses on the same platforms — and on the quality of day-to-day operations.

Owners who do this well treat the condo as a product: professional photography, dynamic seasonal pricing, fast response times, preventive maintenance on the air conditioning, inventory control. Owners who do it badly delegate to a manager without agreeing on metrics and discover twelve months later that net income landed far below the gross the brochure advertised.

An American or Canadian owner who is used to running a ski condo in Colorado or a cottage in Ontario will recognise most of this. What is different in Mexico is the tax layer, the condominium layer and the regulatory layer, all of which are described further down and none of which behave like their equivalents at home.

Long-term rental: an asset with a tenant

In a residential lease the owner gives up use of the condo for months or years in exchange for a monthly rent, normally under a written contract governed by the Civil Code of the State of Quintana Roo (Código Civil para el Estado de Quintana Roo), with a security deposit and, frequently, a guarantor or another form of security. Income is predictable, utilities are paid by the tenant, administration is light, and the operation reduces to collecting rent, handling major repairs and renewing or terminating the contract. In annual contracts it is common practice to agree that the rent be adjusted on renewal in line with the National Consumer Price Index (Índice Nacional de Precios al Consumidor, or INPC) published by INEGI, which protects the cash flow against inflation without requiring a renegotiation every year.

The risks are of a different nature: vacancy between tenants, arrears, unrepaired wear, rent increases capped by the local market, and a legal relationship that, when it breaks down, is resolved in court and not by cancelling in an app. The guide on long-term rental contracts in Quintana Roo sets out the clauses, guarantees and procedure in detail.

Hybrids and mid-term stays

Between the two extremes there are genuine options on the Riviera Maya: renting by the season to digital nomads and professionals who stay from one to six months, alternating a high vacation season with mid-term contracts in the slow months, or dedicating the unit to hotel staff and corporate tenants under company contracts. Each hybrid inherits part of the cost base of hospitality and part of the stability of leasing — and it also inherits a tax treatment that your accountant has to qualify case by case: the line between “lodging with services” and “temporary use or enjoyment of real estate” has consequences for both ISR and IVA.

The mid-term route deserves more attention than it usually gets from foreign investors. A three-month tenant pays a rate well above a twelve-month lease and well below peak nightly pricing, but generates one turnover instead of thirty, no daily guest communication, and a booking that survives a bad sargassum week. For an owner living in London or Vancouver who cannot supervise a nightly operation across five or eight time zones, mid-term is often the model that best matches the supervision they can realistically provide.

Where each model works on the Riviera Maya

The same condo does not perform the same way in Playacar as in Colonia Ejidal, or in Aldea Zama as in downtown Tulum. Geography decides which model makes sense before any spreadsheet does.

Playa del Carmen (municipality of Solidaridad)

Playa del Carmen is the deepest and most liquid market on the corridor: it receives international tourism through Cancún International Airport, cruise traffic via Cozumel, and it has a large resident population working in hospitality, services and retail. That combination lets both models coexist.

Vacation rental concentrates in the areas within walking distance of the beach and Quinta Avenida: the Centro, Gonzalo Guerrero, Zazil-Ha, the Avenida Constituyentes corridor and Playacar with its residential phases and golf course. Long-term rental finds sustained demand in neighbourhoods with services and good access to the federal highway: Ejidal, Colosio, the area around Avenida CTM and, at the top of the market, Playacar again along with amenity-rich developments in the band between Quinta Avenida and the highway. You can review the current supply of condos for sale in Playa del Carmen to calibrate prices by zone before you start modelling.

For a US or Canadian buyer, Playa del Carmen is also the market where the two models can be switched with the least friction. A well-located two-bedroom near Constituyentes can be listed nightly in January and leased for twelve months in a soft year without renovation and without moving neighbourhoods. That optionality has real economic value, and it is the reason many first-time foreign investors start here rather than in a market that only works one way.

Tulum

Tulum is the most volatile market and the one that generates the most yield promises. Aldea Zama, La Veleta, Región 15 and the developments along the corridor towards Tulum “Felipe Carrillo Puerto” International Airport were built for vacation rental: most of the supply is new, furnished by design, and sold with occupancy projections attached. Here the key question is not whether there are tourists — there are — but how many condos are competing for them within the same radius with essentially the same product.

