What rental yield can a villa get in Cabo San Lucas?

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Why do Cabo San Lucas villa yield estimates seem to be all over the place?

Cabo San Lucas villa rental yields are genuinely hard to summarize with one percentage because the available datasets mix very different homes, neighborhoods and definitions of “yield.”

Take AirDNA. Its latest broad Cabo San Lucas dataset tracks 3,396 short-term rentals and shows about $84,200 in average annual revenue, 48% occupancy and a $561 average daily rate. Yet another AirDNA geography carrying the Cabo San Lucas name contains just 211 listings and reports $53,200 in annual revenue, 37% occupancy and a $982 ADR.

That gap is too large to shrug off. The samples are clearly capturing different slices of the market.

Villa-specific data make the problem even clearer. Current local estimates put a well-managed three-bedroom Pedregal villa around $80,000 to $150,000 in annual gross bookings, while larger luxury villas can reach $150,000 to $350,000 or more. Meanwhile, asking prices can run from around $1.5 million for an investable Pedregal villa to several million dollars for premium estates.

So when somebody says a Cabo villa “yields 10%,” we still need to know whether that means gross bookings divided by purchase price, income after management, or the owner's final return after operating costs and tax.

Is Cabo San Lucas getting enough visitors to keep villa demand strong?

Cabo San Lucas still has a deep enough luxury-tourism market to support expensive villas, and the latest destination data give us little reason to question the demand base itself.

Los Cabos received nearly 3.8 million visitors in 2025, according to the Los Cabos Tourism Board. Visitor arrivals were almost 130% higher than a decade earlier. Hotel supply expanded from roughly 15,000 rooms in 2016 to more than 22,000, yet hotels still averaged around 70% occupancy in 2025.

The type of visitor matters just as much as the volume. Nearly 80% of Los Cabos hotel inventory now sits in the five-star category, while the average occupied hotel room fetched close to $440 a night in 2025.

That gives villas access to a large pool of travelers already comfortable spending heavily on accommodation. Families and groups can compare a $1,500 villa with four separate $400 hotel rooms and find the villa perfectly rational.

The demand is there. A good villa still has to capture it at a price that makes sense relative to the millions of dollars tied up in the property.

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Are Cabo San Lucas vacation rentals actually getting stronger right now?

Cabo San Lucas vacation rentals look stable rather than explosively stronger today, which makes aggressive growth assumptions difficult to defend.

The latest broad AirDNA figures appear spectacular at first glance: average listing revenue is up 89% year over year and occupancy is up 12.4%. But average daily rates are down 15.5%, active listing count is down 61.5%, and RevPAR has increased by only 0.5%.

RevPAR is the useful number here because it combines price and occupancy across available nights. A 0.5% increase is basically flat.

AirDNA's narrower Cabo sample is weaker still. Revenue there is down 8.7%, occupancy is down 8.3% and RevPAR is down 7.5%, even though the achieved nightly rate rose 5.3%.

BNBCalc also shows softer conditions in its broader Cabo-area dataset, with annual revenue down around 16%, occupancy down around 5% and RevPAR down around 26% over its comparison period.

So this is a healthy rental destination with strong pricing power, but there is no convincing evidence that an ordinary villa can simply ride rapid market growth to a high return. Property selection matters more now.

How much can a Cabo San Lucas villa really charge per night?

A good Cabo San Lucas villa can realistically charge from several hundred dollars to well above $2,000 a night, although the difference between ordinary and exceptional properties is enormous.

Pedregal is a useful example. Current local market estimates put three-bedroom villas around $400 to $750 a night, while published community estimates extend from roughly $500 to $2,500 or more across the wider villa inventory.

The top end can move much higher during Christmas, New Year and other premium periods. Those prices should not be mistaken for an annual average. A villa advertised at $2,500 for a holiday week may spend much of the year selling nights at a fraction of that rate.

Bedroom count alone also explains surprisingly little. Two four-bedroom homes in the same area can command completely different prices when one has unobstructed ocean views, four equally strong suites, a large pool terrace and high-end design while the other feels like a normal house with extra bedrooms.

