Is rental property worth buying in Cabo San Lucas?

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

Because tourism and the property market are pulling in different directions, so the gap between a good deal and a bad one is unusually wide.

Los Cabos received close to 3.8 million visitors in 2025, about 130% more than a decade earlier, and hotels averaged around 70% occupancy at close to $440 a night. Yet the resale market has cooled hard.

Christie's Real Estate Cabo counted 375 MLS sales in the Cabo San Lucas area (Cabo San Lucas plus the Corridor) from January to September 2026, 18.1% fewer than a year earlier. Condos under $1 million carry about 23.5 months of supply.

For a rental buyer, that cuts both ways. Guests still come and spend a lot, and sellers have lost leverage. But plenty of similar condos compete for both buyers and guests.

The real question is whether a lower entry price makes up for heavier competition and high running costs. In some buildings it does. In others, the numbers 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	Close to 3.8M visitors in 2025	Deep pool of potential guests	Positive
Airport traffic is falling	-5.6% (Jan–Sep 2026)	Fewer new guests than last year	Negative
Cabo San Lucas MLS sales have slowed	-18.1% (Jan–Sep 2026)	Buyers have more choice	Positive for entry price
Sellers are cutting prices	1,295 price cuts, only 19% led to a sale	Room to negotiate	Gives buyers leverage
Sub-$1M condo inventory is heavy	23.5 months	Plenty of competing properties	Negative for appreciation

Is Cabo tourism still strong enough to support a rental in 2026?

Yes, but it has stopped growing. The base is huge; this year's direction is down.

The Los Cabos Tourism Board counted close to 3.8 million visitors in 2025. Hotel occupancy averaged about 70%, the average room sold for close to $440 a night, and revenue per available room reached about $306. Almost 80% of the destination's more than 22,000 hotel rooms are five-star.

Visitors here are used to resort prices, which gives a good vacation rental room to charge far more than in a typical Mexican beach town. Air access is wide too: by the end of 2025, Los Cabos had direct flights to 42 international airports, 32 of them in the United States.

The 2026 airport numbers are the warning. Grupo Aeroportuario del Pacífico (GAP) counted 5.35 million passengers at Los Cabos airport from January to September 2026, down 5.6% from 5.67 million a year earlier. International passengers fell 8.4%, and in September alone they were down 14.7%.

So keep tourism growth out of your spreadsheet. Today's demand is enough for a good property; any future growth is a bonus.

Tourism measure	Current level	Recent direction	What we take from it
Annual visitors (2025)	~3.8M	~130% growth over 10 years	Large tourism base
Hotel occupancy (2025)	~70%	Still high	Accommodation demand is healthy
Hotel ADR (2025)	~$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 passengers, Jan–Sep 2026	5.35M	-5.6% YoY	Demand has cooled
International passengers, Jan–Sep 2026	3.21M	-8.4% YoY (-14.7% in September)	The key US and Canada market is weakest

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

For ordinary condos under $1 million, yes. Supply is heavy, sales are slow and price cuts are working less often.

Christie's January to September 2026 figures show about 23.5 months of supply for condos under $1 million, with around 250 days on the market. Their average sale price fell 5.1% to about $399,000, on 15.9% fewer sales.

Sellers in that segment still closed at about 95.9% of asking on average. But that average hides the stale listings. Cabo Real Estate Services recorded 1,295 price reductions on houses and condos in 2026, and only 19% of them led to a sale, against 34% in 2025. Many owners know their price is wrong.

The top of the market behaves differently. Condos above $1 million rose 24.2% in average price, to about $2.68 million, but they took about 494 days to sell. Homes above $1 million lost 19.0% of their sales.

For a rental investor, the entry price sets the yield from day one. Paying $346,000 instead of $437,000 for a condo that books the same $48,300 a year moves the net return, after the 25% non-resident tax, from about 2.7% to about 3.5%. No amount of extra Airbnb nights does that.

Negotiate hard, especially on standard two-bedroom condos where buyers can compare dozens of similar units.

