Thinking about buying vacation real estate in Mexico?
Cabo San Lucas is one of the most popular real estate markets for buyers interested in vacation homes. Beautiful beaches. Top-tier golf courses. Sunshine year-round. It’s easy to see why.
One thing though…
Buying property in Cabo San Lucas is NOT the same as buying in your home country. There’s a different process, different laws, and a different market to navigate.
Here’s the good news.
With the right information, buying Cabo San Lucas real estate can be one of the most intelligent investments you’ll ever make.
In this report, you’ll discover:
- Why Cabo San Lucas is seeing so many buyers
- The fideicomiso trust system
- The best areas to buy vacation homes
- The key steps to purchasing real estate in Mexico
- How to protect your investment
Why Cabo San Lucas is seeing so many buyers
Vacation real estate in Cabo San Lucas is red hot.
And if the numbers are any indication.
The region saw 16% growth in tourism, which towers over Mexico’s national average. As a result, more and more buyers are interested in Cabo real estate to capitalize on both personal and rental use.
Speaking of personal use, what is it about Cabo that buyers find so attractive?
Why, nearly 56% of flights arriving in Los Cabos originate in the United States. That means faster and easier flights from primary markets like Los Angeles, Dallas, and Phoenix. For American buyers seeking premium Cabo San Lucas homes for sale, this convenience factor plays a big role.
And there’s plenty of other lifestyle factors that help too:
- 350+ days of sunshine per year
- World-class golf courses designed by Jack Nicklaus and more
- Five-star sport fishing and water activities
- Fine dining worthy of Michelin stars
- An active expat community
Doesn’t all that add up to a pretty compelling argument for owning a vacation home in Los Cabos?
The fideicomiso trust system you need to know
Before we dig too deep…
One key thing every foreign buyer should know.
Non-Mexicans cannot own property within 50 kilometers of the coast. However, the Mexican government came up with a solution called a fideicomiso.
The fideicomiso in a nutshell.
It’s a bank trust that allows foreign buyers to own coastal property with full rights. A Mexican bank holds the title to the property, but the buyer has total control over the land.
Buyers can do whatever they want to with the property, including sell it, rent it out, leave it to an heir, or remodel it.
The trust agreement lasts 50 years and gets renewed automatically after that. It’s totally legal and has been around for decades.
Setting up a fideicomiso involves:
- Selecting a participating Mexican bank
- Paying a one-time fee to set up the trust (usually between $500 and $2,000)
- Paying annual trust fees (about $500-$800 per year)
- Using a Mexican notary public to process the paperwork
Don’t let this process scare you away.
Yes, it may seem a bit overwhelming at first. However, with the right professionals on hand to guide the transaction, it all becomes very simple.
The best areas to buy vacation homes
Real estate in Cabo San Lucas is not created equal.
Every area has different advantages depending on your lifestyle choices and investment plans. Here’s an overview of the best areas for vacation home buyers in Cabo San Lucas:
The Tourist Corridor
Located between Cabo San Lucas and San José del Cabo, this 20-mile stretch has the most high-end properties. Think beachfront villas, gated communities, and resort-style amenities.
Prices will be higher here… but so will the prestige.
Downtown Cabo San Lucas
Ideal for buyers who want easy access to bars, restaurants, and marina activities. This area has a lot of condos which makes it a lower entry point and great rental potential.
San José del Cabo
The more low-key, artistic sister. San José boasts colonial charm, art galleries, and a laid-back feel. Buyers who prefer authenticity over party appeal will love this area.
The up-and-comers
Newer neighborhoods like El Tezal and the Pacific side of town offer great values. Properties can be 30-40% cheaper than in prime beachfront locations while still providing ocean views and resort access.
The key steps to purchasing property in Mexico
You know you want to get started.
Here’s a proven process to follow…
Step 1: Know your goals
Personal use, rental income, or both? The answers to this question will help define other factors like location, property type, and features.
Step 2: Build your team
Work with a team that knows the market:
- Licensed real estate agent with Cabo San Lucas experience
- Mexican real estate attorney
- Reputable notary public
- Property inspector
The attorney is not a step you want to skip. Mexican real estate law is vastly different from its U.S. and Canadian counterparts.
Step 3: Do your homework
Make sure the seller has clear title to the property. Check for liens, encumbrances, and proper permits. Verify utility hookups and HOA responsibilities.
Step 4: Make an offer
Most transactions use a promissory agreement (contrato de promesa). This agreement locks in the price while the fideicomiso gets established and due diligence occurs.
Step 5: Close at the notary
In a big departure from North American real estate transactions, Mexican property deals must close before a notary public. This is a government-appointed official that will process the title transfer, calculate the taxes, and registration.
How to protect your investment
Smart buyers take additional steps…
Get title insurance. Although it’s not required in Mexico, American and Canadian title insurance companies are now offering policies that cover Mexican properties.
It’s an added layer of protection.
Budget for the expenses. Don’t forget about closing costs (5-8% of sale price), annual property taxes, HOA fees, and maintenance on top of the purchase price.
Look into property management. If you’re after rental income, professional management services will book guests, handle cleaning, and take care of repairs. Most charge 20-30% of rental revenue.
Stay on top of changing regulations. Mexican real estate laws are not set in stone. Staying in touch with local attorneys allows you to stay compliant if/when changes occur.
Wrapping things up
Owning a Cabo San Lucas vacation home is a combination of lifestyle and investment perks. The area continues to attract buyers from all over North America for the easy access, natural beauty, and large expat community.
To recap the steps:
- Learn about the fideicomiso trust system for foreign ownership
- Pick the right neighborhood that matches your goals and budget
- Hire a qualified team of professionals
- Complete a thorough due diligence before purchasing
- Protect the investment with insurance and property management
Buyers that take time to educate themselves on the process, work with experienced professionals, and make smart choices in properties are positioned for both enjoyment and appreciation.
That dream vacation home in paradise? It may be closer than you think.
