Authored by the expert who managed and guided the team behind the Mexico Property Pack
Yes, the analysis of Cabo San Lucas' property market is included in our pack
Foreigners can legally purchase most types of property in Cabo San Lucas through a Mexican bank trust system called fideicomiso, which costs $500-1,500 annually and allows full control of the property for 50 years with unlimited renewals.
The most popular neighborhoods for foreign buyers include El Tezal with properties ranging from $200,000 condos to multi-million dollar villas, the Marina District offering high rental yields of 6-10%, and luxury gated communities like Pedregal and Cabo Bello where vacation rental demand remains strong throughout the year.
If you want to go deeper, you can check our pack of documents related to the real estate market in Cabo San Lucas, based on reliable facts and data, not opinions or rumors.
Foreigners must use a fideicomiso (bank trust) to buy property in Cabo San Lucas since it's within Mexico's restricted coastal zone, with total acquisition costs typically ranging 8-12% of the purchase price.
The most sought-after areas like El Tezal and Marina District offer rental yields of 5-10% with strong appreciation potential, while the buying process can be completed remotely through proper legal representation.
| Aspect | Key Details | Cost/Timeline |
|---|---|---|
| Property Ownership | Fideicomiso (bank trust) required for foreigners | $500-1,500/year, 50-year renewable terms |
| Acquisition Tax | 3% in Los Cabos municipality | $15,000 on $500,000 property |
| Total Closing Costs | Legal fees, trust setup, notary, taxes | 8-12% of purchase price |
| Cash Purchase Limit | Maximum $47,000 USD in physical cash | Above requires bank transfer/reporting |
| Mortgage Options | Available to foreigners, 15% down minimum | 7-14% interest rates, 10-30 year terms |
| Annual Property Tax | Municipality-set rate | ~$400/year average in Cabo |
| Rental Yields | Best areas: El Tezal, Marina District | 5-10% annual returns |
What kinds of properties can foreigners legally buy in Cabo San Lucas and what restrictions apply?
Foreigners can legally purchase most types of residential property in Cabo San Lucas, including condos, houses, townhomes, and land for development.
The main restriction is that Cabo San Lucas falls within Mexico's "Restricted Zone" - defined as within 50 kilometers of the coastline or 100 kilometers of an international border. In this zone, foreigners cannot directly own land title.
Instead, you must acquire property through a fideicomiso, which is a bank trust where a Mexican bank holds the legal title while you maintain all beneficial ownership rights. This includes the right to use, modify, rent, sell, and inherit the property. The fideicomiso lasts for 50 years and can be renewed indefinitely.
The annual cost for maintaining a fideicomiso ranges from $500 to $1,500 depending on the bank and property value. You have complete control over the property and can treat it exactly as if you owned it directly.
It's something we develop in our Mexico property pack.
Are there specific zones or neighborhoods where foreigners tend to buy the most?
Foreign buyers concentrate heavily in several key neighborhoods that offer the best combination of lifestyle, investment potential, and rental income opportunities.
El Tezal stands out as the most popular area for foreign investment, with properties ranging from $200,000 condos to multi-million dollar villas. This neighborhood has experienced rapid property appreciation and offers proximity to both beaches and downtown Cabo. The area attracts a growing expat and retiree community.
The Marina District draws significant foreign interest due to its vibrant, walkable environment and high vacation rental demand. Properties here typically yield 6-10% annual rental returns and range from $250,000 to $1.5 million for condos, with luxury properties reaching $4 million.
Cabo Bello is another gated community favorite among foreigners, offering properties from $300,000 to $800,000 with strong vacation rental demand. Other popular expat areas include Pedregal (luxury gated community), Chileno Bay, Diamante, and Palmilla.
These neighborhoods consistently attract foreign buyers because they offer established expat communities, modern amenities, security, and strong resale potential.
What's the full step-by-step process for buying a property there as a foreigner?
