Buying a property in Cabo San Lucas: a complete guide

All sources have been thoroughly verified for credibility. Furthermore, a local real estate expert has reviewed and approved the final article.

Yes, the analysis of Cabo San Lucas' property market is included in our pack

Considering buying real estate in Cabo San Lucas? You're not alone!

Many people are enchanted by Cabo San Lucas' scenic beauty and dream of owning a luxurious oceanfront villa or a modern condo there.

Still, would it be a smart investment? Are property prices increasing in Cabo San Lucas? How much does it cost? Is it more profitable to buy in the Marina or Pedregal? Is there any hidden tax? Where can you get a rental yield above 7%?

We have all the answers you need.

At TheLatinvestor, we know this market like the back of our hand. Actually, we've compiled all our findings in one pack. Get it now.

In this article, we'll provide you with helpful information.

How's the real estate market in Cabo San Lucas?

Are property values increasing or decreasing? Let's check the latest data and statistics.

Property types

In Cabo San Lucas, you can find various types of properties for sale.

These include beachfront condos offering stunning ocean views, charming villas nestled in serene neighborhoods, modern single-family homes with private pools, and spacious lots of land for building your dream home.

Whether you're looking for a cozy retreat, a luxurious getaway, or a blank canvas to create your ideal living space, Cabo San Lucas offers a diverse range of properties to suit different preferences and lifestyles.

Better to buy or rent?

(In case you want it for yourself, not for rental purposes)

If Cabo San Lucas is your city of choice, you might be considering whether it's better to buy a property or opt for renting in this popular Mexican resort town.

Usually, buying is better than renting in Cabo San Lucas due to the potential of the property appreciating in value, as well as the ability to customize the property to fit the individual's needs.

On the other hand, renting might be the better fit if you value flexibility.

Property prices in Cabo San Lucas

On average, according to the updated data from National Institute of Statistics and Geography (INEGI), purchasing a property in Cabo San Lucas would cost you around $4,200 per square meter.

There are big differences, obviously. The value of a square meter for a cozy villa in Cabo San Lucas might differ from a condo on the marina. You'll get a more detailed in our pack for buying property in Cabo San Lucas and in Mexico.

To give you a better idea, it means that, instead of buying an apartment in New York, you can get 3 properties in Cabo San Lucas.

However, housing prices in Cabo San Lucas are slightly higher (5%) than in Cancún.

The most expensive neighbourhoods in Cabo San Lucas are probably El Tezal, Puerto Los Cabos, and Palmilla, while the cheaper neighbourhoods are likely to be El Zacatal, El Cangrejo, and El Centenario.

Trends

First and foremost, we have to acknowledge that Mexico is, today, a relatively stable country. The last Fragile State Index that has been reported for this place is 70.3.

Keep this in view when pondering the viability of buying a property in in Cabo San Lucas.

Also, according to the International Monetary Fund (IMF), Mexico's economy is expected to soar by 8.3% in the coming 5 years, resulting in an average GDP growth rate of 1.7%.

If you intend to invest in real estate in Cabo San Lucas it's a good thing because a positive growth rate (usually) leads to higher incomes for citizens, enabling them to invest in real estate, which boosts demand and prices for properties.

Also, in Mexico, the average GDP per capita has changed by -3.6% over the last 5 years. It's not a good number.

Looking for more updated data? We've done a big-picture study to find out if it's a good idea to purchase property in Mexico right now.

Buying property in Cabo San Lucas

It can be difficult to buy property in Cabo San Lucas due to the difficulty of obtaining reliable and updated information about the process. That's why we have created the pack to buy property in Cabo San Lucas and in Mexico.

Buying process

In our pack, we've explained the entire buying process in detail. We've provided clear information about prices and yields based on the area, guidance on negotiating the price, and options for securing a mortgage.

Now, we're offering you a simpler version, step-by-step, to make it easier for you to grasp.

