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

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

Because the data mixes very different homes, neighborhoods and definitions of "yield", so one percentage can't describe a Cabo villa.

Take the big data providers. AirDNA counts about 2,434 active rentals in Cabo San Lucas, earning about $84,100 a year on average at 48% occupancy and $567 a night. AirROI tracks 2,894 listings and puts average revenue at about $29,700. BNBCalc counts about 7,310 listings and an average of roughly MXN 1.2 million (around $64,500).

They can't all describe the same typical property. Boundaries, listing rules and property mixes differ, and all of them blend two-bedroom condos with staffed villas. Never mix them in one calculation.

Villa-specific estimates are more useful. 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. Asking prices 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%", ask whether that means gross bookings divided by price, income after management, or the owner's final return after costs and tax.

Number being quoted	What it usually means	Typical problem
Market Airbnb revenue	All kinds of short-term rentals	Mixes condos, houses and villas
Villa gross yield	Annual bookings ÷ purchase price	Ignores operating costs
Net operating yield	Income after property expenses ÷ price	More useful for comparing properties
Cash-on-cash return	Cash flow ÷ owner's invested cash	Changes with financing
Luxury villa nightly rate	Advertised price per night	Says little about annual occupancy

Are fewer tourists flying to Cabo, and does it matter for villas?

Yes, fewer are flying in this year, but the luxury base villas rely on is still large.

Los Cabos received close to 3.8 million visitors in 2025, according to the Los Cabos Tourism Board, about 130% more than a decade earlier. Hotel supply grew from roughly 15,000 rooms in 2016 to more than 22,000, and hotels still averaged around 70% occupancy in 2025. Nearly 80% of hotel rooms are five-star, and the average room cost close to $440 a night.

That's the villa's pitch: a family or a group can compare a $1,500 villa with four $400 hotel rooms and find the villa perfectly rational.

But 2026 is softer. Grupo Aeroportuario del Pacífico counted 5.35 million passengers at Los Cabos airport from January to September 2026, down 5.6% from a year earlier. International passengers, the villa crowd, fell 8.4%, and 14.7% in September alone. Current demand is enough for a good villa; don't put any tourism growth into your numbers.

Are Cabo vacation rentals getting weaker in 2026?

Yes for prices: revenue per available night is flat at best, and hosts are cutting prices to keep calendars full.

AirDNA shows occupancy up 11.9% over a year, but the average nightly rate down 15.0% to $567. Revenue per available night (RevPAR), which combines both, is about $273, up only 1.5%. Hosts are working harder, with more check-ins and more wear, for about the same money. AirDNA's count of active listings also fell about 72%, which says more about how it counts listings than about the market.

BNBCalc is less kind. Over the 12 months to September 2026, it shows average revenue down 13%, occupancy down 5% and RevPAR down 20%.

What to do: when a seller shows you a villa's income, ask for nightly rates and occupancy month by month for 2025 and 2026, not one yearly total. If 2026 rates are lower, underwrite with 2026.

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

From a few hundred dollars to well above $2,000 a night, and the gap between ordinary and exceptional villas is enormous.

Pedregal is a useful example. Local estimates put three-bedroom villas around $400 to $750 a night, while community estimates for the wider villa stock run from roughly $500 to $2,500 or more.

Prices jump over Christmas, New Year and other peak dates. Don't mistake those for an annual average: a villa advertised at $2,500 for a holiday week may sell most of the year at a fraction of that.

Bedroom count explains less than you'd think. Two four-bedroom homes in the same area can earn very different rates when one has open ocean views, four equally good suites and a big pool terrace and the other feels like a normal house with extra bedrooms.

To underwrite, start from the achieved rates of five to ten truly comparable villas, then cut the result if the house has never been rented.

Villa type	Plausible achieved nightly range	Typical annual positioning
Ordinary 3BR vacation villa	$400–$650	Value-oriented group rental
Strong 3BR Pedregal-style villa	$550–$900	Established luxury rental
Strong 4BR+ villa	$800–$1,500	Premium family/group market
High-end ocean-view villa	$1,500–$2,500+	Luxury group travel
Exceptional staffed estate	$3,000+ on strong dates	Small top end of the market

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 pass $250,000.