For underwriting, we would start with the achieved rates of five to ten genuinely comparable villas, then discount the result if the property is new to the rental market.

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How much annual rent can a Cabo villa realistically make?

A well-run Cabo villa can gross roughly $80,000 to $200,000 a year without being extraordinary, while larger luxury properties can push past $250,000.

Recent local performance estimates put a well-managed three-bedroom Pedregal villa at roughly $80,000 to $150,000 in annual gross revenue, with occupancy around 55% to 65%. Palmilla three-bedroom villas are estimated around $90,000 to $200,000 or more.

For larger luxury properties, current estimates move toward $150,000 to $350,000+. Another recent Cabo guide puts four-bedroom-and-larger villas around $100,000 to $250,000+, which gives us a useful second reference point even though the exact ranges differ.

A concrete Pedregal model is even more useful. A $1.5 million three-bedroom villa renting at an average $650 per night and 55% occupancy generates about $130,500 in annual bookings.

That is a believable middle case: meaningful six-figure revenue without assuming that every week sells at peak-season rates.

Once revenue approaches $300,000 or $400,000, we are usually dealing with a larger and much more differentiated product. Those outcomes exist in Cabo, but they belong in the upside case unless the property already has reservation history proving otherwise.

Does buying a more expensive Cabo villa give you a better rental yield?

Expensive Cabo villas usually generate more rent in dollars, but the percentage yield often gets worse as the purchase price climbs.

Consider a villa producing $130,000 a year. Buy it for $1.3 million and the gross yield is 10%. Pay $1.5 million and it drops to 8.7%. At $2 million, the same villa gives you 6.5%.

The rent has not changed at all.

This is why trophy homes can be disappointing income investments. Buyers pay for privacy, architecture, frontage, scarcity, brand-name communities and personal enjoyment. Renters value those features too, but they rarely pay enough extra rent to compensate dollar for dollar for the owner's higher acquisition cost.

Current local investment models show exactly that pattern. A three-bedroom Pedregal villa around $1.5 million is modeled at roughly 5% to 7% gross yield in one recent dataset, while Palmilla villas around $2.2 million come in around 4% to 5.5%. A four-bedroom Diamante example at $2.5 million lands around 4.4% to 6%.

For a buyer focused mainly on income, paying less for the right villa can be more important than owning the most prestigious address.

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Is Pedregal actually good for villa rental yield?

Pedregal can produce good villa rental returns, but paying Pedregal prices does not automatically produce a good yield.

The neighborhood has obvious rental advantages. It sits next to downtown Cabo San Lucas, has strong name recognition, plenty of ocean-view inventory and a long history of luxury vacation rentals. Current local estimates put Pedregal nightly villa rates around $500 to $2,500+ and annual revenue around $80,000 to $200,000+.

The investment math becomes much more sensitive to purchase price.

One recent Cabo model uses a three-bedroom Pedregal villa purchased for $1.5 million, generating $130,500 of gross annual revenue. That works out to an 8.7% gross yield. Another current estimate models a $3 million ocean-view villa at approximately $380,000 of annual bookings. That reaches 12.7% gross and represents a much stronger result.

There are plenty of weaker possibilities. A $3 million Pedregal property collecting $150,000 annually yields only 5% gross. A $5 million villa earning $200,000 gives just 4%.

Pedregal works best when we find an unusually productive house, an attractive purchase basis, or both. The neighborhood can support high rent; it cannot rescue an excessive purchase price.

How much do Cabo villa management and running costs eat into the yield?

Cabo villa expenses can easily consume 40% to 55% of gross rental revenue, which is why a headline 8% yield often ends up around 4% or 5% before income tax.

Full-service Los Cabos vacation-rental management currently costs roughly 20% to 30% of rental revenue according to Vacation Los Cabos, with established full-service operators often clustering around 25%. Other local operators recommend budgeting closer to 25% to 35%.

