ROI Formula
ROI = (Annual Net Income / Total Investment) × 100%
Annual Income
- Rental Income: Daily rate × Occupied days, or Monthly rent × 12
- Property Appreciation: Typically 3%-5% per year
Annual Costs
- Mortgage Interest: Loan amount × Interest rate
- Property Tax: 0.5%-2% of property value (varies by country)
- HOA Fees: Monthly fee × 12
- Insurance: Property insurance premium
- Maintenance: 10% of rental income
- Management Fee: 15%-25% if using property manager
- Vacancy Loss: Assume 20% vacancy rate
- Platform Fees: Airbnb/Booking 3%-15%
Example: Phuket Condo
Property: ¥1M, Down payment: ¥300K, Annual rent: ¥80K, Annual costs: ¥55K, Net income: ¥25K, Cash ROI: 2.5%, +4% appreciation = 6.5% total return
Tips to Improve ROI
- Choose high-yield markets: Southeast Asia 5%-8%, Europe 3%-5%
- Short-term rental usually beats long-term
- Self-manage to save 15%-25% management fees
- Upgrade furnishing to increase daily rate 20%-30%
- Off-season promotions to reduce vacancy
Target: ROI below 4% is risky, 6%+ is good, but always consider risks.