Long-term rental in Tulum exists and is growing along with the population arriving to work, but the inventory of condos designed for it is smaller, and purchase prices are largely set by the vacation-rental model, which compresses long-term yields. An investor buying in Tulum to lease long-term must validate the achievable rent against real listings, not against the percentage the developer supplies. The supply of condos for sale in Tulum shows the price dispersion between zones clearly.

Cancún and Puerto Morelos (municipalities of Benito Juárez and Puerto Morelos)

Cancún is the most populous city in Quintana Roo and therefore the natural market for long-term leasing: families, professionals, airport and Hotel Zone staff sustain constant demand in the consolidated supermanzanas, in Residencial Cumbres, along the Avenida Huayacán corridor and in Puerto Cancún. Vacation rental in condos concentrates in the Hotel Zone, Puerto Cancún and Puerto Juárez, in direct competition with an enormous hotel inventory.

Puerto Morelos, halfway between the two, is a smaller and quieter market with family and diving-oriented vacation demand and residential demand from people who work in Cancún but prefer a coastal village. Investors who want Cancun real estate exposure with less hotel competition often look here first.

Puerto Aventuras and Akumal

Both are niche markets. Puerto Aventuras, with its marina and gated-community character inside the municipality of Solidaridad, attracts longer-stay vacation rental and long-term rental from foreign residents. Akumal, in the municipality of Tulum, is essentially a vacation market and very sensitive to beach quality and sargassum. In neither of them should you assume urban occupancy levels.

The assumptions that decide everything: occupancy, ADR and seasonality

Vacation-rental profitability is the product of two numbers — nights sold and average rate — minus costs. Everything else is detail. That is why the investor’s first discipline is refusing to accept either number without evidence.

How to estimate occupancy and ADR without inventing them

Occupancy is the percentage of nights in the year actually sold; ADR (average daily rate) is the revenue per night sold, after discounts and promotions but before commissions. Their product, divided by available nights, is RevPAR, and it is the metric that really matters: how much the condo earns per available night, occupied or not.

To estimate them honestly, follow four steps. First, identify between ten and twenty comparable listings in the same zone and of the same type (bedrooms, amenities, distance to the beach) and record their seasonal rates and their calendars over several weeks; blocked calendars are an imperfect but useful proxy for occupancy. Second, ask the manager to show you real, anonymised statements from similar units, including good and bad months; a serious manager has them. Third, deduct from the observed ADR the long-stay discounts and the months in which the unit will be rented below rate simply to fill the calendar. Fourth, apply a stabilisation penalty: a new unit with no reviews does not sell like an established one during its first months.

What you must never do is take the destination-wide average occupancy published by the hotel industry and apply it to your condo. Hotels have sales forces, wholesale channels and rate structures that a single apartment cannot replicate.

There is a second discipline worth adopting, familiar to anyone who has underwritten rental property in the US or the UK: write your assumptions down before you see the developer’s numbers. If you decide in advance that 58 % occupancy at a given rate is what your evidence supports, you are far less likely to be talked into 78 % by a projection that arrives on glossy paper with a pool render attached.

Seasonality in the Mexican Caribbean

High season on the Riviera Maya coincides with winter in the United States and Canada: from mid-December through Easter, with peaks at Christmas, New Year and spring break. Summer brings domestic Mexican and European travellers in July and August. September and October are, year after year, the weakest months, and November is transitional.

A serious model does not use a flat annual occupancy. It builds twelve months with different occupancy and different rates and adds them up. That curve reveals something the average hides: the condo that bills beautifully in January can sit empty for three straight weeks in September while the condominium fee, the base electricity charge and the internet bill keep coming.

British readers should note one extra wrinkle: UK school holidays and the European summer peak fall in July and August, which are shoulder months here rather than the true peak. A unit whose owner blocks Christmas and New Year for personal use is, in effect, removing the two highest-value weeks of the year from the model. If you intend to use the condo yourself, model that use as lost revenue at high-season rates, not as a free perk.