Then come platform charges, electricity, water, insurance, pool care, landscaping, HOA dues where applicable, repairs and replacement of guest-worn furniture and equipment.

A recent Cabo comparison illustrates the size of the gap. Its $1.5 million Pedregal villa generates $130,500 gross. Management at 20% removes $26,100. HOA and maintenance take another $24,000, while utilities and insurance cost $8,400. Net operating income falls to approximately $72,000.

Gross yield: 8.7%. Net operating yield: 4.8%.

That changes the feel of the deal quite a bit.

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Do taxes and rental rules change the Cabo villa return a lot?

Taxes and rental rules can take a meaningful bite from a Cabo villa owner's final cash return, and HOA restrictions can be even more important than municipal rules for a specific purchase.

Baja California Sur currently applies a 4% lodging tax to short-term stays booked through Airbnb, including cleaning fees. Airbnb collects that charge from guests on qualifying reservations.

Mexican rental income can also involve ISR income tax and 16% IVA, with the actual treatment depending on ownership structure, tax residency, deductions and how the bookings are processed. Platform withholding can change materially when the owner has not provided a valid Mexican RFC.

Those figures should be handled carefully when calculating yield. Guest-paid lodging tax does not have the same economic effect as a $10,000 annual maintenance bill, and income tax depends heavily on the owner's circumstances.

The more immediate deal-breaking issue can be the property's own rules. Current Cabo rental guides warn that some communities or individual HOA phases impose minimum stays or restrict short-term rentals altogether.

Before buying a villa for Airbnb income, we would verify the applicable HOA rules, permitted rental duration and tax setup in writing. A spreadsheet showing a 7% yield becomes useless if the property cannot legally follow the assumed rental strategy.

How much does Cabo seasonality affect a villa's annual income?

Cabo villa income still moves sharply between strong and weak periods, although the destination has enough year-round tourism to avoid becoming a purely seasonal rental market.

AirDNA's latest broad Cabo San Lucas data show 48% average annual occupancy and give the market a relatively high seasonality score of 82, meaning demand is steadier than in highly seasonal vacation destinations.

BNBCalc still finds a clear calendar pattern. March, December and February are among the strongest revenue periods, while August, September and October sit at the weak end.

Local villa operators see the same shape more dramatically. Current Pedregal estimates put professionally run three-bedroom villas around 55% to 65% annual occupancy, with peak-season occupancy much higher.

This also changes how we should think about personal use. Twenty owner nights in September can cost relatively little in forgone rent. Twenty owner nights covering Christmas, New Year and prime winter dates can remove a disproportionate share of annual profit.

A buyer planning to spend every major holiday in Cabo should model those dates as unavailable from day one.

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Which villa features actually help rental yield in Cabo San Lucas?

Ocean views, strong outdoor living space and a layout that works for groups can materially lift Cabo villa revenue, while many expensive upgrades add far less than owners expect.

A private pool is almost standard now. BNBCalc finds pools in roughly 81% of Cabo-area short-term-rental listings, so simply having one no longer makes a property unusual.

The real gap appears when several valuable features come together: unobstructed ocean views, an attractive pool terrace, a hot tub, large communal spaces and bedrooms that all feel good enough for adults paying similar shares of the rental cost.

That last point matters for group bookings. A nominal four-bedroom villa with one spectacular master suite and three weak bedrooms is harder to sell at premium rates than a property with four credible suites.

Location then amplifies the effect. Walkability or a short drive to downtown Cabo, the marina, swimmable beaches or major resorts makes a villa easier to book across several traveler types.

Spend on what guests can see in the first five listing photos. Extra interior square footage or decorative finishes are much harder to justify when they do little to improve the nightly rate.

Is short-term renting a Cabo villa better than finding a long-term tenant?

Short-term renting gives a good Cabo villa much more revenue upside, while long-term renting makes the owner's income easier to predict and cheaper to manage.

