Is rental property worth buying in Cabo San Lucas?

Get all the data you need about the real estate market in Cabo San Lucas

Why is Cabo San Lucas rental property harder to judge right now?

Cabo San Lucas rental property is still investable today, but the gap between a great deal and a bad one has become unusually wide.

The reason is simple: tourism and real estate are moving differently. Los Cabos welcomed nearly 3.8 million visitors in 2025, roughly 130% more than a decade earlier, and hotels still averaged around 70% occupancy despite charging close to $440 per night. Yet the resale property market has cooled sharply.

Christie’s H1 2026 MLS report counted 258 sales in the Cabo San Lucas area, down 16.2% from the same period a year earlier. Dollar sales volume dropped even faster, by 28.3%. Across the wider market, condos below $1 million had 25.8 months of available inventory.

That creates an interesting setup for rental investors. Guests are still coming and spending heavily, while sellers have lost some of their leverage. At the same time, plenty of condos are competing for both buyers and renters.

The difficult part is figuring out whether cheaper acquisition prices now compensate for heavier rental competition and operating costs. In some buildings they clearly do. In others, the rental projections still only work if everything goes right.

What is happening now?	Current evidence	What it means for a rental buyer	Our reading
Los Cabos tourism remains large	Nearly 3.8M visitors in 2025	Deep pool of potential guests	Positive
Hotel occupancy remains high	~70%	Accommodation demand is still healthy	Positive
Cabo San Lucas transactions have slowed	-16.2% YoY in H1 2026	Buyers have more choice	Positive for entry price
Cabo San Lucas sales volume has fallen faster	-28.3% YoY	Higher-priced deals are harder to close	Gives buyers leverage
Sub-$1M condo inventory is heavy	25.8 months	Plenty of competing properties	Negative for appreciation

Is Cabo San Lucas tourism still strong enough to support rental property?

Cabo San Lucas still has a very strong tourism base for rental property, although the latest passenger numbers show that demand is softer than it was a year ago.

Visit Los Cabos says the destination received nearly 3.8 million visitors in 2025. Hotel occupancy averaged about 70%, the average room sold for nearly $440 per night, and RevPAR reached roughly $306. Almost 80% of the destination's more than 22,000 hotel rooms now sit in the five-star category.

Cabo has managed to fill expensive accommodation at scale. Travelers coming here are accustomed to paying resort-level prices, which gives good vacation rentals room to charge much more than a typical Mexican beach market.

Air access has also expanded massively. By the end of 2025, Los Cabos had direct connections with 42 international airports, including 32 in the United States.

The freshest airport data add some caution. Grupo Aeroportuario del Pacífico recorded about 4.45 million passengers through Los Cabos during the first seven months of 2026, down 5.4% from the same period in 2025. July traffic alone fell 6.9%. Domestic passengers rose 7% that month, while the international side was much weaker.

We would read that as a cooling year inside a much larger long-term tourism market. A property can still have plenty of guests available today, but we would no longer build an investment case around endlessly rising visitor numbers.

Tourism measure	Current level	Recent direction	What we take from it
Annual visitors	Nearly 3.8M	Strong over 10 years	Large tourism base
Hotel occupancy	~70%	Still high	Accommodation demand is healthy
Hotel ADR	~$440	Premium level	Visitors tolerate high prices
Hotel inventory	22,000+ rooms	Up from ~15,000 in 2016	More demand, but also more supply
Airport traffic, Jan–Jul 2026	~4.45M passengers	-5.4% YoY	Current demand has cooled
July airport traffic	~640,000 passengers	-6.9% YoY	Worth watching, especially international travel

Has Cabo San Lucas finally become a buyer's market?

Parts of the Cabo San Lucas property market look buyer-friendly today, especially ordinary condos below $1 million.

Christie’s latest MLS report counted 1,202 active condo listings below $1 million across its covered Los Cabos market, against 280 sales during the first half of the year. That works out to 25.8 months of inventory. Those units spent an average of 260 days on the market.

Sellers in that category eventually accepted around 95.7% of asking price on average. That may sound like a small discount, but it is an average across completed deals. A condo that has already been sitting for nine or twelve months gives a serious cash buyer much more room to push.

The luxury market is even slower. Condos above $1 million had 28.3 months of inventory and an average 557 days on market. Homes above $1 million had more than 32 months of supply.

Cabo San Lucas itself also weakened noticeably. Its H1 2026 transaction count fell 16.2%, while volume dropped 28.3%.