Sargassum and hurricanes as business variables

Sargassum landfall is a recurring phenomenon on the Quintana Roo coast. The Mexican Navy (Secretaría de Marina, SEMAR), which coordinates the annual response strategy with the state government, the municipalities and the private sector, places the arrival cycle between April and October and addresses it with containment barriers, sargassum-collecting vessels and beach collection. For the investor this is not an environmental debate but a revenue variable: in a heavy year, condos that sell “the beach” in their listing suffer cancellations and pressure on rates, while those that sell cenotes, jungle, a pool or urban life feel it far less.

The Atlantic hurricane season runs from June to November and overlaps the low season. Direct risk — physical damage — is managed with insurance and your own reserve fund. Indirect risk — a week of closed airport and mass cancellations — is managed by penalising the expected occupancy of those months in the model and by not assuming that a normal year is an average year.

Operating costs: what the brochure does not show

Gross income sells condos; net income makes them profitable. These are the line items that most frequently go missing or arrive understated in the projections circulating on the Riviera Maya.

Management and platform commissions

In vacation rental, a professional manager normally charges a percentage of gross income, to which cleaning fees, arrival-handling charges or minor-maintenance charges are added depending on the contract. Platforms charge their own commissions as well — to the host, to the guest, or to both — and the structure chosen changes both the price the guest sees and the amount you receive. Ask for the full management agreement, not a summary, and model your rate as “net of platform”.

In long-term rental, management is usually a placement fee — often equivalent to one month’s rent — plus, if contracted, a small monthly fee for collection and tenant handling. The Quintana Roo real estate services law (Ley de Prestación de Servicios Inmobiliarios del Estado de Quintana Roo) regulates those who provide brokerage and property management services and provides for their registration with the state authority; confirming that your manager complies with it is a cheap and minimal piece of due diligence.

Condominium fees and the reserve fund

Riviera Maya condos live under a condominium regime. The maintenance fee pays for security, the pool, elevators, landscaping, common-area water and administration; the reserve fund pays for the extraordinary. In buildings with resort-grade amenities the fee can be the largest fixed cost of the year, and it is payable whether the unit is occupied or empty.

Two practical warnings. First: pre-construction fee quotes tend to rise once the building enters real operation and the budget meets actual costs. Second: a building with a high proportion of vacation-rental units wears its common areas faster and tends to end up with higher fees or with special assessments (derramas). The guide on the condominium regime and maintenance fees in Playa del Carmen explains which documents to request and how to read a condominium budget.

For US buyers the mental model is close to an HOA, and for UK buyers close to a service charge on a leasehold flat, but with one important difference: Mexican condominium budgets are frequently set annually by an owners’ assembly with wide discretion and, in newer buildings, without a long track record to extrapolate from. Ask for three years of budgets and actuals where they exist, and for the delinquency rate of the building. A building where 20 % of owners do not pay is a building where your fee will rise to cover them.

Electricity and air conditioning

In Quintana Roo, air conditioning is the dominant variable cost. The Comisión Federal de Electricidad (CFE) applies subsidised domestic tariffs by consumption band and, when average consumption exceeds the limit for the applicable tariff, reclassifies the service to the High Consumption Domestic Tariff (Tarifa Doméstica de Alto Consumo, or DAC), which carries no subsidy and is markedly more expensive. A vacation condo with guests who leave the AC running all day falls into DAC easily, and the owner pays the bill. In long-term rental the tenant pays it, which explains a large part of the structural difference between the two models.

Measures that actually work: inverter units, thermostats with limits, occupancy sensors, sealed windows, and an energy-use policy in the unit’s house rules where the platform allows it.

Cleaning, laundry, consumables and replacement

Every vacation turnover costs money: cleaning, linen laundry, bathroom amenities, coffee, water, and the wear no guest ever replaces — mattresses, sofas, tableware, televisions, electronic locks. A prudent model sets aside a percentage of the furniture value each year for replacement and assumes the full package is renewed on a cycle. That furniture, moreover, is invested capital that an unfurnished long-term lease does not require.

Insurance, predial, water and internet

The predial (annual municipal property tax) is levied by the municipality, generally with a discount for early payment in the first months of the year; it is a moderate but real cost. Water in Solidaridad is supplied by a concession holder and billed by consumption. Quality internet is indispensable in both models, and in the vacation model the owner pays for it. Insurance should cover damage to the property, contents and third-party liability, and you should declare the lodging use to the insurer to avoid exclusions when you claim.

