Buying Real Estate in Los Cabos, Mexico

Back in the 1940s, Los Cabos, on the southern tip of Mexico’s Baja California Peninsula, was Hollywood’s playground. Stars like Clark Gable and Henry Fonda were soon joined by presidents, royalty, and industry tycoons. Cabo quickly became a firm favorite on the jet-set calendar, joining the likes of Monte Carlo and Gstaad.

At that time, Cabo was super-exclusive. The only real way to get there was in a private jet or boat. That’s why the rich and famous loved it—they could relax and party away from the prying eyes of fans and the paparazzi.

Gradually, Cabo opened up…with a trans-peninsular highway that connects to Southern California and an international airport that’s adding new flight routes all the time. But it’s kept its glamorous allure.

For many decades, Cabo was a place where you could buy an upmarket house for millions of dollars…or a two-week timeshare for a few hundred thousand. It wasn’t a place where you would find comfortable, affordable homes. That changed after the global economic crash in 2008. As the timeshare and multi-million-dollar home markets dried up, savvy developers in Los Cabos realized they needed to target a whole new market. A few have done this right…but they’re still not meeting demand in this fast-growing locale that’s also attracting more and more tourists.

It’s easy to find a property to buy in Los Cabos, especially if you have a fat budget. What’s not so easy is finding a place that you’ll love to spend time in—and one where you can make attractive capital gains and great rental returns.

Here’s what you need to know about buying property in Los Cabos.

Where to Buy Los Cabos Real Estate

The beaches in Los Cabos are gorgeous. Los Cabos sits on a peninsula with the mighty Pacific Ocean on one side and the beautifully calm Sea of Cortez on the other. In between is a magical landscape of desert, cacti, and bluffs. Los Cabos covers the towns of Cabo San Lucas and San Jose del Cabo, linked by a 20-mile “Corridor.”

Cabo San Lucas

Cabo’s modern history starts with its rich marine waters. In 1919, a fish cannery was set up in Cabo San Lucas. At one point, it was the third-largest packer of tuna in the world.

Then big game fishermen caught on, landing a 500-pound marlin just after World War II. That triggered the rise of the sport fishing industry in Cabo, which is still huge today.

Next, it was Hollywood movie stars…royalty and business tycoons…and, with the opening of the highway connecting Cabo with Southern California, RVs, surfers, and snowbirds.

Cabo San Lucas today is centered on its marina, which is a great spot to hang out, even if you’re not a boater or fishermen. There are plenty of cafés, restaurants, and stores around the marina, along with bars and clubs, and it’s a fun spot for strolling and people watching in the evenings.

Property samples in Cabo San Lucas:

• A two-bed, one-bath condo that’s a 15-minute walk to the marina. It’s five years old, 788 square feet in size, and has an ocean view. It’s listed at $93,000.
• A third-of-an-acre lot with mountain and ocean views in the Pedregal neighborhood. There is seller finance on offer with the lot. It’s priced at $219,000.
• A large third-floor residence in a community with a beach club, pool, swim-up bar, and spa. The three-bed, three-bath home is almost 2,700 square feet inside with 738 square feet of terrace space. With ocean views, the furnished home features an open plan layout, spacious master suite, and a home office. It’s listed at $1.425 million.

San Jose del Cabo

San Jose has a pretty, historic center, with a spacious plaza and cobblestone streets. There are lots of art galleries and the town hosts regular Art Walks, where you can browse paintings, sculptures, fossils…sampling a shot of tequila or a mini taco as you go. The church in the main plaza was a mission church, founded in 1730—but the indigenous population revolted four years later and sacrificed the missionary, unhappy that he tried to convert them from their polygamous ways, according to the plaque displayed on the church. Away from the historic district, the hotel zone is more modern with large resorts and upscale eateries.

Property samples in San Jose del Cabo:

• In downtown/Centro San Jose a small street side commercial building (430 square feet) with a larger residential house behind it (796 square feet). Both need a complete rebuild/remodel. The property is listed at $239,000.
• A penthouse with an ocean view and high ceilings, walking distance to the beach, shopping, and dining. The three-bed, three-bath penthouse has 1,967 square feet inside (over two floors) and 923 square feet outside (including a rooftop with jacuzzi tub). The community has a pool, spa, and picnic area. Appliances are included in the sale. List price: $350,000.
• A beach and ocean view condo in an exclusive community with a beach club, pool, spa, and picnic area. The condo has luxurious, modern finishes and comes fully furnished. It has 1,600 square feet inside, with two bedrooms and bathrooms. Outside, there’s almost 400 square feet of decks and patio space. It’s price at $1.45 million.