That is useful for a rental investor because the entry price controls the yield from day one. Paying $450,000 instead of $500,000 for the same potential $45,000 of annual rental income changes the economics far more than squeezing another five nights out of Airbnb.

We would negotiate hard these days, especially on standard two-bedroom condos where buyers can easily compare similar inventory.

Property segment	Active inventory	H1 2026 sales	Months of inventory	Average sale/list ratio
Condos under $1M	1,202	280	25.8	95.7%
Condos over $1M	212	45	28.3	93.5%
Homes under $1M	635	202	18.9	95.3%
Homes over $1M	411	76	32.4	92.9%

How much can a Cabo San Lucas Airbnb actually earn today?

A good Cabo San Lucas Airbnb can earn a lot, but citywide revenue averages are currently too inconsistent to use for a purchase decision.

The newest AirDNA dataset for Cabo San Lucas, Baja California Sur tracks 3,396 active short-term rentals. It shows average annual revenue of about $84,200, 48% occupancy, a $561 average daily rate and $270 RevPAR.

AirROI, using a similarly recent twelve-month period, tracks 2,901 listings and arrives at a very different result: approximately $29,400 in annual revenue, 31.2% occupancy, a $413 nightly rate and $122 RevPAR.

AirDNA itself illustrates how sensitive these numbers are to geography. A second Cabo San Lucas market definition on its platform contains only 211 listings and reports annual revenue around $53,200, occupancy of 37% and a remarkable $982 average daily rate.

The gaps are too large to dismiss as statistical noise. Luxury villas, ordinary condos, owner-blocked calendars and different geographic boundaries are being mixed together in different ways.

We would therefore ignore any agent who says something like “Airbnbs in Cabo average $80,000 a year” without showing the comparable properties behind the claim.

For an actual purchase, we want rental histories from the same building or from genuinely similar units nearby: same bedroom count, similar view, similar amenities, similar furnishing level and similar distance from the beach or marina. Ten strong comparables are much more useful than 3,000 mixed listings.

Rental dataset	Listings tracked	Occupancy	Average nightly rate	Annual revenue
AirDNA, Cabo San Lucas BCS	3,396	48%	$561	$84,200
AirROI	2,901	31.2%	$413	$29,401
AirDNA, alternate Cabo geography	211	37%	$982	$53,200

Is Airbnb competition getting too heavy in Cabo San Lucas?

Cabo San Lucas already has enough short-term rentals that an average condo can easily disappear into the crowd.

AirROI currently tracks around 2,900 active Cabo San Lucas listings and reports supply growth of 24.2% in its latest dataset. AirDNA's broader Cabo San Lucas geography contains about 3,400 active rentals.

Those numbers matter more when we look at the kind of housing being built and sold. The resale market is carrying a large number of condos, particularly below $1 million, which overlaps heavily with the type of property many foreign investors buy for Airbnb.

Location alone is becoming less persuasive. “Cabo,” “ocean view” and “pool” describe hundreds of competing listings.

The properties that stand out tend to have something guests can understand in a few seconds: walking distance to Médano Beach, marina access, a private pool, a spectacular unobstructed view, enough beds for a group, resort facilities or a price noticeably below similar units.

Reviews also become more powerful as competition rises. A new investor entering a building where several established hosts already have hundreds of five-star reviews may need lower introductory rates before reaching the same occupancy.

We would assume heavy competition from the beginning rather than treating it as a future risk.

Do Cabo San Lucas's high nightly rates actually produce good rental yields?

Cabo San Lucas can produce very good rental yields, but high nightly prices alone tell us almost nothing about the return an owner keeps.

Take a condo bought for $500,000. If closing costs add 7%, the investor starts with about $535,000 committed before any meaningful furnishing upgrade.

Suppose that condo grosses $55,000 a year. The initial gross yield looks attractive at roughly 10.3% on the all-in acquisition cost.

Full-service vacation-rental managers in Los Cabos commonly charge around 20% to 30% of rental income. Using 25% removes $13,750.

Now add a $450 monthly HOA, around $5,400 a year. Allow another $1,500 for insurance and roughly $4,500 for utilities, routine maintenance, replacement items, trust expenses and miscellaneous owner costs.

The remaining operating income lands close to $30,000. That gives us a yield around 5.6% on the $535,000 invested.

At $35,000 of gross rental revenue, the same property quickly becomes weak. At $85,000, it becomes much more interesting.

Optimistic Cabo projections often fall apart right here. The owner sees a $500 nightly rate and imagines enormous returns, while occupancy, management fees and fixed expenses decide the actual result.