That last point is worth underlining for foreign owners, because it is where home-country intuition misleads most often. A policy written for an owner-occupied second home may not respond to a claim arising from paying guests. Declare the use in writing, keep the confirmation, and re-confirm at each renewal if you change from long-term to nightly operation.

Vacancy, arrears and wear in long-term leasing

Long-term rental has its own quiet costs: the month or two of vacancy between tenants, paint and repairs at changeover, the risk of arrears, and the cost of an eviction proceeding if the relationship breaks down. These are mitigated with rigorous screening, adequate guarantees, a well-drafted contract and, where the profile justifies it, a rental legal-protection policy (póliza jurídica). The guide on renting an apartment in Playa del Carmen describes the process from the tenant’s side, which helps you understand what the local market demands.

Taxation: ISR, IVA, platform withholdings and the RFC

Here lies the least visible and most expensive difference between the two models. What follows is general information based on current federal legislation; how it applies to your specific case must be determined by a contador público (licensed public accountant), because it depends on your tax residence, your ownership structure and the size of the income.

Mexican tax resident individual: leasing or business activity

The Ley del Impuesto sobre la Renta (income tax law) devotes Chapter III of Title IV (articles 114 to 118) to income earned by individuals from granting the temporary use or enjoyment of real estate. It allows the deduction of actual property expenses — predial, maintenance, real interest on loans, insurance premiums, wages, investment in construction — or, alternatively, the election of a blind deduction with no receipts equal to 35 % of income plus the predial paid (article 115). Provisional payments are monthly, with a quarterly option when monthly rents do not exceed the threshold set by the law itself (article 116); if the tenant is a legal entity, it withholds 10 % of income tax on the rent.

When the owner provides lodging with services — cleaning during the stay, linens, reception, amenities — the authority may consider that the owner is carrying out a business activity rather than simple leasing, with a different regime of deductions and obligations. In addition, the law provides for the Simplified Trust Regime (Régimen Simplificado de Confianza) for individuals with annual income not exceeding 3.5 million pesos (article 113-E), which applies reduced rates to gross income without deductions, including rental income; its compatibility with income obtained through platforms is subject to specific rules you must review with your accountant. Choosing the regime is a first-order tax decision that has to be made before you rent the first night.

Digital platform withholdings

Since 2020, the Ley del ISR (articles 113-A to 113-D) and the Ley del IVA (articles 18-B to 18-M) have required technology platforms that intermediate lodging services to withhold taxes from the individuals providing them. The current parameters are:

Item	With RFC provided to the platform	Without RFC
Income tax (ISR) withheld on lodging income (excluding VAT)	4 %	20 %
VAT (IVA) withheld on the tax charged (16 %)	50 %, i.e. 8 points	100 %, i.e. all 16 points
Nature of the withholding	Creditable provisional payment, or optional final payment	Final payment

The option to treat the withholdings as final payments exists for those whose only income comes from platforms — or additionally from wages and interest — without exceeding 300,000 pesos per year (article 113-B), and it is elected by filing a notice with the SAT. Whoever takes it waives the right to deduct expenses, which rarely suits a condo with high fees, management costs and electricity bills; whoever does not take it credits the withholdings against provisional payments and reports deductions. In either case the host needs to register for an RFC (Registro Federal de Contribuyentes, the Mexican tax ID), obtain an e.firma (advanced electronic signature) and issue electronic invoices, and anyone not electing the final-payment option must also keep accounting records and file returns. Operating “without registering” is not merely an infraction: it costs money every single month through the 20 % withholding.

VAT deserves a note of its own. Lodging is taxed at 16 %, and the exemption in article 20, fraction II of the Ley del IVA for residential housing does not apply to furnished properties or to those used for lodging. In other words, a furnished condo let long-term may also trigger VAT, whereas the same condo unfurnished and used as housing is exempt. That is one of the reasons the tax treatment of hybrid models has to be studied with care.