The property purchase process in Cabo San Lucas follows a structured eight-step timeline that typically takes 60-90 days to complete.
First, find and hire a licensed local real estate agent and attorney who specialize in foreign purchases. These professionals are essential for navigating Mexican property law and avoiding costly mistakes.
Second, establish your budget and financing. Most buyers use cash, though Mexican mortgage financing is available with 15% down payments and rates of 7-14%.
Third, conduct your property search and viewings with your agent. Once you find a suitable property, negotiate and submit your offer through your agent.
Fourth, enter the due diligence phase where your attorney verifies clear title, inspects the property for liens or debts, and confirms all legal documentation is in order.
Fifth, if the property is in the restricted zone, apply for your fideicomiso through a Mexican bank and obtain the required permit from Mexico's Ministry of Foreign Affairs (SRE).
Sixth, sign the purchase-sale agreement and place your deposit (typically 5-10% of purchase price) into an escrow account held by the notary.
Seventh, complete the notary review and closing process. The notary handles title registration, calculates all taxes and fees, and prepares final paperwork for signing.
Eighth, attend the final closing where you or your legal representative signs the deed, funds are transferred, and you receive the keys to your new property.
Which documents and paperwork are required at each stage of the purchase?
The documentation requirements vary by stage but follow a predictable pattern that your attorney will guide you through.
For the initial stages, you'll need your passport, current visa status, and proof of financial solvency including recent bank statements showing sufficient funds for the purchase and closing costs.
During due diligence, your attorney will obtain the property title certificate, certificate of no encumbrances (showing no liens or debts), official property appraisal, and all relevant property documents from the seller.
For the fideicomiso setup, you'll need to obtain an RFC (Mexican tax ID number) and apply for the SRE permit from Mexico's Ministry of Foreign Affairs, which authorizes foreign ownership through the trust.
At closing, you'll sign the fideicomiso contract documents, the purchase-sale agreement, and provide proof of payment for all taxes, fees, and escrow deposits.
If completing the purchase remotely, you'll need a notarized and apostilled power of attorney document authorizing your legal representative to act on your behalf.
Don't lose money on your property in Cabo San Lucas
100% of people who have lost money there have spent less than 1 hour researching the market. We have reviewed everything there is to know. Grab our guide now.
Can you complete the buying process without physically being in Mexico?
Yes, you can complete the entire property purchase process remotely, though a physical visit is strongly recommended for property inspection and relationship building.
The key requirement for remote purchasing is establishing a notarized and apostilled power of attorney that authorizes a trusted legal representative to act on your behalf. This document must be prepared in your home country and properly authenticated for use in Mexico.
Your attorney can handle most steps remotely including document review, title verification, fideicomiso application, contract negotiation, and even final closing procedures. Many banks now allow fideicomiso setup through digital processes.
However, certain practical considerations make a site visit valuable. You should inspect the property in person or have a trusted local representative conduct a thorough inspection on your behalf. Building direct relationships with your attorney, real estate agent, and property management team also proves beneficial for long-term success.
Some banks may require you to open a Mexican bank account in person, though this requirement varies by institution and can sometimes be completed through legal representation.
What fees, taxes, and ongoing costs should you expect when buying and owning property there?
Property acquisition costs in Cabo San Lucas typically total 8-12% of the purchase price, making budgeting straightforward for buyers.
| Cost Category | Rate/Amount | Example on $500,000 Property |
|---|---|---|
| Acquisition Tax (Los Cabos) | 3% of purchase price | $15,000 |
| Closing Costs (total) | 8-12% of purchase price | $40,000-$60,000 |
| Annual Property Tax | ~$400/year average | $400 |
| Fideicomiso Annual Fee | $500-$1,500 | $1,000 |
| Capital Gains Tax (at sale) | Up to 35% | Varies by profit |
| HOA Fees (if applicable) | Varies by community | $100-$500/month |
| Property Management | 8-12% of rental income | $400-$600/month |
Annual property taxes in Mexico remain extremely low compared to other countries, typically 0.1-0.3% of property value. In Cabo San Lucas, most properties incur around $400 per year in property taxes regardless of value.