$500K purchase example	Weak rental	Solid rental	Strong rental
Gross annual bookings	$35,000	$55,000	$85,000
Management at 25%	$8,750	$13,750	$21,250
Illustrative other operating costs	$12,000	$11,400	$13,000
Approx. operating income	$14,250	$29,850	$50,750
Approx. yield on $535K all-in cost	2.7%	5.6%	9.5%

Could a long-term rental in Cabo San Lucas be a better investment than Airbnb?

Yes, some Cabo San Lucas long-term rentals currently look more attractive than average Airbnbs once we adjust for effort, volatility and fees.

TheLatinvestor's latest Cabo condo analysis models some of the strongest long-term net yields in Lienzo Charro Centro, Cabo San Lucas Centro, El Tezal and Ventanas de Cabo.

Its Lienzo Charro Centro studio example reaches around 9% gross and 6.5% modeled net yield. A one-bedroom there comes out around 8.4% gross and 6.2% net. Centro and El Tezal also contain examples around the 5% to 6% net range.

These are modeled figures rather than guaranteed returns, so we would still verify live rents. The useful part is the pattern: stronger yields tend to come from practical neighborhoods where the purchase price stays reasonable.

That is very different from buying a premium resort condo. Beach proximity can push a property's value up by hundreds of thousands of dollars while adding much less to what a local long-term tenant will pay each month.

Long-term rentals also avoid constant guest turnover. Management can cost less, cleaning becomes occasional, revenue depends less on review scores, and owners are less exposed to one weak tourism season.

Airbnb still offers more upside for an exceptional property. For a fairly ordinary condo, a stable twelve-month tenant is often the better business.

Which Cabo San Lucas neighborhoods make the most sense for rental property now?

Centro and El Tezal currently look strongest for straightforward yield, while Médano, the Marina and selected Pedregal properties work better when the goal is premium vacation-rental income.

Cabo San Lucas Centro has an obvious advantage: renters can reach restaurants, employment, nightlife and parts of the marina without paying full beachfront property prices. The latest long-term yield models consequently look relatively strong there.

El Tezal has grown quickly because it offers newer condo stock, access to shopping and practical housing for people who actually live in Cabo. Entry prices remain lower than in the main resort zones, which helps the rental calculation.

Médano and the Marina operate differently. Tourists value the ability to walk to the beach, bars, restaurants and boat departures. A strong unit there can generate far more nightly income than an inland condo, especially if the property has a good view and attractive amenities.

Pedregal works best higher up the market. Large villas can serve groups willing to pay several thousand dollars per stay, and the area carries an international reputation that helps marketing. Purchase prices, upkeep and management are correspondingly high.

We would be careful with resort-corridor condos where the owner pays a major premium for the address but receives no equally large rental premium. That is where lifestyle value and investment value often start to drift apart.

Cabo area	Best rental strategy	Main advantage	Main weakness	Our view today
Centro	Long-term / flexible STR	Lower entry price, walkability	Noise, older stock	Strong income candidate
El Tezal	Long-term / mid-term	Newer stock, local demand	Lots of competing condos	Attractive at the right price
Médano	Short-term	Beach access, walkability	Expensive	Strong for proven STR units
Marina	Short-term	Tourist convenience	High acquisition price	Good if revenue history supports it
Pedregal	Premium STR	Views, prestige, group demand	High operating costs	Selective
Resort corridor	Lifestyle + rental	Resort amenities	Price can outrun rent	Highly property-specific

How much do Cabo San Lucas HOA fees and property management eat into rental returns?

Cabo San Lucas HOA and management fees can easily consume a third or more of a vacation rental's apparent profit.

A current Los Cabos management guide from MPC Vacations puts full-service vacation-rental management around 20% to 30% of rental income. Booking-only services can cost less, while luxury villas with heavier guest support can cost more.

HOA fees vary wildly. Current Los Cabos buyer guides place ordinary downtown or El Tezal condos around $150 to $300 per month. Mid-range gated developments often fall around $300 to $600. Luxury beachfront or golf communities can move above $1,000, while branded residences can reach $1,500 to $3,000 a month once resort-level charges are included.

At $300 per month, the HOA costs $3,600 annually. At $1,500, it costs $18,000.

That $14,400 difference can wipe out most of the investment return on a condo generating $50,000 or $60,000 in bookings.

Insurance adds another meaningful expense. Current local estimates put many higher-value Cabo policies around $1,500 to $5,000 annually. Hurricane deductibles frequently run around 2% to 5% of insured value, so the owner's exposure during a major storm can be much larger than the premium itself.