For an American reader there is a further layer this guide does not model: Mexican tax paid on Mexican-source rental income generally interacts with your home-country return through the foreign tax credit machinery, and rental property abroad carries its own reporting obligations at home. Canadians and Britons face analogous, but not identical, rules. Coordinate a Mexican contador with your accountant at home before the first booking, not at filing season.

Non-residents and the fideicomiso

If the owner is not a Mexican tax resident, article 158 of the Ley del ISR taxes income from granting the temporary use or enjoyment of real estate located in Mexico at 25 % of the income obtained, with no deductions whatsoever. The withholding is made by the payer when the payer is a Mexican resident; in other cases the taxpayer must remit the tax directly. The double-taxation treaties Mexico has signed may allow that tax to be credited in the country of residence, but they do not eliminate the Mexican obligation.

The fideicomiso — the bank trust that is the standard ownership vehicle for foreigners in the coastal restricted zone — does not change this conclusion: the beneficiary is the one who receives the benefits of the property and the one who pays tax; the trustee bank does not compute or pay income taxes for you. Many foreign owners choose to register for an RFC as residents with an establishment in Mexico, or analyse with their accountant whether their immigration and tax situation allows them to file as residents, with deductions. The details of the structure are covered in the guide on the fideicomiso bank trust for foreign buyers.

The practical significance of the 25 % gross rate is easy to miss. On a long-term lease with modest costs it is painful but survivable. On a vacation rental where management alone consumes a quarter of gross income and utilities another tenth, a 25 % gross tax with no deductions can convert a respectable net operating margin into something close to nothing. This single article is, for many non-resident owners, the strongest argument for getting the structure and the tax registration right before the first night is sold.

Mexican corporation

Where the investment covers several units or the purpose is clearly commercial, some investors acquire through a Mexican corporation with a foreigner-admission clause. The company is taxed as a legal entity at the corporate rate on its profit, deducts expenses and investments, and generates a second layer of taxation when it distributes dividends. It carries fixed costs of incorporation, accounting and compliance that are only justified above a certain volume. The comparison between that route and the fideicomiso is developed in the guide on the restricted zone and Mexican corporations.

The Quintana Roo lodging tax

On top of federal taxes, the state levies its own tax on the provision of lodging services, governed by the Ley del Impuesto al Hospedaje del Estado de Quintana Roo and administered by the state tax authority (Servicio de Administración Tributaria del Estado, SATQ). The law reaches lodging contracted through digital platforms and provides that, when the platform or another intermediary takes part in collecting payment, it must withhold and remit the tax on the provider’s behalf and issue a withholding certificate within the short deadline the law itself sets, in the format authorised by SATQ. The law was amended in December 2024 and again in December 2025; tax-firm analyses of the 2026 fiscal package report a general rate of 5 % and a rate of 6 % for lodging contracted through digital platforms. Confirm the applicable rate, the tax base and the registration obligations in the current legal text published by the state Congress and directly with SATQ before you set your rates, because this tax has been amended in nearly every recent year.

The tax is paid by the guest as part of the price, but responsibility for it being correctly triggered, withheld and remitted rests with the provider. When the host collects outside the platform — direct bookings, repeat guests — the host must remit it personally.

Anti-money-laundering rules

The federal anti-money-laundering law (Ley Federal para la Prevención e Identificación de Operaciones con Recursos de Procedencia Ilícita) treats the leasing of real estate as a vulnerable activity when the monthly rent reaches the threshold expressed in UMA set out in its article 17, fraction XV, and then requires identification of the tenant and, above a second threshold, the filing of notices. The threshold is high and only reached by rents at the very top of the market, but in luxury long-term leases in Playacar, Puerto Cancún or Aldea Zama your adviser should verify the current threshold and, where applicable, comply with the identification and reporting duties.

Local regulation: condominium, tourism registry and municipalities

Vacation-rental operations do not depend on the SAT alone. Three local layers can restrict or prohibit them, and all three are reviewed before you buy, not after.