The fideicomiso trust requires annual renewal fees paid to the Mexican bank, ranging from $500-$1,500 depending on the institution and property value.
Is it possible to buy in cash, and are there any limits or reporting requirements?
Cash purchases are common and preferred in Cabo San Lucas real estate transactions, but Mexico has specific limits and reporting requirements for physical cash transactions.
The legal limit for physical cash transactions is 800,000 Mexican pesos (approximately $47,000 USD as of September 2025). Any amount exceeding this threshold must be completed through bank transfers, cashier's checks, or other banking instruments.
Transactions above the cash limit trigger automatic reporting to Mexico's tax authority (SAT), which monitors large cash movements for anti-money laundering compliance.
Most property purchases use wire transfers directly between banks, which provides better security, clear documentation, and easier compliance with reporting requirements. Your notary will coordinate the transfer timing to ensure funds arrive properly for closing.
Cash purchases offer advantages including faster closing times, stronger negotiating position, and no financing contingencies. However, you'll still need to demonstrate the legal source of funds through bank statements and other financial documentation.
Can foreigners get a mortgage in Mexico, what types are available, and what are the current rates and conditions?
Mexican banks do offer mortgage financing to foreigners, though terms and requirements differ significantly from home country financing options.
Current mortgage rates for foreigners range from 7-14% annually, depending on the lender, your creditworthiness, and loan terms. Most loans require minimum down payments of 15-20% and offer terms from 10-30 years.
Several lenders specialize in foreign buyer mortgages including Moxi (offering 5-7% rates), MortgageHub (~9%), HIR Casa (8.9%), and SOC CAF (10.6-10.8%). Each lender has different requirements for income verification, credit checks, and residency status.
Most Mexican mortgages are issued in pesos, which creates currency risk for buyers earning income in other currencies. Some lenders offer dollar-denominated loans, but these typically carry higher rates and stricter requirements.
The qualification process typically requires proof of income from your home country, credit reports, bank statements, and sometimes a Mexican bank account. Some lenders require temporary or permanent Mexican residency, while others work with tourist visa holders.
Processing times range from 30-60 days, and most lenders require property appraisals and title insurance before approval.
Does buying property lead to residency or citizenship, and what are the timelines and requirements?
Property ownership alone does not automatically grant Mexican residency or citizenship, but it can strengthen your application for legal residency status.
Mexico offers two main residency pathways: temporary residency (renewable up to 4 years) and permanent residency. Property ownership demonstrates financial stability and ties to Mexico, which immigration officials view favorably during residency applications.
Temporary residency requires proving monthly income of approximately $1,600 USD or bank savings of $27,000 USD. Permanent residency requires $2,600 monthly income or $108,000 in savings. Property ownership can help meet these financial requirements.
Mexican citizenship becomes available after 5 years of legal residency (2 years if married to a Mexican citizen). The process requires Spanish language proficiency, Mexican history knowledge, and demonstration of integration into Mexican society.
Residency applications must be initiated at Mexican consulates in your home country, not within Mexico. Processing times typically range from 2-6 months depending on the consulate and application completeness.
It's something we develop in our Mexico property pack.
We did some research and made this infographic to help you quickly compare rental yields of the major cities in Mexico versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you're planning to invest there.
What are the common mistakes and pitfalls foreigners face when buying in Cabo San Lucas?
Foreign buyers frequently encounter preventable problems that can cost thousands of dollars and months of delays when purchasing Cabo San Lucas property.
The most critical mistake is failing to hire licensed local professionals. Using unlicensed "expat advisors" or trying to navigate the process without proper legal representation often leads to title problems, overpayment, and legal complications.