This is the step-by-step process to purchase a property in Cabo San Lucas:

1. Research the market and set a budget, considering factors like location, amenities, and view.
2. Engage a local real estate agent familiar with Cabo's regulations and offerings.
3. View properties and choose one that meets your preferences and requirements.
4. Make an offer and negotiate terms, taking into account the local market conditions.
5. Sign a purchase agreement, and provide an earnest money deposit (around 5% of the property price).
6. Conduct due diligence with the help of a local attorney, reviewing property titles, zoning regulations, and any liens.
7. Secure financing if needed, often through a Mexican bank.
8. Obtain a Mexican taxpayer ID (RFC) and open a bank trust (Fideicomiso) if buying within the restricted zone, as foreigners cannot directly own property in these areas.
9. Obtain permits and approvals from local authorities and the Ministry of Foreign Affairs (SRE) for the Fideicomiso.
10. Finalize closing details with the notary and seller, including property inspection and appraisal.
11. Pay the remaining balance and closing costs, which typically range from 5% to 10% of the property price.
12. Sign the final deed before a notary public, officially transferring ownership and taking possession of the property.

Also, if you're not from the country, you might want to check our article on how to buy property as a foreigner in Mexico.

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Where to find a property

Explore these websites to find properties in Cabo San Lucas:

• Mexico Real Estate Group - Specializing in luxury properties in Mexico, this multilingual brokerage serves international buyers and investors.
• Top Mexico Real Estate - A professional agency dedicated to helping American and Canadian buyers find their dream homes in Mexico.
• Bay Realty Mexico - A local real estate agency with over 15 years of experience in the Puerto Vallarta and Riviera Nayarit real estate market.
• Cochran Real Estate - A boutique real estate agency specializing in assisting buyers and sellers in Jalisco and Nayarit, Mexico.

Also, know that we have included contacts of real estate agencies, property lawyers, moving companies, expats communities and more in our pack for buying property in Mexico.

Which properties for which budget?

As mentioned before, the average price per sqm in Cabo San Lucas is $4,200. A 1-bedroom property with a size of 60 square meters would cost approximately $252,000, whereas a 2-bedroom property with a size of 85 square meters would cost approximately $357,000.

Of course, the price of properties can be influenced by their qualities and the area they're in.

Top neighborhoods in Cabo San Lucas will come with higher price tags. If you're looking at Pedregal, a house could be around $790,000, but an apartment in Palmilla might be priced at $450,000.

Of course, certain regions are more affordable. You may find a residence in El Tezal for $420,000, or you might locate a residence in El Caribe priced at $260,000.

Find a more detailed price list in our full pack for buying property in Mexico.

Mistakes to avoid

Here are the main pitfalls specific to buying a property in Cabo San Lucas, Mexico:

• Ejido land issues: Beware of properties on ejido land, as ownership rights can be complex and uncertain.
• Fideicomiso complexities: Foreigners may require a bank trust (fideicomiso) to own property, leading to additional costs and paperwork.
• Notary selection: Choose a reputable notary to ensure proper legal documentation and avoid fraudulent transactions.
• Coastal zone regulations: Check compliance with strict regulations governing building near the coastline.
• Water scarcity: Confirm a reliable water supply, as the region is susceptible to droughts.
• Hurricane vulnerability: Assess the property's resilience against potential hurricanes and damage insurance options.
• Cultural differences: Understand local customs and laws to navigate the buying process smoothly.
• Maintenance fees: Investigate HOA fees and services provided to avoid unexpected expenses.

We don't want this to happen to you, so we have included a full checklist for your property investment in our pack of documents. Avoid these mistakes and save a lot of money.

Everything you need to know is included in our Mexico Property Pack

Living in Cabo San Lucas

Living in Cabo San Lucas is a dream come true for many, offering a unique combination of stunning beaches, world-class amenities, and a vibrant culture that make it an ideal place to buy a property.

Cost of living

The cost of living in Cabo San Lucas is generally quite affordable compared to other tourist destinations in Mexico. The cost of housing and food is relatively low, while the cost of entertainment and leisure activities can be quite high.

Here are some examples to better understand the cost of living in Cabo San Lucas, Mexico:

• Margarita cocktail at a beachside bar in Medano Beach: $8.
• Rent for a one-bedroom apartment in the Pedregal neighborhood: $1,000/month.
• Tacos de pescado (fish tacos) for two at a local taqueria: $15.
• 1.5-liter bottle of Jarritos (Mexican soda): $1 at a supermarket.
• Electricity bill for an 85m² apartment using CFE (Federal Electricity Commission): $80/month.
• Monthly membership at Cabo Fitness Club: $70.
• Ticket to a Mexican film at Cinemex Puerto Paraíso: $9.
• Cup of locally brewed craft beer at a microbrewery in downtown Cabo: $5.