The condominium bylaws

The Quintana Roo condominium property law (Ley de Propiedad en Condominio de Inmuebles del Estado de Quintana Roo) recognises the right of a condominium owner to lease their unit, but subjects its use to the purpose set out in the escritura constitutiva that creates the regime and to the rules in the bylaws. If the deed fixes a strictly residential purpose, or if the bylaws restrict short stays, the owners’ assembly can sanction vacation-rental operations. Before you list, request the escritura constitutiva, the current bylaws and the minutes of the most recent assemblies: that is where you see whether the building is genuinely “Airbnb friendly” or only in the seller’s pitch. And watch the trend: a building that is tolerant today can vote in a restriction tomorrow if day-to-day coexistence deteriorates.

This is the risk foreign buyers most consistently underrate, because in many US and UK markets short-term-rental restrictions arrive from the city, and here they arrive from the neighbours as well. A vote you did not attend, in a language you do not read fluently, in a building where most owners live full time, can end your business model without any change in the law. Read the minutes for the tone of the debate, not only for the resolutions already passed.

RETUR-Q and state regulation of platforms

The Ley General de Turismo provides for the National Tourism Registry, a public catalogue of tourism service providers with mandatory enrolment (arts. 46 to 49), and the states operate their own registries coordinated with it. In Quintana Roo that registry is the State Tourism Registry (Registro Estatal de Turismo, RETUR-Q), run by the state tourism ministry (SEDETUR), where tourism service providers, including lodging providers, are enrolled. The state government has publicly stated its intention to regulate lodging offered through digital platforms, link it to the provider registry and thereby reinforce security and crime-prevention controls. In the recent public debate, state and municipal authorities and the hotel sector — with particular insistence in Tulum — have proposed uniform criteria so that each municipality can define where and under what conditions platform lodging may operate, with a level playing field of obligations relative to hotels. For the investor this means two things: confirm with SEDETUR whether your operation qualifies as a tourism service and, if so, register and keep the registration current; and do not assume that today’s regulation will be tomorrow’s.

Municipal licences and land use

The municipalities — Solidaridad, Tulum, Benito Juárez, Puerto Morelos — control land use, operating licences, civil protection and waste collection. The land use assigned to the plot and to the development must permit the use you plan; in tourism-oriented developments the deed usually provides for it, but in ordinary residential buildings it is worth verifying with the relevant urban development office. Municipal rules in this area evolve quickly, and your local adviser should confirm the position in force at the time of purchase.

A worked comparison (illustrative, not a forecast)

What follows is an illustrative example built on round assumptions, declared one by one, to demonstrate the method. No figure comes from a real market and none should be used as a reference for prices or returns; replace them with your own, obtained as explained above.

Shared assumptions

A one-bedroom condo in a Riviera Maya development with a pool, purchase price of 200,000 US dollars, acquisition costs already paid and excluded from the analysis, condominium fee of 200 dollars per month, predial of 250 dollars per year, no mortgage. The analysis is before income tax, because tax depends on each investor’s regime and residence; lodging VAT is treated as charged to the guest and excluded.

Vacation-rental scenario

Complete furniture and equipment package: an additional 15,000 dollars, so total invested capital is 215,000. ADR net of platform commissions: 110 dollars. Annual occupancy: 60 %, that is 219 nights. Management: 25 % of gross income. Cleaning not covered by the guest: 1,200 dollars per year. Consumables and replacement: 800. Electricity, water, gas and internet: 2,400. Insurance: 400. Maintenance and repairs: 1,000.

Long-term rental scenario

Unfurnished condo, invested capital 200,000. Monthly rent: 1,100 dollars. Vacancy: one month per year. Placement commission: one month’s rent. Insurance: 300. Maintenance and repainting at tenant changeover: 600. Utilities: paid by the tenant.

The comparison

Item (US dollars per year)	Vacation rental (60 % occupancy)	Long-term rental
Gross income	24,090 (219 nights × 110)	13,200 (12 × 1,100)
Vacancy	included in occupancy	−1,100
Management / placement	−6,023	−1,100
Cleaning, consumables and replacement	−2,000	0
Utilities (electricity, water, internet)	−2,400	0 (tenant)
Condominium fees	−2,400	−2,400
Predial and insurance	−650	−550
Maintenance	−1,000	−600
Net operating income	9,617	7,450
Invested capital	215,000	200,000
Net operating return	4.5 %	3.7 %

On these assumptions the vacation model produces roughly 2,200 dollars more per year, an additional 0.8 % of return on capital, in exchange for 15,000 dollars more invested, a daily operation, more complex taxation and total exposure to the season.

