How to Estimate Rental Income on Your Costa Rica Property (2025 Guide)

Why Rental Income Estimates Often Go Wrong

For many foreign buyers, rental income is a key part of the decision to purchase property in Costa Rica. Whether the goal is to offset ownership costs, generate passive income, or maximize long-term returns, understanding rental potential is essential.

Yet this is where expectations often diverge from reality. Online calculators, optimistic projections, and anecdotal success stories can paint an overly rosy picture. In practice, rental income depends on a careful balance of location, seasonality, property type, and management quality.

Here is how experienced investors and property managers estimate rental income accurately in Costa Rica in 2025.

Step 1: Understand Your Rental Market Type

Before running numbers, define what kind of rental property you own or plan to buy.

Short-Term Vacation Rentals

• Airbnb and VRBO style rentals

• Strong in Guanacaste beach towns

• Higher nightly rates but seasonal demand

• Higher management and cleaning costs

  
  

Long-Term Rentals

• 6 to 12 month leases

• Lower monthly income

• Stable occupancy

• Lower management effort

• Often exempt from IVA tax

  
  

Your income strategy should match your property type and your tolerance for volatility.

Step 2: Know the Seasons in Costa Rica

Rental demand in Costa Rica is highly seasonal.

High Season

• Mid December to April

• July is often a mini high season

• Highest nightly rates and occupancy

  
  

Green Season

• May to November

• September and October are slowest

• Lower rates but still consistent demand in well-located properties

  
  

A realistic annual estimate blends both seasons rather than assuming year-round peak performance.

Step 3: Determine Realistic Nightly Rates

Nightly rates vary dramatically based on location and property quality.

Typical 2025 Nightly Rates in Guanacaste

• 1 bedroom condo near beach: $120–$180

• 2 bedroom condo: $160–$280

• 3 bedroom home with pool: $250–$450

• Luxury ocean-view villa: $600–$1,800+

  
  

Avoid using asking rates you see online. Instead:

• Look at recent booked rates, not advertised prices

• Compare similar properties in the same neighborhood

• Adjust for view, walkability, and amenities

  
  

Step 4: Apply Realistic Occupancy Rates

Occupancy is the most common overestimation error.

A healthy annual average in good locations:

• 55%–65% for well-managed vacation rentals

• 70%+ is exceptional and usually short-lived

• Luxury villas often have lower occupancy but higher nightly rates

  
  

Example:

• 60% occupancy = 219 booked nights per year

  
  

Step 5: Calculate Gross Annual Rental Income

Example scenario:

• Average nightly rate: $275

• Occupancy: 60% (219 nights)

  
  

Gross annual income:$275 × 219 = $60,225

This is the number many buyers stop at. The real work starts next.

Step 6: Subtract Operating Expenses

Common Annual Expenses

• Property management: 18%–25%

• Cleaning fees: $80–$200 per stay

• HOA fees: $2,500–$10,000+

• Utilities: $2,000–$6,000

• Maintenance and repairs: 1%–2% of property value

• Insurance: $800–$2,000

• Platform fees: 3%–5%

• IVA tax on short-term rentals: 13%

  
  

Example Expense Breakdown

From $60,225 gross income:

• Management (22%): $13,250

• Cleaning and turnover: $4,000

• HOA: $4,800

• Utilities: $3,200

• Maintenance: $6,000

• Insurance: $1,200

• Platform fees: $2,100

• IVA tax: $7,829

Total expenses: $42,379

Step 7: Net Rental Income

Net annual income:$60,225 – $42,379 = $17,846

This is your true rental income, before mortgage payments if applicable.

Step 8: Calculate ROI Correctly

If the property cost:

• Purchase price: $500,000

• Closing costs: $18,000

• Furniture and setup: $35,000

  
  

Total investment: $553,000

Net ROI:$17,846 ÷ $553,000 = 3.2% annual return

This does not include:

• Appreciation

• Personal use value

• Tax optimization

• Inflation hedge

  
  

Strong Costa Rica investments often blend moderate cash flow + long-term appreciation rather than relying on yield alone.

Step 9: Factors That Increase Rental Performance

• Walkable location to beach and restaurants

• Ocean view or sunset exposure

• Professional photography and staging

• Reliable property management

• Fast internet and backup power

• Pet-friendly policies

• Strong reviews and repeat guests

Small upgrades often outperform major renovations.

Step 10: Common Mistakes to Avoid

• Using peak season numbers year-round

• Ignoring IVA tax

• Underestimating maintenance in coastal climates

• Self-managing from abroad

• Buying based on projected income rather than proven comps

A conservative estimate protects your investment and your peace of mind.

Final Thoughts

Rental income in Costa Rica can be rewarding, but it is not automatic. Successful investors treat their properties as hospitality businesses, not passive assets.

When you use realistic rates, conservative occupancy, and full expense accounting, you gain clarity. That clarity allows you to choose the right property, the right location, and the right strategy for your goals.

For most owners, the true return is a combination of income, appreciation, and lifestyle value. When those align, Costa Rica real estate performs exceptionally well.