Local estimates put a well-managed three-bedroom Pedregal villa at roughly $80,000 to $150,000 a year, with occupancy around 55% to 65%. Palmilla three-bedroom villas are estimated around $90,000 to $200,000 or more.

For bigger homes, estimates move toward $150,000 to $350,000+. BNBCalc's average for 4+ bedroom listings in Cabo San Lucas is about MXN 2.5 million a year (around $134,000), a good reality check against brochure numbers.

A concrete Pedregal model helps. A $1.5 million three-bedroom villa renting at an average $650 a night and 55% occupancy brings in about $130,500 a year. That's a believable middle case: six figures without assuming every week sells at peak rates.

Once revenue nears $300,000 or $400,000, you're looking at a much bigger, more special house. Those results exist in Cabo, but keep them in the upside case unless the property has the booking history to prove it.

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

No. Expensive villas earn more dollars, but the yield usually gets worse as the price climbs.

Take 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, it's 6.5%. The rent hasn't changed at all.

Buyers of trophy homes pay for privacy, architecture, frontage, scarcity and brand-name communities. Renters like those things too, but they rarely pay enough extra to match the owner's higher price.

Local investment models show the pattern. A three-bedroom Pedregal villa around $1.5 million is modeled at roughly 5% to 7% gross, Palmilla villas around $2.2 million at about 4% to 5.5%, and a four-bedroom Diamante example at $2.5 million at about 4.4% to 6%.

If income is the goal, paying less for the right villa beats owning the most famous address.

Gross annual bookings	$1.25M purchase	$1.5M purchase	$2M purchase	$3M purchase
$100,000	8.0%	6.7%	5.0%	3.3%
$130,000	10.4%	8.7%	6.5%	4.3%
$160,000	12.8%	10.7%	8.0%	5.3%
$200,000	16.0%	13.3%	10.0%	6.7%
$250,000	20.0%	16.7%	12.5%	8.3%

Is Pedregal actually good for villa rental yield?

It can be, but Pedregal prices don't automatically produce a good yield.

The rental advantages are real: it sits next to downtown Cabo San Lucas, has a famous name, plenty of ocean views and a long history of luxury rentals. Local estimates put Pedregal villa rates around $500 to $2,500+ a night and annual revenue around $80,000 to $200,000+.

The problem is the entry price. Find Mexico Houses put the average Pedregal listing at about $2.6 million in 2026. At that price, a villa grossing $130,000 makes only 5% gross.

The same $130,500 villa bought at $1.5 million makes 8.7%. One local estimate models a $3 million ocean-view villa at about $380,000 of bookings, about 12.7% gross, but that's a standout house. A $3 million Pedregal property collecting $150,000 yields 5%, and a $5 million villa earning $200,000 just 4%.

Pedregal works when you find an unusually productive house, a good price, or both. The neighborhood supports high rents; it can't rescue an inflated price.

Is now a good time to negotiate hard on a Cabo villa?

Yes. The luxury home market has slowed enough that buyers have real leverage, and price is the easiest way to lift your yield.

Christie's Real Estate Cabo counted 19.0% fewer sales of homes above $1 million in the first nine months of 2026, with an average price of about $4.04 million, down 2.8%. It puts supply for those homes at about 26 months. Sales in Cabo San Lucas and the Corridor overall fell 18.1%.

Sellers are cutting, but cuts aren't working well. Cabo Real Estate Services recorded 1,295 price reductions on houses and condos so far in 2026, and only 19% of them led to a sale, against 34% in 2025.

What to do: compare the asking price with sold villas, not other listings; ask how long the house has been for sale and how many times it was cut; and work backward from realistic 2026 bookings to the price that gives you at least 6% gross. On the table above, moving from $2 million to $1.5 million on $130,000 of bookings takes you from 6.5% to 8.7% gross, before you rent a single night.

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

Expenses can easily take 40% to 55% of gross bookings, which is why a headline 8% often ends up around 4% or 5% before income tax.

