Key terms and concepts to understand the real estate and investment market in Mexico.
A
ADR (Average Daily Rate)
Average vacation rental rate per night. Calculated by dividing total income by occupied nights.
Amenities
Shared facilities and services in a development: pool, gym, rooftop, security, coworking and more.
Appraisal (Avalúo)
Technical report that determines the commercial value of a property. Required by banks to grant credit and by notaries for title transfer.
Appreciation (Plusvalía)
Increase in property value over time. It depends on the zone, the construction stage and the market cycle: it is not a fixed or guaranteed rate.
B
Bridge Loan
Temporary financing to buy a property before selling another. Short terms of 6-12 months.Learn more →
Bank Trust (Fideicomiso)
Legal instrument allowing foreigners to "own" property in restricted zones of Mexico through a bank. Renews every 50 years.
C
Cap Rate (Capitalization Rate)
Annual net rental income divided by purchase price. What counts as a healthy Cap Rate depends on the zone, the property type and the cost of money at the time.Learn more →
Cash-on-Cash Return
Annual cash return on actual cash invested (down payment + closing costs), not considering appreciation.
D
DSCR (Debt Service Coverage Ratio)
Ratio measuring whether rental income covers mortgage payment. DSCR > 1.25 is ideal for bank qualification.
Down Payment (Enganche)
Initial payment when buying a property. The percentage depends on the financing type and the buyer profile; see /financiamiento for the conditions by profile.Learn more →
I
IRR (Internal Rate of Return)
Annualized return considering the time value of money. Includes appreciation, rental income, and costs over time.
N
NOI (Net Operating Income)
Gross rental income minus operating expenses (maintenance, management, insurance). Does not include mortgage payment.
O
Occupancy Rate
Percentage of nights a vacation property is rented. It varies by zone and by season; measured occupancy per zone is in the profitability map.
P
Pre-sale (Preventa)
Stage where units are sold before construction begins. The price is usually lower than ready-to-move-in in exchange for waiting and taking on construction risk; how much lower depends on each development.
Property Manager
Person or company managing a vacation rental: check-in/check-out, cleaning, maintenance. The usual fee is 20% of gross income, but it varies by operator and by the scope of the service.
R
Ready to Move In
Completed property ready to inhabit or rent, with no construction waiting period.
RevPAR (Revenue per Available Room)
Revenue per available night = ADR × Occupancy Rate. Key metric for comparing performance between properties or zones.
ROI (Return on Investment)
Total return (rental + appreciation) relative to amount invested, expressed as an annual percentage.Learn more →
Restricted Zone
Strip of 50 km from the coast and 100 km from Mexico's borders where foreigners need a trust (fideicomiso) to buy property.
T
Title Transfer (Escrituración)
Legal process of transferring property before a notary public. Costs include taxes, notary fees, and registration.Learn more →
Y
Yield
Annual rental income as a percentage of property value. Gross yield = gross rent, Net yield = after expenses.
Z
Zoho Pipeline
Commercial status of the development within the CRM. Defines whether the property is available, reserved, in process, or delivered.