Many buyers skip thorough due diligence, failing to verify clear title, check for property liens or debts, and confirm all legal documentation. This oversight can result in purchasing properties with hidden legal problems or outstanding obligations.
Misunderstanding fideicomiso trusts causes confusion and poor decisions. Some buyers worry unnecessarily about trust security, while others fail to budget for annual trust fees and renewal requirements.
Rushing the timeline creates unnecessary stress and poor decisions. The 60-90 day purchase process allows proper verification and documentation - attempting to accelerate this timeline often leads to mistakes.
Inadequate budget planning is common, with buyers underestimating closing costs (8-12% of purchase price) and ongoing expenses like property taxes, trust fees, HOA costs, and property management.
Finally, many buyers fail to inspect properties thoroughly in person or through trusted local representatives, leading to surprises about property condition, neighborhood characteristics, or infrastructure issues.
What are the typical property prices, rental yields, and the long-term market forecast?
Cabo San Lucas property prices vary significantly by neighborhood and property type, with the most desirable areas commanding premium prices and rental returns.
| Neighborhood | Condo/House Price Range | Luxury Villa Range | Annual Rental Yield |
|---|---|---|---|
| El Tezal | $200,000-$600,000 | $800,000-$2,000,000+ | 5-8% |
| Marina District | $250,000-$1,500,000 | Up to $4,000,000 | 6-10% |
| Cabo Bello | $300,000-$800,000 | $1,000,000-$3,000,000 | 6-9% |
| Pedregal | $400,000-$1,200,000 | $1,500,000-$5,000,000+ | 4-7% |
| Chileno Bay | $350,000-$900,000 | $1,200,000-$3,500,000 | 5-8% |
Rental yields in well-chosen areas average 5-10% annually, with vacation rental properties often achieving higher returns during peak seasons (December-April and July-August). Properties in El Tezal and Marina District consistently deliver the strongest rental performance.
The long-term market forecast remains positive driven by continued demand from US and Canadian retirees, investors, and expats. El Tezal specifically has experienced rapid appreciation over the past 5 years and this trend is expected to continue through 2026-2027.
Market growth factors include Cabo's direct flight connectivity to major US cities, established tourism infrastructure, growing expat community, and Mexico's favorable economic policies toward foreign investment. However, buyers should expect some price volatility related to US economic conditions and currency fluctuations.
What is everyday life like for expats living in Cabo San Lucas?
Expat life in Cabo San Lucas offers a comfortable blend of modern amenities, outdoor recreation, and vibrant international community that attracts retirees and remote workers worldwide.
Daily conveniences include access to major international retailers like Costco, Soriana, and Fresko supermarkets, excellent private healthcare facilities, international restaurants, high-speed internet, and modern banking services. Many expats find their cost of living lower than their home countries while maintaining similar lifestyle quality.
The outdoor lifestyle opportunities are exceptional, with year-round access to beaches, world-class fishing, golfing at championship courses, hiking, mountain biking, and water sports. The climate remains warm and sunny most of the year with minimal rainfall.
The expat community is diverse and welcoming, with active social groups, cultural events, volunteer opportunities, and support networks. Many neighborhoods like El Tezal have established expat populations that organize regular community activities and provide newcomer assistance.
Safety levels in most expat neighborhoods are high, with many communities featuring gated security, dedicated security patrols, and strong community watch programs. Expats generally report feeling safe and secure in their daily activities.
Language barriers exist but are manageable, with many locals speaking English in tourist and expat areas. However, learning basic Spanish significantly improves daily interactions and community integration.
It's something we develop in our Mexico property pack.
Conclusion
This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.
Cabo San Lucas presents a compelling opportunity for foreign property investors seeking both lifestyle and investment returns in a well-established market with clear legal frameworks for foreign ownership.
Success requires working with licensed local professionals, understanding the fideicomiso trust system, budgeting for total acquisition costs of 8-12%, and focusing on proven neighborhoods like El Tezal and Marina District that offer the strongest rental yields and appreciation potential.