We would also inspect the HOA reserve fund. A cheap monthly fee can become expensive very quickly when the association has no money for roofs, elevators, pools or storm repairs.

A current fee schedule, two years of HOA financial statements, reserve balances and recent special assessments belong in the due-diligence file before we calculate the final yield.

How much do taxes, closing costs and foreign ownership change a Cabo rental investment?

Taxes and transaction costs in Cabo materially lower the return, while foreign ownership itself is a manageable and well-established process.

A foreign buyer purchasing residential property in Cabo normally uses a fideicomiso because Cabo lies inside Mexico's restricted coastal zone. Mexico's Foreign Ministry defines that zone as land within 50 kilometers of the coast.

The bank holds legal title as trustee and the foreign buyer holds the beneficial rights to use, rent, improve, sell or transfer the property. The trust can run for up to 50 years and can be renewed.

The Foreign Ministry's current government fee for authorizing a new restricted-zone fideicomiso is MXN21,650. The bank then charges its own setup and annual trustee fees.

The larger cost appears at closing. A recent Los Cabos buyer-cost breakdown estimates roughly 5% to 8% of the purchase price for a typical foreign residential buyer.

The Los Cabos acquisition tax is 3%. Notary costs, Public Registry fees, appraisals, certificates, escrow, legal fees and the trust structure add to the bill.

That means a $500,000 property can easily cost about $535,000 before furnishing if we assume 7% closing costs.

Rental taxation also needs to be included. Mexico's SAT currently sets a 4% ISR withholding rate for lodging income received through qualifying digital platforms, calculated on income excluding VAT. Lodging can also involve VAT and state or municipal charges depending on the transaction structure.

Los Cabos currently charges an environmental sanitation fee to guests using digital accommodation platforms, with the platform or accommodation provider responsible for collecting it under municipal rules.

We would use a Mexican accountant for the final after-tax model because foreign tax residence, ownership structure and deductible expenses can materially change the result.

The broader lesson is simpler: a Cabo property has to earn enough to overcome relatively high entry costs. Buying for two or three years leaves very little room for error.

Cost or rule	Current indication	Effect on the investment
Foreign ownership structure	Fideicomiso in coastal restricted zone	Normal additional administration
Federal fideicomiso permit	MXN21,650	Small relative to purchase price
Los Cabos acquisition tax	3%	Significant closing expense
Typical foreign-buyer closing budget	~5–8%	Raises true acquisition cost
Full-service STR management	~20–30% of revenue	Major recurring cost
Platform lodging ISR withholding	4%	Reduces owner cash flow
HOA	~$150 to $3,000+/month	Can make or break yield
Property insurance	Often ~$1,500–$5,000+	Needs hurricane coverage review

Should a Cabo San Lucas rental buyer count on property prices rising?

We would currently assume little or no near-term appreciation when deciding whether a Cabo San Lucas rental is worth buying.

Cabo still has a credible long-term property story. Tourism has grown enormously over the past decade, international air connections have expanded, luxury hotel brands keep investing in Los Cabos, and good coastal land remains finite.

Today's resale market gives us very little reason to bake aggressive appreciation into a spreadsheet.

As seen above, Cabo San Lucas H1 2026 transactions fell 16.2% year over year and sales volume dropped 28.3%. Across the broader market, sub-$1 million condos carried more than two years of inventory.

Buyers can afford to be patient.

The best approach today is to ask whether the rental return works at the current purchase price. If the property appreciates over ten years, that improves the outcome. The investment should already make sense before that happens.

This also changes how we view new developments. A pre-construction unit sold on the promise that prices will be much higher when construction finishes deserves more scrutiny while existing resale inventory remains plentiful.

Does financing a Cabo San Lucas rental still make financial sense?

Financing can make an average Cabo rental unattractive very quickly because borrowing costs are often higher than the property's net operating yield.

Foreign-buyer financing in Mexico commonly carries higher rates than borrowers are used to seeing on prime residential mortgages in the United States or Europe. Depending on the lender and buyer profile, rates can sit around the high single digits or above, usually with substantial down payments.

Imagine a property producing a genuine 5.5% operating yield before financing. Borrowing part of the purchase price at roughly 9% creates a difficult spread. The rental income does not comfortably pay for the cost of debt.

A high-performing vacation rental earning 8% or 9% net can make leverage more defensible, especially if the buyer wants to preserve cash.

The Cabo market also attracts many cash buyers, so financing does not necessarily give an investor the same advantage it might in a market where almost everyone needs a mortgage.