Full-service vacation-rental management in Los Cabos costs roughly 20% to 30% of revenue according to Vacation Los Cabos, with established operators often around 25%. Some local operators tell owners to budget 25% to 35%.

Then come platform fees, electricity, water, insurance, pool care, landscaping, HOA dues where they apply, repairs and replacing guest-worn furniture.

A local example shows the gap. A $1.5 million Pedregal villa grosses $130,500. Management at 20% removes $26,100, HOA and maintenance $24,000, utilities and insurance $8,400. Net operating income: about $72,000.

Gross yield: 8.7%. Net operating yield: 4.8%. And that assumes a 20% manager; at 25%, net drops to about $65,500, or 4.4%. In the 20% case, a non-resident owner then owes 25% of gross rent in income tax, about $32,600, which leaves about $39,400, or 2.6%.

$1.5M Pedregal villa example	Annual amount	Share of gross bookings
Gross rental revenue	$130,500	100%
Management	-$26,100	20%
HOA and maintenance	-$24,000	18%
Utilities and insurance	-$8,400	6%
Net operating income	$72,000	55%
Net operating yield	4.8%	—

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

They can, and the costliest mistake is easy to avoid: get a Mexican tax ID before your first booking.

Airbnb collects the 4% Baja California Sur lodging tax from guests, including on the cleaning fee. That's paid by guests, so it hits your price competitiveness more than your margin.

Income tax is different. Airbnb withholds 4% of your receipts if you give it a valid Mexican tax ID (RFC), and 20% if you don't. On $130,500 of bookings, that's the difference between about $5,200 and $26,100 withheld. A non-resident owner should budget 25% of gross rent whatever is withheld: about $32,600 on the same bookings. Short stays can also carry 16% VAT, and your final bill depends on your residency and how you own the villa, so get tax advice before buying.

The property's own rules can matter even more. Some communities or HOA phases set minimum stays or restrict short-term rentals altogether. We found no citywide registry or cap on short-term rentals in Los Cabos as of October 2026, but HOA bylaws apply regardless.

Before buying a villa for rental income, get the HOA rules, permitted rental length and tax setup in writing. A 7% yield on paper is worthless if the house can't legally be rented the way you planned.

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

A lot. Cabo isn't a purely seasonal market, but villa income swings clearly between winter and late summer.

AirDNA puts average occupancy at 48% and gives Cabo San Lucas a seasonality score of 73 out of 100, where higher means steadier revenue through the year.

BNBCalc shows the calendar: revenue per available night peaks in March and December and bottoms out in August and September. September is also peak hurricane season, which brings cancellations and sometimes repairs.

Local villa operators see the same shape more sharply. Professionally run three-bedroom Pedregal villas are estimated at around 55% to 65% occupancy over the year, with much higher occupancy in peak season.

That changes the cost of owner use. Twenty nights in September cost little in lost rent. Twenty nights over Christmas, New Year and prime winter dates can wipe out a big share of the year's profit. If you plan to spend every holiday in Cabo, block those dates in your model from day one.

Will Cabo's water shortage hurt villa bookings?

It can. A group paying $1,500 a night that finds no water in the shower will leave a review that costs you far more than a tanker truck.

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. A second desalination plant was reported 73% complete, but in June 2026 the local business council said paperwork was holding up construction.

Villas use more water than condos: pools, gardens, more bathrooms. Before buying, ask how many days a week the house gets city water, how big the cistern is, whether there's a backup tank, and what the owner or HOA spent on water trucks in 2026. Ask how the house handled the September outage, and put water trucks in your running costs if the answers are vague.

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

Ocean views, great outdoor space and a layout that works for groups lift revenue; many expensive upgrades add far less than owners expect.

A pool matters. BNBCalc links listings with a pool to about 112% more revenue in Cabo San Lucas. But most villas already have one, so a pool alone won't set yours apart.

The real gap appears when several features come together: open ocean views, a good pool terrace, a hot tub, big shared spaces, and bedrooms that all feel good enough for adults splitting the bill.

That last point matters for groups. A four-bedroom villa with one great master suite and three weak bedrooms is harder to sell at premium rates than one with four real suites.