The Corridor

The 20-mile Corridor that connects the towns of Cabo San Lucas and San Jose del Cabo runs through some amazing scenery—bluffs, long stretches of beach, rocky points with crashing ocean waves.

The beach side of the highway is home to some of the most upscale resorts and hotels in the Cabo area. On the non-beach side, you’ll find more affordable homes, many aimed at the local upper-middle-classes. It also appeals to management and professionals working in the major resorts close by. They’re happy to own and rent here as it’s close to some of the best schools in Cabo, the airport, shopping, and entertainment.

Property samples in The Corridor:

• On the non-beach side of the highway, a modern home in a gated community. The three-bed, 2.5-bath house has 1,345 square feet inside and 538 square feet of deck/patio. It’s a year old and comes partly furnished. List price: $230,000.
• A home on a larger lot. The house covers more than 2,300 square feet with almost 1,300 square feet of outside space including a rooftop with an outdoor kitchen. There’s also a swimming pool and jacuzzi tub. The two-bed, two-bath home comes furnished and has ocean views. List price: $475,000.
• On the beach side of the highway, a huge home with almost 4,800 square feet of inside space and 2,152 square feet outside. The home is steps to the beach and features two family rooms, a large master suite, ocean views, a swimming pool, and jacuzzi. The community amenities include a golf course, clubhouse, gym, steam room, and pool. List price: $1.25 million.

What You Need to Know About Buying Real Estate in Los Cabos

Buying Cabo real estate can be easier and more affordable than you might have imagined; if you know where to look, you can find affordable homes in this glamourous locale that will set you up for capital gains and attractive rental yields.

But there are a couple of things you should keep in mind if you’re considering buying in Cabo.

Title Issues—Make Sure You Can Own That Beachfront Property

The right piece of beachfront land may sound like a great buy. But be careful that you can actually own it. Most countries overseas have a section of the beach related to the high-water mark where you cannot legally own a property.

In Mexico, all residential property purchased by foreigners that is located within 62 miles from any international border, or 31 miles from any coastline, will need to be acquired through either a Mexican corporation or a fideicomiso (also known as a Real Estate Bank Trust).

The fideicomiso creates a trust agreement for the benefit of the foreign buyer, and the bank takes on a fiduciary obligation to the owner. The owner retains all the benefits of ownership and has the legal right to lease the property, sell the property, and will the property to their heirs.

The one-time cost for establishing a trust is around $2,000. There is also an annual bank fee for the maintenance of the trust. The annual fee is based upon a percentage of the value of the home—$500 to $550 approximately.

There is little consistency with regard to what banks charge for this fee, so it is a good idea to shop around. A home in the $200,000 range will have a yearly fee of approximately $550 per year.

Trusts are currently 50-year documents and they can be renewed at the end of the 50-year term for an additional 50 years. There is no limit to the number of times the trust can be renewed. The renewal fee is currently approximately $900.

Additionally, in Mexico, if land was formerly ejido (indigenous-owned) land, tread carefully. This can be a potential landmine, as someone may be able to lay claim to your property in the future. Ejido land can be titled but it’s a complicated process and your attorney will have to do extra checks to make sure that the title is clear, and everything was done correctly.

Once you have these issues checked out, you can start enjoying your Cabo real estate…and your holding costs will be low. Though property taxes vary by municipalities, on a $250,000 home in Los Cabos, you can expect to pay about $250 per yearin property taxes.

Condo fees vary from community to community but are generally much lower than what you would pay at home for a similar level of amenities.

There are some great real estate bargains to be had in Los Cabos—but they’re not always easy to find…and sometimes you need the help of connected insiders.

The Easy Way to Find the Best Deals

Ronan McMahon, who is director of Pangea, International Living’s preferred real estate advertiser, has identified some very profitable real estate opportunities in Cabo for members of his Real Estate Trend Alert group.

One condo deal Ronan recommended in Los Cabos was so good, he put his money where his mouth is, and bought himself. The members-only price on the luxury ocean-view two-bed condo he bought…along with fellow Real Estate Trend Alert members…was $336,156 back in 2015. In 2019, a similar condo in the same community was listed at $630,088. That’s a whopping $293,932 in paper gains.

A luxury villa deal that Ronan recommended also did just as well. A Real Estate Trend Alert member paid $375,000 for one of these villas in 2017. In October 2019, a villa just down the street listed at $759,000.

Stay updated with Ronan’s latest real estate insights on Los Cabos and across his global beat, right here.