Sensitivity: the number that matters

Drop occupancy to 45 % — 164 nights — while holding ADR constant. Gross income falls to 18,040 dollars, management to 4,510, cleaning to around 900, and the rest of the costs stay fixed. Net operating income lands at roughly 5,400 dollars, about 2.5 % on 215,000: below the long-term lease. Raise the condominium fee to 300 dollars a month, which happens frequently once a building enters real operation, and both scenarios lose 1,200 dollars, but the vacation scenario feels it more because its margin is already thinner. Add a heavy sargassum year or a hurricane that closes the airport for a week in high season, and the gap inverts decisively.

The lesson of the example is not that one model wins; it is that vacation rental requires getting occupancy right within a narrow margin of error, while long-term leasing tolerates larger mistakes. An investor who cannot verify occupancy with their own evidence should default to the prudent scenario.

What the example does not capture

It leaves out income tax, which can weigh more heavily on the vacation model because of the 4 % withholding on gross or, if the owner is a non-resident without a structure, the 25 % with no deductions. It leaves out the state lodging tax and the platform charges the guest does not absorb. It leaves out the value of the owner’s time and the risk of condominium or regulatory sanctions. And it leaves out capital appreciation, which on the Riviera Maya has historically been a central part of the investment thesis but which nobody can guarantee and which this guide does not quantify.

It also leaves out currency. An owner earning pesos and spending dollars or pounds at home carries an exchange-rate exposure that no occupancy assumption addresses. Rates on international platforms are often set in dollars while condominium fees, predial and repairs are paid in pesos; the mismatch can help you or hurt you, and it belongs in the risk column rather than in the yield column.

How to think about the risk of each model

Comparing average returns without comparing volatility is a beginner’s mistake. Vacation rental has a potentially higher expected return and a far wider dispersion: excellent years of strong demand alongside years of sargassum, oversupply or travel disruption. Long-term rental has a lower return with a dispersion bounded by the contract.

Three questions help you decide. Do you depend on this income to pay for something — a loan, a mortgage at home, your living budget? If so, stability is worth more than the average. Can you supervise the operation, even remotely, with monthly metrics, or are you blindly dependent on a third party? If you are dependent, the vacation model will charge you for that blindness. How much new supply is under construction within a kilometre of your unit? In Tulum and in parts of Playa del Carmen the answer is usually “a great deal”, and new supply competes for the same nights.

Concentration risk counts as well. A building where most units are dedicated to vacation rental has fewer permanent residents, more turnover, more wear and, frequently, more conflict in the assembly; it is a building whose resale value depends on the vacation model remaining viable. Diversifying across models or across zones is as legitimate here as in any other portfolio.

There is a final, less quantifiable risk worth naming: distance. Managing a nightly operation from Toronto, Dallas or Manchester means that every small failure — an AC unit that dies on a Saturday, a lock that stops responding, a cleaner who does not show — is resolved by someone whose incentives are not identical to yours. The models that survive that distance well are the ones with fewer moving parts per year. That is not an argument against the vacation model; it is an argument for choosing the model that matches the supervision you can genuinely provide.

The exit: appreciation, resale and taxes on sale

No rental model is fully evaluated without thinking about the eventual sale. A condo with a documented long-term rental history and a paying tenant sells to another investor with a demonstrable cash flow, or to an end user who values that the unit was not run as a hotel. A vacation condo with reviews, a full calendar and orderly statements sells to another operator at a premium for the going concern; without that record, it sells like any other furnished apartment.

On sale, the owner faces income tax on the gain, computed on the profit with cost indexation and deductions, plus obligations before the notario público (the civil-law notary who authorises real estate transfers). The exemption for the sale of a principal residence requires, among other conditions, proving that the property was the seller’s home, a condition a condo operated on platforms will struggle to meet. The details, including the treatment of non-residents and the local taxes that apply to the transaction, are set out in the guide on taxes when selling property in Mexico. Model the exit with those costs and you will see that total investment return depends as much on after-tax appreciation as on annual rental income.