Segment (Jan–Sep 2026)	Average sale price	Price change YoY	Sales change YoY	Months of supply
Condos under $1M	$399K	-5.1%	-15.9%	23.5
Condos over $1M	$2.68M	+24.2%	-1.5%	n/a
Homes under $1M	$403K	-0.5%	-0.6%	17.3
Homes over $1M	$4.04M	-2.8%	-19.0%	26.3

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

Somewhere between about $29,700 and $84,100 a year on average, depending on which data provider you believe. That gap alone tells you not to buy on a citywide average.

AirDNA's October 2026 data counts 2,434 active short-term rentals in Cabo San Lucas, with average annual revenue of about $84,100, 48% occupancy and an average nightly rate of $567.

AirROI, over the 12 months to September 2026, tracks 2,894 listings and puts average revenue at about $29,700 a year, with 32.5% occupancy and a nightly rate of about $393.

The two use different boundaries, listing rules and property mixes, and both blend staffed villas with studios. AirROI's tiers are more useful: the median listing makes about $1,770 a month, the top quarter starts at about $4,030 and the top 10% at about $10,500.

Prices are also moving. AirDNA shows the average nightly rate down 15.0% over a year while occupancy rose 11.9%: hosts are filling more nights at lower prices for roughly the same money.

Ignore any agent who says "Cabo Airbnbs average $80,000 a year" without showing the comparables. Ask for 2025 and 2026 month-by-month rental history from the same building, or from units with the same bedroom count, view, amenities and distance to the beach or marina. Ten good comparables beat 2,000 mixed listings.

Rental dataset	Listings tracked	Occupancy	Average nightly rate	Annual revenue
AirDNA (Oct 2026)	2,434	48%	$567	~$84,100
AirROI (12 months to Sep 2026)	2,894	32.5%	~$393	~$29,700
AirROI median listing	—	~32%	~$178	~$21,200
AirROI top-quarter threshold	—	53%+	$388+	~$48,300+

Is Airbnb competition getting too heavy in Cabo San Lucas?

For generic one- and two-bedroom condos, yes. An average unit disappears in the crowd.

AirROI tracks about 2,900 active listings in Cabo San Lucas and shows supply up about 27% over a year. Two-bedroom units are the biggest group, at 38% of entire homes with a known bedroom count.

The resale market is full of the same product. At the end of Q3 2026, 646 two-bedroom condos were for sale in Los Cabos; only 67 sold in the quarter while 175 new ones were listed. That's about 22 months of supply, and much of it will end up on Airbnb.

"Cabo," "ocean view" and "pool" describe hundreds of listings. The ones that stand out have something a guest understands in seconds: a walk to Médano Beach or the marina, a private pool, a real unobstructed view, beds for a group, or a price clearly below similar units.

Reviews matter more as competition rises. A newcomer in a building where other hosts already have hundreds of five-star reviews may need lower rates for months before reaching the same occupancy. Assume heavy competition from day one.

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

For a normal condo at a normal price, no. High nightly rates say very little about what the owner keeps.

Take a condo bought at $437,000, the average Cabo San Lucas condo sale price in 2025. With 7% closing costs, about $468,000 is committed before any furniture upgrade.

At AirROI's median revenue, about $21,200 a year, a 25% management fee takes $5,300. HOA dues of $400 a month, about $2,000 of insurance and about $4,500 for utilities, repairs, replacements and the bank trust take another $11,300. A non-resident owner then owes 25% of gross rent in income tax, another $5,300. What's left is about -$700: the condo loses money.

At $35,000 of bookings, the owner keeps about 1.3%. At the top-quarter threshold of about $48,300, about 2.7%. Bought at the Q3 2026 Los Cabos condo median of $346,000 instead, that top-quarter case rises to about 3.5%.

This is where Cabo projections fall apart. The owner sees a $500 nightly rate and imagines a big return, while occupancy, management and fixed costs decide the result. Also check which Airbnb fee applies: with the host-only fee of about 16% now common in Mexico, the host pays the whole service fee.

$437K condo ($468K all-in)	Median revenue	Above median	Top-quarter threshold
Gross annual bookings	~$21,200	$35,000	~$48,300
Management at 25%	$5,300	$8,750	$12,075
HOA, insurance, utilities, repairs, trust	$11,300	$11,300	$11,300
Income tax, non-resident (25% of gross)	$5,300	$8,750	$12,075
Approx. net income	~-$700	~$6,200	~$12,850
Net yield on $468K	~-0.1%	~1.3%	~2.7%
Net yield if bought at $346K ($370K all-in)	~-0.2%	~1.7%	~3.5%

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

For an ordinary condo, it can match a median Airbnb with far less work. For a foreign non-resident, tax eats a big part of that advantage.

