By definition, return on investment (ROI) is the ratio between your net profit over a period and what you paid for the investment in the first place. Buyers ask us all the time to find them “good rental income properties with a high ROI.” It’s the right question to ask — so let’s walk through what you can realistically expect in our corner of Costa Rica.
Why Properties Near the Beach Are the Money Makers
In our area, a property is considered “close to the beach” when it sits within about 200 meters (600 feet) of the sand — or right on it. These properties are in high demand with buyers for a simple reason: they’re easy to rent to the tourists who visit for a week or two, and they’re a pleasure for owners who come down a few weeks each year. They are money makers, plain and simple.
Ocean views push demand even higher. View properties rent faster and command a higher weekly rate, because a beachfront setting with an ocean view is exactly what most vacationers picture when they book Costa Rica. Close to the beach plus an ocean view is the #1 request we hear.
A Simple Rule of Thumb for Rental Income
A well-maintained, comfortable property that’s advertised with good photos should rent an average of about 25 weeks per year. The easy way to budget your expected gross annual rental income is to multiply the property’s value (or asking price) by 10% to 12%. A $400,000 condo, for example, should bring in roughly $40,000 to $48,000 in gross income per year. It can be more and it can be less, but the rental history of the properties we’ve sold over the last five years has proven this a reliably accurate way to budget.
A few things can pull that percentage down: an asking price that’s high compared to the property’s real value, the owner using the unit during high season, poor photos, deferred maintenance, a rental rate priced above the competition, or weak guest reviews. It isn’t an exact science — but it’s a dependable starting point when you’re weighing a purchase.
What a Rental Property Costs to Run
The typical expenses for a rental income condo are: HOA fees (also called condo fees), property tax, luxury home tax on certain properties, income tax, electricity, cable, internet, phone, water, rental commissions, management fees, housekeeping, maintenance, optional insurance on interior contents, and some legal and accounting fees. A rental home carries the same list plus a few additions — pool maintenance, a gardener, and optionally an alarm system — though homes outside gated communities often pay no HOA fees at all.
As a rule, a little over half of your gross income goes to expenses, and the rest is your profit. Starting from a 10% gross return on the purchase price, that works out to a net ROI between 0% and 5%.
Here’s the part every investor should understand: the running costs of a $400,000 condo are almost the same as those of a $150,000 condo — but the income is much higher. Higher-end properties sit in better locations, offer better finishes, and belong to nicer complexes, so renters happily pay more to stay in them. Expenses stay nearly flat while income climbs, which is why, in general, higher-end properties deliver a higher ROI.
Three Real-World Budget Examples
Below are three rental budgets with projected income and expenses for properties in Playa Tamarindo, all professionally managed and rented by a local company. Every property is different, and plenty of factors influence both sides of the ledger — these examples exist to give a future investor an honest feel for the returns typically expected when buying in Playa Tamarindo. All amounts are in US dollars, before IVA.
Estimated Return on Investment for a $150,000 Property
Here’s what an owner can expect from a $150,000, 2-bedroom condo in Tamarindo — projected at 16 rental weeks per year.
| 2-Bedroom Condo, Playa Tamarindo — projection: 16 rental weeks | Amount (US$) |
|---|---|
| 10 weeks of high season (December through April) @ $1,100/week | $11,000.00 |
| 2 weeks of green season (June through August) @ $900/week | $1,800.00 |
| 2 weeks of rainy season (May through November) @ $700/week | $1,400.00 |
| 2 weeks of holidays (Christmas, New Year and Easter) @ $1,400/week | $2,800.00 |
| Annual income (paid by renters) | $17,000.00 |
| Commission collected by Airbnb/VRBO (3%) | $510.00 |
| Annual income (received by management company) | $16,490.00 |
| 20% commission on rental income (management company) | $3,298.00 |
| Annual income (received by owner) | $13,192.00 |
| Income tax (12.75% of rental income received by owner) | $1,681.98 |
| Sub-total profit | $11,510.02 |
| Property management fee ($100/month × 12) | $1,200.00 |
| Condo fees ($200/month × 12) | $2,400.00 |
| Insurance on interior contents | $300.00 |
| Cable ($25/month) | $300.00 |
| Internet ($40/month) | $480.00 |
| Phone ($10/month) | $120.00 |
| Water (average $50/month) | $600.00 |
| Electricity (16 rented weeks @ $50/week + 36 weeks @ $5/week) | $980.00 |
| Property taxes (0.25% × $150,000) | $375.00 |
| Luxury home tax | Not applicable |
| Housekeeping (once a week, $30/week × 52) | $1,560.00 |
| Extra cleaning charged to renter | $0.00 |
| Gardener / pool maintenance | Not applicable |
| Alarm system with armed response | Not applicable |
| General maintenance budget (sheets, towels, repairs, etc.) | $2,000.00 |
| Professional fees (attorney, certifications, etc.) | $500.00 |
| Annual accounting (end of fiscal year) | $200.00 |
| Annual corporate taxes (active corporation) | $200.00 |
| Annual expenses | $11,215.00 |
| Total net profit | $295.02 |
| Return on investment (on a $150,000 purchase) | 0.20% |
Estimated Return on Investment for a $425,000 Property
Here’s what an owner can expect from a $425,000, 2-bedroom condo in Tamarindo — projected at 26 rental weeks per year. Notice how the expenses barely move compared to the $150,000 condo, while the income more than doubles.
