A holiday rental in St. Maarten is a small business attached to a piece of real estate. You judge it the way you would judge any small business, with revenue, costs and what is left over. The headline yield printed in a listing is not that number.
The arithmetic takes ten minutes. Average nightly rate multiplied by occupancy multiplied by 365 gives you gross revenue. Then subtract management, association dues, insurance, GEBE bills, maintenance and a reserve for replacing furniture. What remains is your net, and almost everything that matters happens inside that subtraction.
Every figure below is an illustration chosen to show the shape of the calculation, not a forecast. Actual results vary by property, building, management and season.
The formula, in full
- Gross revenue = average nightly rate x occupancy x 365
- Net operating income = gross revenue minus management, dues, insurance, utilities, maintenance, furnishing reserve and administration
- Net yield = net operating income divided by everything you invested, not just the purchase price
Most disappointing purchases come from the last two lines. Buyers model revenue carefully, guess at the costs, then measure the return against the purchase price and forget the 4 percent transfer tax, the notary fee and the furniture.
Input one: the nightly rate you will actually achieve
There are two nightly rates in every conversation about a rental here. There is what a Cupecoy two bedroom commands during the Heineken Regatta in early March, and there is the blended rate across all twelve months. Only the second belongs in your model.
The blended rate is lower for reasons unrelated to the quality of the property. Weekly stays are discounted, platforms run promotions, and managers cut rates in September to keep a unit occupied. A Maho condo asking $500 in February blends down a long way across twelve months.
Two practical points. Confirm whether the quoted rate is before or after platform commission, because that commission can sit inside or outside the management fee. And ask whether cleaning fees are kept by the cleaner or passed through your account. Both are common, and both change your statement.
Input two: occupancy, which decides almost everything
High season and low season on this island
High season runs from the middle of December to the middle of April. That is when North Americans and Europeans arrive through SXM, when Porto Cupecoy is busy on a Wednesday and when good units book months ahead. March is the strongest stretch, with the Heineken Regatta and SXM Festival weeks apart, followed by Carnival on the Dutch side around April and May.
Then it turns. Hurricane season runs from 1 June to 30 November and the genuine trough is late August through October. Some restaurants close for part of it. Demand returns around St. Martin’s Day on 11 November and builds into December.
Why annual occupancy is the only honest number
Annual occupancy is nights booked divided by 365. It connects directly to revenue and it is the hardest figure to dress up. Watch for two substitutes. Occupancy while listed looks excellent if the unit came off the market for three months in the autumn. Peak season occupancy is context, not a revenue input.
Model a range instead of a point. Run a strong case, a middle case and a weak case, then check that the weak case still covers dues, insurance and any mortgage payment.
Your own use is occupancy you give away
Most owners buy here partly because they want to be here, and owners want the same weeks the market wants. Three weeks in February is a real reduction in a year’s income. Put it in the model rather than discovering it in the statement.
The costs that come off the top
Management
Full service short term management commonly runs around 20 percent of gross revenue, with rates above and below depending on what is included. Read the agreement. The fee usually covers listing, pricing, guest communication, check in and check out, housekeeping coordination and the call at eleven at night. It often excludes platform commission, linen, consumables and the markup on repairs.
Association dues
In a condo at Cupecoy, Maho or Simpson Bay this is the largest fixed cost, and it is payable whether the unit earns or sits empty. Some buildings include insurance, water, internet, pool, grounds and security in the dues. Others include very little. Ask for the current budget rather than a verbal figure, and ask whether dues have risen in the last two years.
Insurance, including windstorm cover
Hurricane Irma made landfall on 6 September 2017 as a category 5 storm and reset both the building stock and the insurance market. Two layers usually apply. The association insures the structure and common areas, and that sits inside your dues. You insure the interior, contents, liability and often loss of rental income. Windstorm cover is the expensive part, priced property by property on construction, roof, impact glass or shutters, elevation and claims history. Ask for the policy schedule and read the windstorm deductible, which is frequently a percentage of insured value rather than a flat sum.
Utilities
GEBE supplies electricity and water on the Dutch side and power is expensive by regional standards. A rental with air conditioning running for guests through August uses a great deal of it. Add TelEm fibre and television. The owner pays all of this, unlike a long term tenancy where the tenant usually does.
Maintenance, furnishing and the small lines
Salt air, humidity and constant turnover are hard on a property. Air conditioning units, appliances, locks and outdoor furniture wear faster than in a private home. Separately, set aside roughly 3 to 5 percent of gross revenue for furnishing replacement, because a tired interior loses rate before it loses bookings. Then add the small lines: consumables, linen, pest control, bank charges, bookkeeping and any local licence.