The management gap alone is meaningful. Full-service vacation-rental management commonly runs around 20% to 30% of revenue, sometimes higher. Long-term management is generally much cheaper because there are fewer bookings, check-ins and guest issues.

A successful vacation villa can compensate by charging hundreds or thousands of dollars per night. A well-positioned Pedregal property can gross well into six figures when operated professionally.

Long-term leases rarely reach that revenue ceiling, but vacancy becomes much easier to manage and the property suffers less hospitality-style wear.

For an investor choosing a villa specifically because of Cabo's tourism demand, short-term rental usually offers the more interesting upside. We would choose long-term leasing when simplicity, predictable cash flow or HOA rules carry more weight than maximizing revenue.

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What gross rental yield should we actually expect from a Cabo villa today?

For a good Cabo San Lucas villa bought at a reasonable price, we would currently underwrite roughly 4.5% to 8% gross rental yield and treat anything above 8% as a strong result that needs property-specific evidence.

This is lower than the 8% to 12% figures often attached to Cabo rental properties in general because villas are expensive.

Recent villa-specific models illustrate the range. A $1.5 million Pedregal villa generating $80,000 to $110,000 gives roughly 5.3% to 7.3% gross. A $2.2 million Palmilla villa earning $90,000 to $120,000 produces about 4.1% to 5.5%. A $2.5 million four-bedroom Diamante property producing $110,000 to $150,000 lands around 4.4% to 6%.

There are clear exceptions. The separate $1.5 million Pedregal example producing $130,500 reaches 8.7%. A highly productive $3 million ocean-view property grossing around $380,000 would reach roughly 12.7%.

Those stronger cases are precisely why Cabo attracts income-oriented buyers. They also show why using an average neighborhood yield is dangerous: two villas in the same community can produce radically different returns.

What net rental yield can a Cabo villa actually leave the owner?

A professionally managed Cabo villa will often settle around 2.5% to 5% net operating yield before financing and the owner's personal income tax, with 5%+ already representing a good villa investment.

The easiest way to see it is to start from gross yield.

Suppose we buy a villa for $1.5 million and gross $105,000 a year. That is 7% gross. If only 50% to 60% of bookings remain after management and normal operating costs, net operating income falls to roughly $52,500 to $63,000. The resulting yield is about 3.5% to 4.2%.

The documented Pedregal model discussed above performs slightly better: $130,500 of bookings becomes $72,000 after its modeled recurring expenses, leaving 4.8% on a $1.5 million purchase.

A villa that reaches 6% net before financing would therefore get our attention. Achieving that consistently usually requires some combination of a good acquisition price, high occupancy, premium nightly rates, controlled operating costs and strong direct-booking volume.

Claims of 8% or 10% net deserve much more scrutiny. Cabo certainly has properties capable of producing unusual returns, but those numbers should come with trailing reservation statements and a complete expense history.

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What rental yield can a villa get in Cabo San Lucas?

A Cabo San Lucas villa can realistically produce around 4.5% to 8% gross rental yield today, with roughly 2.5% to 5% left as net operating yield in a normal professionally managed case.

That is the range we would use for serious underwriting.

A villa reaching 8% to 10% gross is doing well. Crossing 10% gross is possible when the purchase price is unusually attractive or the house is an exceptional rental performer. Sustainable net returns above 5% are also possible, but we would want real booking and expense records before assuming them.

At the weaker end, plenty of multimillion-dollar villas can produce only 3% to 5% gross. They may still be excellent homes and appreciate over time, but rental income alone does not make them compelling investments.

The latest market data reinforce that distinction. Cabo tourism remains strong and guests are still paying high nightly rates, while short-term-rental RevPAR is roughly flat in AirDNA's broadest current Cabo dataset. These days, investors cannot rely on a rapidly rising market to hide an expensive purchase.

For a villa bought mainly for income, around 6% to 8% gross and 3.5% to 5% net looks credible. Around 8% to 10% gross is attractive. Anything materially above that should be treated as a property-specific opportunity that needs proof rather than a normal Cabo San Lucas return.

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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.