| 2-Bedroom Condo, Playa Tamarindo — projection: 26 rental weeks | Amount (US$) |
|---|---|
| 17 weeks of high season (December through April) @ $1,700/week | $28,900.00 |
| 4 weeks of green season (June through August) @ $1,400/week | $5,600.00 |
| 3 weeks of rainy season (May, through November) @ $1,200/week | $3,600.00 |
| 2 weeks of holidays (Christmas, New Year and Easter) @ $3,000/week | $6,000.00 |
| Annual income (paid by renters) | $44,100.00 |
| Commission collected by Airbnb/VRBO (3%) | $1,323.00 |
| Annual income (received by management company) | $42,777.00 |
| 20% commission on rental income (management company) | $8,555.40 |
| Annual income (received by owner) | $34,221.60 |
| Income tax (12.75% of rental income received by owner) | $4,363.25 |
| Sub-total profit | $29,858.35 |
| Property management fee ($100/month × 12) | $1,200.00 |
| Condo fees ($300/month × 12) | $3,600.00 |
| Insurance on interior contents | Optional |
| Cable ($25/month) | $300.00 |
| Internet ($40/month) | $480.00 |
| Phone ($10/month) | $120.00 |
| Water (average $50/month) | $600.00 |
| Electricity (26 rented weeks @ $75/week + 26 weeks @ $10/week) | $2,210.00 |
| Property taxes (0.25% × $425,000) | $1,085.00 |
| Luxury home tax (budget) | $400.00 |
| Housekeeping (once a week, $30/week × 52) | $1,560.00 |
| Extra cleaning charged to renter | $0.00 |
| Gardener / pool maintenance | Not applicable |
| Alarm system with armed response | Not applicable |
| General maintenance budget (sheets, towels, repairs, etc.) | $2,000.00 |
| Professional fees (attorney, certifications, etc.) | $500.00 |
| Annual accounting (end of fiscal year) | $200.00 |
| Annual corporate taxes (active corporation) | $200.00 |
| Annual expenses | $14,455.00 |
| Total net profit | $15,403.35 |
| Return on investment (on a $425,000 purchase) | 3.62% |
Estimated Return on Investment for a $800,000 Property
Here’s what an owner can expect from an $800,000, 4-bedroom home in Tamarindo — projected at 26 rental weeks per year. A larger home carries a few expenses a condo doesn’t (pool, gardener, alarm system), yet the weekly rates it commands push the return higher still.
| 4-Bedroom Home, Playa Tamarindo — projection: 26 rental weeks | Amount (US$) |
|---|---|
| 17 weeks of high season (December through April) @ $4,000/week | $68,000.00 |
| 4 weeks of green season (June through August) @ $3,000/week | $12,000.00 |
| 3 weeks of rainy season (May, through November) @ $2,000/week | $6,000.00 |
| 2 weeks of holidays (Christmas, New Year and Easter) @ $6,000/week | $12,000.00 |
| Annual income (paid by renters) | $98,000.00 |
| Commission collected by Airbnb/VRBO (3%) | $2,940.00 |
| Annual income (received by management company) | $95,060.00 |
| 20% commission on rental income (management company) | $19,012.00 |
| Annual income (received by owner) | $76,048.00 |
| Income tax (12.75% of rental income received by owner) | $9,696.12 |
| Sub-total profit | $66,351.88 |
| Property management fee ($115/month × 12) | $1,380.00 |
| Condo fees | Not applicable |
| Insurance | $1,600.00 |
| Cable ($25/month) | $300.00 |
| Internet ($40/month) | $480.00 |
| Phone ($10/month) | $120.00 |
| Water (average $200/month) | $2,400.00 |
| Electricity (26 rented weeks @ $150/week + 26 weeks @ $50/week) | $5,200.00 |
| Property taxes (0.25% × $800,000) | $2,000.00 |
| Luxury home tax (budget) | $800.00 |
| Housekeeping (once a week, $50/week × 52) | $2,600.00 |
| Extra cleaning charged to renter | $0.00 |
| Gardener / pool maintenance ($250/month × 12) | $3,000.00 |
| Alarm system with armed response, connected to central | $800.00 |
| General maintenance budget (sheets, towels, repairs, etc.) | $3,000.00 |
| Professional fees (attorney, certifications, etc.) | $500.00 |
| Annual accounting (end of fiscal year) | $200.00 |
| Annual corporate taxes (active corporation) | $200.00 |
| Annual expenses | $24,580.00 |
| Total net profit | $41,771.88 |
| Return on investment (on a $800,000 purchase) | 5.22% |
Let Us Build Your Personalized Budget
If you plan to buy your property with one of our RE/MAX agents, we will gladly prepare a personalized budget for each property you select after your tour. That way you’ll know what to expect before you commit, and you’ll make your choice with all the information in hand. Knowledge is the key to success — talk to an agent and we’ll run the numbers together.
A Word About These Numbers
The three budgets above are projections, not promises. Actual return on investment varies from property to property and year to year, influenced by many factors, including: location and proximity to the beach; ocean views; community amenities (pools, security, beach clubs); the property’s age, condition and finishes; the quality of the property management and marketing (photos, listings, response times); guest reviews and repeat bookings; nightly-rate competition in the area; seasonality and overall tourism trends; how many weeks the owner reserves for personal use; changes in HOA fees or special assessments; utility costs; insurance premiums; maintenance surprises and repairs; changes to Costa Rican taxes and regulations (including IVA and income-tax rules); exchange-rate movements; and financing costs if the purchase is not in cash. None of the figures on this page constitute a guarantee of income or expenses, and they should not be considered legal, tax or financial advice — they exist to help you build a realistic budget as you plan your purchase.