A fully worked example
The property below is invented to illustrate the method. Replace every figure with the real one for your unit.
| Assumption | Illustrative figure |
|---|---|
| Property | Two bedroom condo, Dutch side, walkable location |
| Purchase price | $550,000 |
| Closing costs at about 5.5% | $30,250 |
| Furnishing and setup | $40,000 |
| Total invested | $620,250 |
| Blended average nightly rate | $325 |
| Annual occupancy, 219 nights | 60% |
| Line | Basis | Illustrative amount |
|---|---|---|
| Gross rental revenue | $325 x 219 nights | $71,175 |
| Management | 20% of gross | ($14,235) |
| Association dues | $800 per månad | ($9,600) |
| Insurance, contents and windstorm | Annual premium | ($4,500) |
| GEBE, water and TelEm | Annual | ($4,800) |
| Maintenance and repairs | Allowance | ($2,500) |
| Furnishing reserve | 3% of gross | ($2,135) |
| Consumables and linen | Allowance | ($1,200) |
| Bookkeeping and bank | Allowance | ($800) |
| Net operating income | $31,405 | |
| Net yield on purchase price | $31,405 / $550,000 | 5.7% |
| Net yield on total invested | $31,405 / $620,250 | 5.1% |
Note the gap between those last two lines. Measured against the purchase price alone the return looks better by more than half a point. The honest number includes the transfer tax and the furniture.
What happens when occupancy moves
Hold the rate constant and move only occupancy. Management and the furnishing reserve move with revenue. The rest is treated as fixed, though GEBE bills rise with use.
| Annual occupancy | Gross revenue | Net operating income | Net yield on $620,250 |
|---|---|---|---|
| 45% | $53,381 | $17,704 | 2.9% |
| 55% | $65,244 | $26,838 | 4.3% |
| 60% | $71,175 | $31,405 | 5.1% |
| 70% | $83,038 | $40,539 | 6.5% |
A fifteen point swing in occupancy more than doubles the net. That is the argument for buying where rental demand is broadest and for distrusting any single occupancy assumption. Build your own version in the rental yield calculator inside our property tools and find the point at which the property stops working for you.
Why the Dutch side keeps more of the net
Two features matter more over a long hold than any single year’s bookings. There is no annual property tax on the Dutch side, so that line simply does not exist. And there is no capital gains tax on a resale at a profit.
Entry costs run roughly 5 to 6 percent, being 4 percent transfer tax plus a notary fee of roughly 1 to 2 percent, rising to about 6 to 7 percent with a local mortgage. On the French side, notaire fees and transfer duties together run roughly 7 to 10 percent, an annual taxe fonciere applies, and gains on resale can be taxed at up to 34 percent, with relief where the property was the seller’s main home. Dutch side property trades in US dollars in practice, though the guilder is official and pegged at about 1.79.
The absence of an annual property tax does not mean rental activity is untaxed. Letting can attract local turnover and accommodation taxes. Confirm your position with your notary and a local tax adviser before you commit, because rules change.
How to test someone else’s projection
- The booking history for that specific unit for the last two calendar years, month by month.
- The gross to net statements for the same period, showing every deduction.
- The current association budget and any dues increase in the last two years.
- The insurance schedule, including the windstorm deductible.
- The management agreement, with fee, term and notice period.
If those five are not available, treat the projection as marketing rather than evidence.
Ofta ställda frågor
What occupancy should I assume for a St. Maarten holiday rental?
There is no single correct figure. It depends on the building, the location, the size and quality of the unit, pricing and the manager’s reach. Model a strong, middle and weak case and ask for the real booking history of that unit. Results vary by property, building, management and season.
Is 20 percent management too much?
Not necessarily. A manager who fills February and holds rate through October can be worth more than a cheaper one who does not. Compare on net, not on the fee, and ask what sits outside it.
Do association dues include insurance?
Often the association insures the structure and common areas and that cost is inside your dues. You would still insure the interior, contents, liability and possibly loss of rental income. Ask for the association policy and confirm where the boundary sits.
Should I buy a unit that is already furnished and rented?
It saves time and capital and comes with a trading history you can inspect. Check the age of the furniture, because inheriting a tired interior means an early refresh. Ask for two years of statements, not a summary.
How much cash do I need beyond the purchase price?
Budget roughly 5 to 6 percent for closing, or about 6 to 7 percent with a local mortgage, plus furnishing if the unit is not sold furnished, plus working capital for the first few months. The buyer cost guidance in our property tools gives the completion figure for any price.
Where to go from here
Model the property you are actually considering. Get the real dues, the real insurance quote, the real booking history and the real management terms, then run three occupancy cases and decide whether the weak one is a year you could live with.
We can pull operating history and association documents for any unit in our current listings and build the model with you. To start, contact us, or read about the team first. None of this is financial or tax advice, and figures for a specific property should be confirmed with your notary and a qualified adviser.
