The core formula is simple: net annual yield = (annual revenue − annual costs) ÷ property value. Revenue = average nightly rate × occupied nights. Costs = condo fees, property tax, cleaning, commissions and maintenance. The classic mistake is assuming 100% occupancy — use the area’s real occupancy.
The three metrics that matter
- Cap rate (net yield): net annual result ÷ property value. Lets you compare against any investment.
- ROI: return on total invested capital (price + renovation + furniture).
- Payback: how many years of accumulated results repay the investment.
A numeric example
Property at R$ 890,000; average nightly rate R$ 480; 68% occupancy (~20 nights/month) → revenue ≈ R$ 9,600/month. Costs (condo fees, tax, cleaning, commission) ≈ R$ 4,200. Result ≈ R$ 5,400/month, or R$ 64,800/year → cap rate ≈ 7.3% net per year, before property appreciation.
The mistakes that wreck the math
Ignoring vacancy and seasonality, forgetting management and furnishing costs, and — worst of all — not confirming the building allows short-term rentals. Projected yield on a building that bans operation is worth zero. Use the Investemporada calculator with real costs and verified building status.
Frequently asked questions
What is a good cap rate in Brazil?
Conventional letting typically nets around 4–6% a year; well-run short-term rentals in high-demand areas can beat that — but always validate with real data, not promises.
What occupancy should I project?
The real average for the area and building, not peak season. Between 55% and 70% is a common range in consolidated tourist areas.
Does furniture count in the calculation?
Yes, in ROI: add renovation and furnishing to invested capital. Leaving them out artificially inflates the return.