Neighbourhoods

We like to make information easy to understand. Therefore, we made a table that shows all the neighborhoods in Cabo San Lucas. For yields, prices and rents, check our property pack.

Life in Cabo San Lucas

Cabo San Lucas is a major tourist destination in Mexico that is known for its beautiful beaches and luxury resorts. It has a strong economy that is largely driven by tourism, as well as fishing and agriculture.

What expats usually like the most in Cabo San Lucas is its beautiful beaches and its vibrant nightlife. They also appreciate the many outdoor activities, like deep sea fishing and whale watching, that the area has to offer.

Access to healthcare in Cabo San Lucas is generally good, with a number of hospitals and clinics providing quality care.

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Renting out in Cabo San Lucas

This section is for you if you want to buy property solely for renting out and earning income.

Long-term

Tenant Profiles in Cabo San Lucas

According to the data reported by Wikipedia, the home ownership rate in Mexico is 80%, which is rather high.

It is probably a bit less in Cabo San Lucas which is quite different from the rest of the country.

If you decide to buy and rent out to long-term tenants, you should target families looking for a vacation home, retirees looking for a place to settle down, and young professionals looking for a place to live and work. Additionally, you may also be able to attract tourists looking for a short-term rental.

Here is a little summary table we've made for you.

Rental yields

Nowadays, rental yields in Cabo San Lucas are usually below 5%. It's not much. A good rental yield is usually around 7% or higher. Maybe, you knew it already.

Cabo San Lucas properties close to the beach and downtown areas tend to have the best rental yields due to the high demand for vacation rentals in these areas. These properties also benefit from the city's warm climate, which makes them attractive for year-round rental income.

For further explanation and a more detailed breakdown, you can check the reports and analyses we have made.

Finally, be aware that rental incomes in Cabo San Lucas are taxed at 25%, which is average.

Short-term

You could also decide to rent short-term to vacationers, business travelers, and cruise ship passengers visiting Cabo San Lucas. Additionally, short-term rentals can be attractive to seasonal workers, such as those working in the fishing and tourism industries.

If you decide to go with that option, look for properties in the Marina and Medano Beach areas of Cabo San Lucas. These areas are popular amongst tourists and boast stunning views of the Land's End arch.

Currently, there are approximately 6,000 active Airbnb listings in Cabo San Lucas, reflecting a highly dynamic and bustling short-term rental market. The average daily rate stands around $320, which is quite high.

You have the opportunity to generate a nice additional income stream then. According to online testimonials and analytics platform like AirDNA, Guesty and Inside Airbnb, people who offer short-term rentals in Cabo San Lucas can make around $4300 per month. Also, the average occupancy rate is estimated at 70%.

Is it worth buying real estate in Cabo San Lucas then?

Certainly, buying a property in Cabo San Lucas can be a fantastic idea for those who are looking for a dreamy second home or a tranquil retirement destination. Cabo's scenic beauty, vibrant culture, and relatively affordable cost of living make it an enticing choice.

If you're planning to live in Cabo San Lucas, buying a property makes sense as it allows you to customize your living space and potentially benefit from property value appreciation over time. Plus, you'll be part of a community that enjoys stunning beaches, world-class amenities, and a laid-back lifestyle.

However, it's not all sunshine and roses. If you're a short-term investor or looking for quick returns, Cabo may not be your best bet. The market doesn't guarantee rapid property price increases. Likewise, those who value flexibility in their living arrangements might prefer renting, as property ownership comes with responsibilities and financial commitments.

Budget-conscious buyers should also tread carefully, as property prices can vary widely, and there are additional costs like maintenance fees and property taxes. Lastly, if you're unfamiliar with Mexican property regulations, the process of buying property in Cabo can be complicated, especially for foreigners.

So, while Cabo San Lucas offers a slice of paradise, it's crucial to weigh your options and align your investment goals with the reality of the market and your personal situation.

Make sure you understand the real estate market in Cabo San Lucas

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The content provided here is for informational purposes only and does not imply endorsement or advice. While we strive for accuracy, we do not guarantee the completeness or reliability of the information, including text, images, links, or other elements in this material. Following the content and analyses presented here does not assure specific outcomes. For guidance tailored to your individual circumstances, it is recommended to consult with a professional, such as a lawyer, accountant, or business advisor.