How to Read a Rental Pro Forma Before You Buy an Investment Condo

A glossy sales brochure showing "12% projected annual return" is not the same thing as a rental pro forma you can trust. Developers and sales teams have every incentive to make the numbers look good, so learning to read — and stress-test — a pro forma is one of the highest-value skills you can bring into a Riviera Maya property purchase.

What a Pro Forma Should Actually Contain

A legitimate rental pro forma breaks the numbers down step by step rather than jumping straight to a headline yield. At minimum, it should separate:

• Gross rental revenue — projected nightly rate multiplied by projected occupancy
• Vacancy assumption — the percentage of nights the unit is expected to sit empty
• Operating expenses — HOA/maintenance fees, property management commission, cleaning, utilities, insurance, and the annual property tax (predial)
• Net operating income (NOI) — what's left after expenses, before financing or purchase costs
• Net yield — NOI divided by your total acquisition cost, including closing costs

If a pro forma skips straight from "average nightly rate" to "annual return" without showing vacancy and expenses in between, treat the headline number as marketing, not analysis.

A Worked Example

Here's how a realistic pro forma might look for a one-bedroom condo in Playa del Carmen purchased for $220,000 USD, all-in with closing costs:

Region-wide, gross short-term rental yields in the Riviera Maya commonly land in the 7-11% range, with net yields after all expenses more typically in the 4-7% range — so a pro forma landing outside that band deserves extra scrutiny in either direction.

Always ask what occupancy assumption underlies the projected revenue. Region-wide average occupancy runs closer to 47%, with Playa del Carmen typically stronger than Tulum, which has seen faster new-supply growth. A pro forma assuming 70%+ occupancy year-round is describing a best case, not a base case.

Red Flags to Watch For

• No vacancy factor at all — assumes the unit books every single night of the year
• Peak-season rates applied year-round — using December-April pricing to project every month
• Missing HOA/maintenance fees — especially common in new developments still finalizing their fee schedule
• No allowance for the local lodging tax and RETUR-Q registration costs — recently introduced compliance obligations that a stale or generic pro forma may not reflect
• Currency assumptions buried in fine print — check whether figures are in USD or pesos, and at what exchange rate

Building Your Own Sanity Check

Rather than relying solely on a developer's or agent's pro forma, request or independently pull occupancy and average daily rate data for comparable buildings in the same neighborhood. A property manager with existing units nearby can usually share real performance data, which is a far more reliable baseline than a projection built before the building even opened.

A Simple Checklist Before You Trust the Numbers

• Does the projection show gross revenue, vacancy, and expenses as separate lines?
• Is the occupancy assumption realistic for the specific submarket (Tulum vs. Playa del Carmen vs. Puerto Aventuras)?
• Are HOA fees, predial, insurance, and management commission all included?
• Does the projection account for the state lodging tax and RETUR-Q compliance costs?
• Is the net yield in the 4-7% range typical for this market, or is it an outlier that needs explaining?

Stress-Testing the Numbers

A pro forma built around a single set of assumptions tells you what happens in one scenario. A more useful exercise is running the same model through a best case, a base case, and a worst case, adjusting occupancy and ADR in each:

If the worst-case scenario leaves you unable to cover HOA fees, predial, insurance, and a basic maintenance reserve, that's a meaningful signal the purchase price is too aggressive relative to realistic performance — regardless of how attractive the base-case or best-case numbers look on paper.

Run your worst-case scenario using the lowest three months of comparable occupancy data you can find for the specific submarket, not a generic annual average. If the property still breaks even there, the rest of the year is genuine upside.

FAQ

Q: Should I trust a developer's pro forma at all?

A: Use it as a starting point, then rebuild it yourself with your own occupancy and expense assumptions, ideally checked against real data from a local property manager.

Q: What net yield should I consider a "good" outcome in this market?

A: Net yields in the 4-7% range are typical for well-located, well-managed units. Anything significantly higher usually reflects an aggressive occupancy assumption rather than a realistic one.

Q: Does the pro forma need to account for currency risk?

A: If your income and expenses aren't in the same currency, yes — peso-denominated costs like HOA fees and predial can shift in USD terms as the exchange rate moves, and a thorough pro forma should note the exchange rate it's using.

A pro forma is only as good as the assumptions behind it, and Top Listings Riviera Maya can help you cross-check developer projections against real occupancy and expense data from comparable buildings — call +44 7513 075054 before you commit to a number on paper.