TuLugar's October 2026 listing data puts the median asking rent for a condo in El Tezal at about $1,855 a month, against a median asking price of about $374,000. That's about $22,260 a year, or about 6% gross, roughly what a median Cabo Airbnb grosses ($21,200) before a 25% management fee.

The catch is tax. A non-resident landlord renting long term pays 25% of gross rent, with no deductions. On El Tezal's median, that brings 6% gross down to about 4.5% before HOA and insurance. A Mexican tax resident can deduct expenses and usually pays less.

These are asking rents and asking prices, so verify live rents before buying. The pattern still holds: yields are better where prices stay reasonable and people actually live year-round.

A long-term lease also means fewer check-ins, occasional cleaning, cheaper management, no review scores and less exposure to a weak tourist season. Airbnb keeps more upside for an exceptional property. For an ordinary condo, a reliable twelve-month tenant is often the better business.

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

El Tezal and the practical parts of Centro look best for plain yield. Médano, the Marina and selected Pedregal properties work when the goal is premium vacation-rental income.

Centro puts tenants and guests close to restaurants, jobs, nightlife and parts of the marina without beachfront prices. Listings in the Centro and Marina cluster ask about $2,897 per square meter, below the Los Cabos condo median of about $3,071.

El Tezal has grown fast because it offers newer condos, shopping and housing for people who live and work in Cabo. Its median asking rent of about $1,855 against a median asking price of about $374,000 gives the best gross long-term yield in TuLugar's data, about 6%. It also has lots of similar condos, so buy below asking.

Médano and the Marina work differently. Tourists pay for walking to the beach, bars, restaurants and boats. Long-term rent there is only about 4.2% gross on asking prices, so they make sense for proven short-term rental units, not as a long-term fallback.

Pedregal works higher up the market. Villas serve groups paying several thousand dollars per stay, but purchase prices, upkeep and management are high, and most homes are car-dependent.

Be careful with resort-corridor condos where you pay a big premium for the address and get no matching rental premium. That's where lifestyle value and investment value drift apart.

Area (TuLugar, Oct 2026)	Median condo asking price	Median asking rent	Gross long-term yield
Los Cabos, all condos	$371,000	$1,637/month	~5.3%
El Tezal	$374,000	$1,855/month	~6.0%
El Médano	$569,000	$2,000/month	~4.2%

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, weak long-term yield	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 HOA fees, insurance and management eat into rental returns?

Often a third or more of a vacation rental's gross income, and more on an expensive building.

Full-service vacation-rental management in Los Cabos runs about 20% to 30% of rental income, according to Vacation Los Cabos. Booking-only services cost less; staffed villas cost more.

HOA fees vary widely. Local broker ranges put simple condos at about $150 to $300 a month, many gated developments at $300 to $600, luxury properties at $500 to $1,500, and some branded residences well above $1,500. At $300 a month, that's $3,600 a year; at $1,500, $18,000. The $14,400 difference can wipe out most of the return on a condo booking $50,000 a year. Many HOAs bill in pesos. The peso has weakened since early September, from under 17 to about 18.6 per dollar, so those fees cost fewer dollars than a few weeks ago, though a bit more than on the 2025 average.

Insurance is a real line too, and hurricanes drive it. Mexpro, a Mexican insurance broker, quotes a 5% hurricane and flood deductible for Cabo San Lucas, calculated on the insured value, plus 10% to 20% coinsurance in many policies. On a condo insured for $400,000, the deductible alone is $20,000. One Cabo owner reported his premium rising from about $1,700 to $4,000 a year after Hurricane Odile. Hurricane Rachel stayed offshore in early October 2026, but beaches closed and four shelters opened.

Check the HOA's reserve fund before buying. A cheap monthly fee becomes expensive fast when there's no money for roofs, elevators, pools or storm repairs. Get the current fee schedule, two years of HOA financial statements, reserve balances and recent special assessments, and price your own policy before you calculate the yield.

Will Cabo's water shortage hurt your rental income?