For a pure income purchase today, we would generally prefer cash or unusually inexpensive financing. Expensive debt turns too many Cabo deals into bets on future appreciation.

What kind of Cabo San Lucas rental property has the best chance of working now?

A reasonably priced two-bedroom condo with strong walkability, manageable HOA fees and more than one rental strategy has one of the best risk-reward profiles in Cabo today.

Two bedrooms broaden the renter pool. Couples can use the extra room, families can bring children, and small groups can split the cost. The owner also has a realistic long-term-rental fallback.

Walkability becomes especially valuable around Centro, Médano and the Marina. A tourist who can reach the beach, restaurants and nightlife without a car sees an immediate benefit.

We also like properties that can switch between short-, mid- and long-term rentals. A unit that only works financially as a high-priced Airbnb becomes vulnerable when occupancy weakens.

A lock-off layout can add flexibility. Good outdoor space, a genuinely useful view and attractive shared amenities can help too, provided we do not pay so much for them that the yield disappears.

For luxury villas, a different rule applies. The property needs enough bedrooms, privacy and amenities to serve groups that cannot easily replace the experience with several hotel rooms.

What we would avoid today is the generic middle: an expensive new condo, several kilometers from the main tourist areas, surrounded by similar new condos, carrying a large HOA and sold with a brochure promising 70% occupancy.

What rental return should we demand in Cabo San Lucas today?

For a pure Cabo San Lucas investment, we would currently want roughly a 5% to 6% realistic net operating yield on the full amount invested, with a higher target for a labor-intensive vacation rental.

The calculation should start with the purchase price, closing costs and whatever money is required to make the property genuinely rentable.

Then we subtract management, HOA, owner-paid utilities, maintenance, insurance, trust expenses, realistic vacancy and recurring replacements.

A stable long-term rental producing 5.5% net can be quite respectable because the operational burden is limited.

A short-term rental producing the same 5.5% feels less attractive. The owner accepts booking volatility, reviews, guest turnover, pricing decisions and tourism risk for the same economic return.

Once the realistic net yield reaches 7% or more, Cabo becomes much more compelling. An honestly underwritten 8% or 9% property would stand out strongly in the current market.

At 2% or 3%, we would classify the property primarily as a lifestyle asset. The rental income may help pay expenses, but the financial return alone would be difficult to defend.

Is rental property worth buying in Cabo San Lucas?

Yes, rental property is worth buying in Cabo San Lucas today, but only when the deal works on current rental income rather than optimistic assumptions about occupancy or future property prices.

The reason we still come out positive is the combination of resilient tourism and a softer buying market. Cabo continues to attract millions of visitors, hotel occupancy remains high at premium room rates, and the destination has built unusually deep air connectivity with the United States.

Meanwhile, property sellers face a very different environment from the post-pandemic boom. Cabo San Lucas sales have slowed, overall volume has fallen faster, and condo inventory remains heavy. Buyers can now shop around and negotiate.

The rental side requires more discipline. Current short-term-rental datasets disagree dramatically on average Cabo revenue, and thousands of properties compete for guests. We would trust verified building-level rental histories far more than citywide Airbnb estimates.

Costs then decide whether the deal survives. Full-service management around 20% to 30%, HOA fees that can range from a few hundred dollars to several thousand per month, insurance, maintenance, tax and 5% to 8% buyer closing costs can reduce a spectacular-looking gross yield to an ordinary net return.

The best opportunities these days are likely to come from two different ends of the market. Centro, El Tezal and similar practical neighborhoods can produce attractive long-term or flexible-rental yields because acquisition prices stay relatively reasonable. Exceptional Médano, Marina or Pedregal properties can also work very well when their location or product genuinely supports premium short-term revenue.

We would be comfortable buying if conservative numbers still produce around a 5% to 6% net operating yield on the full investment, the HOA is financially sound, rental rules are clear and the property has a workable fallback strategy if vacation bookings weaken.

We become much more interested above 7%.

Anything around 2% or 3% needs a strong lifestyle reason behind it.

The current Cabo market rewards buyers who care more about the individual deal than the destination's reputation. Tourism gives the rental market a strong foundation, while softer property sales give buyers leverage. Used together, those two conditions can produce very good investments. Paying a premium simply because the listing says “Cabo” is where the numbers start to break.

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THE LATINVESTOR

A team specialized in real estate investing in LATAM countries

We are a team of financial experts, legal professionals, developers, and local real estate specialists dedicated to helping people like you avoid mistakes when investing in real estate in a foreign place, particularly in Cabo San Lucas. If you’d like to learn more about us, you can check our presentation page.