One structural point deserves emphasis for foreign sellers. The buyer pool for a heavily vacation-oriented building is narrower than the pool for a well-located unit that works for a resident too. Narrower pools mean longer marketing times and weaker negotiating positions, particularly if the regulatory environment tightens between the day you buy and the day you sell. Liquidity is part of the return, even though it never appears in a yield table.

Decision checklist before buying to rent

Work through this list with the specific condo you are evaluating, not in the abstract.

1. Zone and product: who is the natural guest or tenant for this unit, and how many comparable units compete for them within one kilometre?
2. Escritura constitutiva and condominium bylaws: do the stated purpose and the rules permit short stays? What have recent assemblies voted on?
3. Fees and reserve fund: current budget, history of increases, delinquency in the building and the state of the reserve fund.
4. Evidence of occupancy and ADR: comparables observed over several weeks, real statements from similar units, a stabilisation penalty.
5. Monthly curve: twelve months with different occupancy and rates, with September and October penalised and with a sargassum scenario.
6. Full costs: the complete management agreement, the electricity tariff and DAC risk, insurance with the lodging use declared, furniture replacement.
7. Tax structure: tax residence, ISR regime, RFC and e.firma, VAT treatment, the state lodging tax and RETUR-Q, all reviewed with an accountant before the first listing.
8. Ownership structure: fideicomiso, Mexican corporation or direct deed, decided according to the number of units and the purpose of the investment.
9. Prudent scenario: net return with low occupancy and a high fee. If that scenario does not work for you, the average will not rescue it.
10. Exit: how this unit will be sold in five or ten years, and with what tax burden.

If after working through the list you are still undecided between the two models, the signal is clear: buy a unit that works reasonably well in both — walkable location, a building with flexible bylaws, a moderate fee, a layout a resident would like — and choose the model with the market in front of you rather than with the brochure. You can explore properties for sale across the Riviera Maya with that mental filter and ask an adviser for the condominium and tax documents of each candidate before falling in love with the view.

Frequently asked questions

Which makes more money, a vacation rental or a long-term rental?

It depends on actual occupancy and actual rates, not advertised ones. In this guide’s illustrative example, on prudent assumptions, the vacation rental produces a somewhat higher net operating income at the cost of more capital, more work and more volatility; at low occupancy, the long-term lease beats it. Your own model, with documented assumptions, is the only valid answer.

How much does the platform withhold?

With an RFC provided, 4 % income tax on lodging income and 50 % of the VAT charged, that is 8 of the 16 points (Ley del ISR, art. 113-A; Ley del IVA, art. 18-J). Without an RFC, 20 % income tax and 100 % of the VAT. The withholding is a creditable provisional payment or, in certain low-income cases, final by election.

I am a foreigner and bought through a fideicomiso — can I rent?

Yes, and you must pay Mexican tax on that rental income. If you are not a Mexican tax resident, the Ley del ISR taxes gross rental income from Mexican real estate at 25 % with no deductions (art. 158), without prejudice to what your tax treaty may allow you to credit at home. Check with an accountant whether a different structure suits you before you publish.

Can the condominium prohibit vacation rentals?

It can restrict or prohibit them if the escritura constitutiva fixes a strictly residential purpose or if the bylaws restrict short stays, under the Quintana Roo condominium property law. Review both documents and the assembly minutes before you buy.

What is RETUR-Q?

The Quintana Roo State Tourism Registry, run by SEDETUR, where the state’s tourism service providers are enrolled and which is coordinated with the National Tourism Registry created by the Ley General de Turismo. The state government has stated its intention to regulate lodging offered through digital platforms and to require registration of those who provide it; if you operate a vacation rental, confirm with SEDETUR whether your activity qualifies as a tourism service, what the current requirements are and how to keep the registration current.

How do sargassum and hurricanes affect returns?

As seasonal variables. According to the Mexican Navy, sargassum landfall concentrates between April and October and depresses the rate and occupancy of units that sell the beach; hurricane season runs June to November and overlaps the low season. Penalise those months in your model, keep your own reserve fund, and confirm that your insurance covers damage and third-party liability with the lodging use declared.