It can. A guest who finds no water in the shower leaves a bad review, and in Cabo San Lucas that risk became real in 2026.

On September 1, 2026, a ruptured seawater intake shut down Cabo San Lucas' first desalination plant. Later that month, the water utility OOMSAPAS put neighborhoods such as Las Palmas, Lomas del Valle and Los Cangrejos II on an emergency rotation, with water trucks filling the gaps. CONAGUA puts the local aquifer's deficit at about 24 million cubic meters a year.

The fix is slow. A second desalination plant was reported 73% complete, but in June 2026 the local business council said paperwork was holding up construction. In July 2026, the state governor also floated refusing new development permits in Los Cabos unless developers prove they have enough water. It's a proposal, not a law.

Before buying a rental, ask how many days a week the building gets city water, how big the cistern is, whether there's a backup tank and what the HOA spent on water trucks in 2026. Ask how it handled the September outage. For a presale, get the developer's water feasibility letter before paying a deposit, and budget for water trucks in your running costs.

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

Closing costs and rental taxes lower the return noticeably. Foreign ownership itself is routine.

Cabo lies in Mexico's restricted zone, within 50 kilometers of the coast, so a foreign buyer holds residential property through a fideicomiso, a trust with a Mexican bank. The bank holds title; you keep the right to use, rent, improve, sell or pass on the property. The trust runs up to 50 years and can be renewed.

The Ministry of Foreign Affairs charges MXN 21,650 (about $1,160) to authorize a new trust. The bank charges about $550 to $800 to open the trust, then about $550 to $700 a year.

The bigger cost is at closing: about 6% to 9% of the price for a typical foreign buyer. Los Cabos' acquisition tax (ISABI) is 3%; notary, registry, appraisal, certificates, closing officer, legal fees and the trust add the rest. A $437,000 condo costs about $468,000 at 7%.

Renting adds taxes. Airbnb collects the 4% Baja California Sur lodging tax from guests, short stays can owe 16% VAT, and the platform withholds income tax from your payouts. Los Cabos also charges guests of booking platforms an environmental sanitation fee, collected by the platform or the host. A non-resident owner pays 25% of gross rent in income tax, with no deductions; the yields above include it.

Use a Mexican accountant for the final after-tax model; your tax residence, structure and deductions change the result. And with 6% to 9% to recover at entry, a two- or three-year hold leaves very little room for error.

Cost or rule	Current figure	Effect on the investment
Foreign ownership structure	Fideicomiso (bank trust)	Routine extra paperwork
Federal trust permit	MXN 21,650 (~$1,160)	Small next to the price
Annual trust fee	~$550–$700	Small recurring cost
Los Cabos acquisition tax (ISABI)	3%	Largest closing item
Typical foreign-buyer closing budget	~6–9%	Raises the real purchase cost
Full-service STR management	~20–30% of revenue	Biggest recurring cost
Platform income tax withholding	4% with RFC, 20% without	Can turn a thin return into a loss
Rental income tax, non-resident owner	25% of gross rent	Takes a quarter of every booking or lease
HOA	~$150 to $1,500+/month	Can make or break the yield
Hurricane deductible	Often 5% of insured value	Large one-off risk

What happens if you rent out your Cabo condo without a Mexican tax ID?

Airbnb withholds 20% of your rental income instead of 4%. On a thin Cabo yield, that difference can wipe out most of the profit.

Under Mexico's Income Tax Law (Articles 113-A and 113-C), platforms withhold 4% of a host's receipts when the host gives them a valid RFC, the Mexican tax ID, and 20% when the host doesn't. The 4% isn't always the final tax; your annual filing settles that.

On the top-quarter example above, $48,300 of bookings, 4% is $1,932 and 20% is $9,660. For a Mexican tax resident, that extra $7,728 takes about 1.7 points off the net yield on a $468,000 purchase. A non-resident should budget 25% of gross rent whatever the platform withholds; the yields above already include it.

What to do: get an RFC before your first booking, check that it's entered on your Airbnb account, and have a local accountant handle VAT and annual filings. If you buy a condo with an existing rental history, ask the seller how the taxes were handled; bookings a previous owner ran informally aren't a guide to your net income.

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

No. Assume little or no price growth in the next few years and treat any gain as a bonus.

