When you ask "What is the ROI on apartments in Panama?", you usually hear vague answers: "Between 5% and 8%."
This vagueness is dangerous. It leads investors to make bad decisions based on numbers they don't understand.
This guide teaches you how to calculate the REAL rental ROI in Panama: gross, net, zone by zone, and the expenses everyone forgets to count.
Gross ROI vs. Net ROI
Gross ROI = (Annual Rent) / (Purchase Price) x 100%
Example:
- Apartment bought for $150,000
- Rents for $850/month = $10,200/year
- Gross ROI: $10,200 / $150,000 = 6.8%
This is the number you'll hear most, but it's the LEAST important because it completely ignores expenses.
Net ROI = (Annual Rent - Annual Expenses) / (Purchase Price) x 100%
Using the same example:
- Annual rent: $10,200
- HOA fee: $300/month x 12 = $3,600
- Property tax: $150,000 x 0.7% = $1,050
- Insurance: 0.15% = $225
- Maintenance/repairs: 1.5% = $2,250
- Vacancy loss: 10% = $1,020
- Total expenses: $8,145
- Net ROI: ($10,200 - $8,145) / $150,000 = 1.37%
This calculation shows why many investors who only look at gross ROI end up disappointed.
Main Expenses
HOA fee is the biggest expense: $150-1,200/month depending on the building. Property tax: 0.6%-0.8% of cadastral value annually. Insurance: 0.15% of insured value/year if you have a mortgage. Maintenance: 1-2% of value annually for repairs. Vacancy: 10%-15% of annual rent for time without a tenant. Management: 5-8% of rent if you don't manage personally.
Real Net ROI by Zone
| Zone | Investment | Rent/year | Expenses/year | Net | Net ROI |
|---|---|---|---|---|---|
| Punta Pacifica | $400,000 | $26,400 | $12,800 | $13,600 | 3.4% |
| Costa del Este | $250,000 | $21,600 | $10,500 | $11,100 | 4.4% |
| San Francisco | $200,000 | $18,000 | $8,400 | $9,600 | 4.8% |
| Obarrio | $150,000 | $11,400 | $5,800 | $5,600 | 3.7% |
| Bella Vista | $180,000 | $14,400 | $7,000 | $7,400 | 4.1% |
| El Cangrejo | $80,000 | $7,800 | $3,900 | $3,900 | 4.9% |
| Marbella | $170,000 | $13,200 | $6,000 | $7,200 | 4.2% |
Real ROI ranges between 3%-5% net after expenses, not the 6%-8% gross numbers you'll hear at conventions.
Want to calculate the exact ROI on a specific property? Use PanamaEstimate or ask Alma for free personalized analysis.