Oaxaca Rental Property Investment ROI Guide (2025)

Oaxaca's Tourism Boom: The Foundation for Rental Success

Record-Breaking Visitor Numbers

Oaxaca tourism statistics

2.9 million visitors January–June 2025
1.3 million tourists in 2023, generating 5.976 billion pesos
43,448 visitors during Guelaguetza festival
192 million pesos spent during festival weekend

Festival-Driven Demand

Multiple peak seasons drive premium pricing

Guelaguetza Festival (July)

• 133,363 visitors in July 2023 (peak month)
• 22,000+ attendees fill the auditorium
• 517 million pesos projected revenue (2025)
• 81% hotel occupancy during festival weeks

Day of the Dead (November)

• Second-highest tourism period
• International visitors seeking authentic celebrations
• Extended stays for cultural immersion
• Premium pricing opportunities

Year-Round Cultural Events

• 21+ major festivals through the year
• Mezcal festivals and artisan events
• Radish Festival (December)
• Religious celebrations maintain demand

Vacation Rental Market Performance Data

Airbnb Revenue Analysis (2024–2025)

Market Overview

Avg annual revenue: $8,000 USD (142,000 MXN)
Median occupancy: 45%
Average daily rate: $148 USD
Peak months: Feb & Dec
International guests: 27.78%

Property Type Performance

Entire homes/apartments: 52.5% of listings
Private rooms: 47.5% market share
Houses: 38% of property types
1-bedroom: 48% of market

Occupancy and Booking Patterns

Strong seasonality with defined peaks
271–366 days availability for 68.2% of listings
Avg capacity: 3.1 guests
Primary market: 2–4 guest properties (53.6%)

Investment ROI Analysis by Property Type

Premium Centro Histórico Properties

Colonial Mansions ($800K–$1.5M)

• Daily rates: $200–$400+ (festival periods higher)
• Annual occupancy: 50–65%
• Gross annual revenue: $40,000–$70,000
• Target market: Luxury cultural tourists

Boutique Apartments ($200K–$600K)

• Daily rates: $80–$200
• Annual occupancy: 45–60%
• Gross annual revenue: $15,000–$35,000
• Target market: Couples, digital nomads

Jalatlaco Artistic Properties

Art-Focused Properties ($300K–$800K)

Leveraging the neighborhood's "coolest" status

• Daily rates: $100–$250
• Annual occupancy: 40–55%
• Gross annual revenue: $20,000–$45,000
• USP: International recognition fuels demand

Family-Oriented San Felipe Properties

Large Houses with Gardens ($500K–$1.2M)

• Daily rates: $150–$350
• Annual occupancy: 35–50%
• Gross annual revenue: $25,000–$60,000
• Target market: Families, wellness travelers

Cost Analysis and Operating Expenses

Typical Operating Costs

Property Management

Professional management: 15–25% of revenue
Self-management: 5–10% for ops
Platforms: 3–5% booking fees

Utilities and Maintenance

• Electricity: $50–$150/mo
• Water: $20–$50/mo
• Internet: $30–$60/mo (fiber)
• Property taxes: 1–3% annually

Regulatory Considerations

Low regulation currently for STRs; only 6% licensed
Compliance: Local registration typically sufficient
Taxes: 16% VAT + income tax on profits

Net ROI Calculations

Mid-Range Investment: $400K Property

• Gross revenue: $25,000
• Operating expenses: $8,000 (32%)
• Net income: $17,000
• Cash-on-cash: 4.25%
• Total return (w/ appreciation): 8–12%

Premium Investment: $800K Property

• Gross revenue: $50,000
• Operating expenses: $15,000 (30%)
• Net income: $35,000
• Cash-on-cash: 4.38%
• Total return (w/ appreciation): 9–15%

Strategic Investment Locations

Best Neighborhoods for Vacation Rentals

Centro Histórico / Santo Domingo

• Highest rates; cultural proximity
• Year-round demand; walkability
• Challenge: festival noise, higher costs

Jalatlaco

• Growing popularity & authenticity
• Appeals to cultural/creative travelers
• Value upside vs. Centro

Xochimilco

• Emerging market; traditional feel
• Budget-friendly acquisition
• Growth potential

Revenue Optimization Strategies

Festival Season Management

• Dynamic pricing: +200–400% during peaks
• 3–7 night minimums
• Early booking incentives
• Package deals with local partners

Off-Season Tactics

• Monthly rentals for digital nomads
• Target domestic tourism
• Schedule maintenance low-demand months
• Create themed experiences

Guest Experience Enhancement

• Local guidebooks; insider tips
• Cultural connections: classes, workshops
• Concierge partnerships
• Authentic décor and art

Market Risks and Mitigation

Potential Challenges

• Regulatory changes; licensing potential
• Tax policy shifts on STRs
• Neighborhood restrictions
• Market saturation and platform dependency

Risk Mitigation Strategies

• Diversify platforms; build direct booking
• Flexible design for STR and long-term
• Local partnerships with managers/providers
• Ongoing market research and pricing intel

Long-Term Investment Outlook

Infrastructure Development

• Airport expansion; more US/MX flights
• Road improvements to coast/CDMX
• Fiber internet supports remote work

Cultural Recognition

• UNESCO World Heritage status
• Culinary capital of Mexico
• Authentic cultural immersion demand

Government Support

• Tourism promotion & infrastructure
• Community tourism programs
• Expanded cultural programming

Conclusion: Oaxaca's Rental Investment Opportunity

Strong fundamentals, cultural magnetism, and sustainable returns

Oaxaca vacation rental investment offers compelling opportunities backed by robust tourism growth and festival-driven demand. Success hinges on strategic location selection, peak season optimization, authentic guest experiences, and professional management.

For well-positioned properties with effective operations, 8–15% total returns (including appreciation) are achievable in 2025.

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Oaxaca Rental Property Investment: Complete ROI Guide for Vacation Rentals

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