Location adds to it. Being walkable or a short drive from downtown, the marina, swimmable beaches or the big resorts makes a villa easier to book for several kinds of guests. Reliable water is now on that list too.

Spend on what guests see in the first five listing photos. Extra interior space or fancy finishes rarely raise the nightly rate enough to pay for themselves.

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

Short-term renting gives a good villa much more upside; a long-term lease gives steadier, cheaper-to-manage income.

Management alone shows the gap. Full-service vacation-rental management runs around 20% to 30% of revenue, sometimes more. Long-term management costs much less because there are fewer check-ins and guest problems.

A good vacation villa makes up for it by charging hundreds or thousands of dollars a night, and a well-placed Pedregal house can gross well into six figures. Long-term leases rarely get near that, but vacancy is easier to handle and the house suffers less wear.

If you're buying a villa because of Cabo's tourism, short-term rental is usually the point. A long-term lease makes sense when simplicity, steady cash flow or HOA rules matter more than maximum revenue.

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

For a good villa bought at a reasonable price, about 4.5% to 8% gross, and anything above 8% needs proof from that specific property.

That's lower than the 8% to 12% often quoted for Cabo rentals in general, because villas are expensive.

Local villa models show the range. A $1.5 million Pedregal villa grossing $80,000 to $110,000 makes about 5.3% to 7.3%. A $2.2 million Palmilla villa earning $90,000 to $120,000 makes about 4.1% to 5.5%. A $2.5 million four-bedroom Diamante house producing $110,000 to $150,000 lands around 4.4% to 6%.

There are exceptions. The $1.5 million Pedregal example producing $130,500 reaches 8.7%. A very productive $3 million ocean-view house grossing around $380,000 would reach about 12.7%. Those cases are why Cabo attracts income buyers, and also why a neighborhood average is dangerous: two villas on the same street can earn very different returns.

Villa example	Purchase price	Annual gross rent	Gross yield
Pedregal base case	$1.5M	$80K–$110K	5.3%–7.3%
Pedregal stronger case	$1.5M	$130.5K	8.7%
Palmilla 3BR	$2.2M	$90K–$120K	4.1%–5.5%
Diamante 4BR	$2.5M	$110K–$150K	4.4%–6.0%
Exceptional Pedregal case	$3.0M	~$380K	~12.7%

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

Usually about 2.5% to 5% before financing and income tax, and about 1.5% to 3% after the 25% a non-resident owes on gross rent; 5% or more before tax is already a good villa investment.

Start from gross. Buy a villa for $1.5 million and gross $105,000 a year: that's 7% gross. If 50% to 60% of bookings remain after management and normal costs, net operating income is about $52,500 to $63,000, a yield of about 3.5% to 4.2%.

The Pedregal example above does a bit better: $130,500 of bookings becomes $72,000 after costs, or 4.8% on $1.5 million. For a non-resident, the 25% tax on gross rent takes that to about 2.6%, and the $105,000 case to about 1.8% to 2.5%.

A villa making 6% net before financing deserves a close look. Getting there usually takes a good purchase price, high occupancy, strong nightly rates, tight costs and plenty of direct bookings.

Claims of 8% or 10% net need much more checking. Cabo has houses that do it, but the numbers should come with past reservation statements and a full expense history.

So what yield should you aim for with a Cabo villa?

For a villa bought mainly for income, aim for about 6% to 8% gross and 3.5% to 5% net before income tax, which is about 2% to 3% for a non-resident after the 25% tax on gross rent. Between 8% and 10% gross is good. Above that, you need proof.

Crossing 10% gross is possible when the price is unusually low or the house is an exceptional performer. Net returns above 5% are possible too, but ask for real booking and expense records before counting on them.

At the weak end, plenty of multimillion-dollar villas make only 3% to 5% gross. They can be lovely homes, but rent alone doesn't make them good investments.

The 2026 data back this up. Tourism is still big and guests still pay high rates, but international arrivals are down 8.4%, nightly rates are down 15.0% and RevPAR is flat. A rising market won't hide an expensive purchase. The good news is that sellers of $1 million+ homes are under pressure, so the best way to raise your yield right now is to negotiate the price down.