Cabo still has a credible long-term story: tourism has grown a lot over a decade, luxury hotel brands keep investing, and good coastal land is limited. The official SHF index put Los Cabos up about 96% in the five years to late 2025.

Today's resale market gives no reason to put that pace into a spreadsheet. Condos under $1 million lost 5.1% in average price from January to September 2026, the Los Cabos condo median fell 8.9% in Q3 alone, and supply sits near two years.

Ask whether the rental return works at today's price. If the property gains value over ten years, good. The deal should make sense before that happens.

This also changes how to look at presales. A unit sold on the promise that prices will be much higher at delivery deserves extra scrutiny while finished resale condos are plentiful and negotiable.

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

Rarely. Mexican mortgage rates sit well above what an ordinary Cabo rental earns.

Loans Mexican banks actually granted averaged 9.99% in June 2026, and Banco de México's series of quoted rates stood at about 11.31% in August. Non-residents should plan on putting 35% to 50% down, and a peso loan adds currency risk if you earn in dollars.

A property earning a real 5% net and borrowing at about 10% loses money on every borrowed dollar. Debt only starts to make sense on a rental that genuinely nets 8% or more.

Cabo is also a cash-heavy market, so a mortgage gives you no edge over other buyers. For a pure income purchase, pay cash or find unusually cheap financing. Expensive debt turns most Cabo deals into a bet on prices rising.

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

A two-bedroom condo bought well below asking, in a walkable spot, with a sound HOA, reliable water and a realistic long-term fallback.

Two bedrooms widen the pool: couples, families and small groups, plus long-term tenants if vacation bookings slip. That fallback matters when median Airbnb revenue grosses about the same as a long-term lease.

Walkability pays most around Centro, Médano and the Marina. A guest who reaches the beach, restaurants and nightlife without a car sees the benefit at once.

A lock-off layout, good outdoor space, a real view and useful shared amenities can help, as long as you don't pay so much for them that the yield disappears.

Villas follow a different rule: enough bedrooms, privacy and amenities to serve groups that can't easily book several hotel rooms instead.

Avoid the generic middle: an expensive new condo several kilometers from the tourist areas, surrounded by similar new condos, with a big HOA, an unclear water supply and a brochure promising 70% occupancy when the median Cabo listing books about 32%.

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

At least 5% to 6% net on the full amount invested for a pure investment, and more for a hands-on vacation rental.

Start with the purchase price, closing costs and whatever it takes to make the property rentable. Then subtract management, HOA, utilities, repairs, insurance, the trust, tax, empty nights and replacements.

A stable long-term rental at 5.5% net is respectable because the work is limited. A short-term rental at the same 5.5% is less attractive: you take on booking swings, reviews, turnover and tourism risk for the same money.

Above 7% net, Cabo gets interesting fast. An honestly modeled 8% or 9% would stand out in today's market, and our examples show how rare that is for a condo.

At 2% or 3%, the property is mainly a lifestyle purchase. The rent helps with the bills, but the return alone is hard to defend.

So, should you buy a rental property in Cabo San Lucas now?

Yes, but only when the deal works on today's rental income, not on hopes for higher occupancy or higher prices.

The case rests on two things: tourism is still deep and expensive, and the resale market has turned toward buyers. Close to 3.8 million visitors came in 2025, while Cabo San Lucas MLS sales fell 18.1% in the first nine months of 2026 and condo supply sits near two years.

The risks are just as clear. Airport traffic is down 5.6% this year, nightly rates are down 15.0%, the data providers disagree on what a typical Airbnb earns, and water became a real problem in September 2026.

Costs then decide the deal. With management at 20% to 30%, HOA fees from a few hundred to over a thousand dollars a month, a 5% hurricane deductible, 6% to 9% closing costs and 25% of gross rent in tax for a non-resident, a median-revenue condo at an average price loses money.

The best opportunities sit at two ends. Practical areas like El Tezal and Centro, bought below asking, can work as long-term or flexible rentals. Exceptional Médano, Marina or Pedregal properties with a proven rental history can still earn a premium.

We'd buy if conservative numbers still give about 5% to 6% net on the full investment, the HOA and water supply are sound, the tax setup is in place and the property can fall back on a long-term tenant. Above 7%, we'd move fast. Paying a premium because the listing says "Cabo" is where the numbers break.