It’s Not What You Buy, It’s How Much You Earn From It 💵🏡

How to calculate the return on an investment property? 📊💰

Are you buying a property… or a fantasy? 🤔

Many people think real estate investing is just about buying something pretty or in a trendy area. But the truth is: when it comes to investing, what matters isn’t what you buy—it’s what you earn from it.

💬 As I always tell my clients: “Don’t just buy a property. Buy an income-generating asset.”

And to know if what you’re buying will really generate income, you need to understand how to measure profitability.

What is ROI and how do you calculate it? 📈

Return on Investment (ROI) is the basic way to measure whether your property will bring in profit. Without this calculation, you're investing blind—and that can get expensive.

✅ Simple ROI formula:

ROI (%) = (Annual Net Profit / Total Investment) x 100

Let’s break it down:

• Net annual profit = Rental income – Expenses (maintenance, taxes, management)

• Total investment = Purchase price + closing costs + furniture (if needed)

📌 Real-world example:

You buy an apartment in Punta Cana for $150,000. You rent it on Airbnb for $2,500/month, and after expenses, you clear $1,800/month.

• Annual Net Profit: $1,800 × 12 = $21,600

• Total Investment: $160,000 (including fees and furnishing)

• ROI = (21,600 / 160,000) × 100 = 13.5% per year

📊 According to AirDNA, ROI in Dominican Republic tourist areas like Punta Cana ranges from 10% to 16% annually, depending on occupancy and property type【1】.

What makes a property truly profitable? 💡

Here are the traits of a property that earns well:

✅ High rental demand (tourist areas or key neighborhoods)

✅ Low operating and maintenance costs

✅ Tax exemptions through programs like CONFOTUR【2】

✅ Easy to manage (ideal for Airbnb or long-term tenants)

📌 Pro tip: Properties registered under CONFOTUR (Law 158-01) are exempt from property and transfer taxes for up to 15 years, which significantly boosts net ROI.

And if you buy pre-construction, you’re often buying at today’s price—before the market drives it higher.

⚠️ Common Mistakes When Calculating ROI

1. ❌ Forgetting to include ALL costs (maintenance, furnishing, admin fees)

2. ❌ Using gross income instead of net income

3. ❌ Assuming 100% occupancy (realistic Airbnb rates are 65–75%)

4. ❌ Ignoring future appreciation or depreciation

5. ❌ Underestimating management effort or cost

📌 That 15% ROI on paper can quickly turn into 5% in reality if you don’t calculate it carefully.

🧰 Helpful Tools to Get it Right:

• AirDNA.co – Real data on occupancy and rates for Airbnb

• ROI calculators – Online tools or a simple spreadsheet

• Expert advice – Having the right guide can save you thousands (I can help 😉)

Investor A vs. Investor B

Factor	Investor A (Bad ROI Estimate)	Investor B (Smart ROI Estimate)
Purchase Price	$160,000	$160,000
Estimated Rent	$3,000/month (no research)	$2,500/month (based on data)
Occupancy Assumption	90% (overestimated)	70% (realistic)
Real ROI	5–6%	13.5%

🔍 The difference? One invested based on emotion. The other ran the numbers.

What should you do now? 🚀

Before you buy a property, ask yourself:👉 Will this property earn more than it costs to maintain?

If you’re not sure—don’t guess. Let’s run the numbers together.

🎯 I’ll help you understand your options and make sure you’re investing smart.

📞 Gilberto del Orbe

📧 Email: gilberto@remax365.com

📲 WhatsApp: +1 (809) 705-6337

Sources:

【1】 AirDNA – “Dominican Republic Vacation Rental Performance Overview – 2024”

【2】 Dirección General de Impuestos Internos (DGII) – CONFOTUR Program: https://www.dgii.gov.do/servicios/serviciosDGII/confotur