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Vacation Rental Investment in Los Cabos: ROI, Rules & Best Areas (2026)

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Vacation Rental Investment in Los Cabos & BCS

Baja California Sur is one of Mexico’s hottest vacation rental markets. With 3+ million annual tourists, year-round sunshine, and growing international demand, the region offers compelling returns for property investors.

Investment Snapshot

3972+ properties across BCS | Gross yields: 5–10% | Nightly rates: $200–$1,000+ for premium properties

Best Areas for Rental Income

Area Rental Demand Nightly Rate Range Best Property Type
Cabo San Lucas (Médano) Very High $150–$800 Condos
Cabo Corridor (Resorts) Very High $300–$1,500+ Villas & Resort Condos
San José del Cabo High $120–$600 Homes & Condos
Todos Santos Medium-High $100–$400 Boutique Homes
La Paz Medium $80–$300 Condos & Homes
East Cape Growing $100–$350 Beach Houses

Sample Investment Analysis

2BR Condo in Cabo San Lucas — $450,000 USD

Average nightly rate: $250 | Occupancy: 70% | Annual gross income: ~$63,875

Property management (25%): -$15,969 | Taxes & insurance: -$5,000 | Maintenance: -$3,000

Net annual income: ~$39,906 | Gross yield: 14.2% | Net yield: 8.9%

Legal & Tax Considerations

  • RFC required: Register for a Mexican tax ID to operate legally
  • ISR (income tax): Progressive rates 1.92–35%; deductions available
  • IVA (VAT): 16% on short-term rentals; may be included in nightly rate
  • US tax obligations: Report worldwide income; claim foreign tax credits
  • Business license: Some municipalities require a commercial license for STR

Frequently Asked Questions

Is Cabo San Lucas a good vacation rental investment?
Yes. Los Cabos receives 3+ million tourists annually. Premium properties generate $200–$1,000+ per night on Airbnb/VRBO. Occupancy rates of 60-80% are common for well-managed properties in prime locations.
Can foreigners rent out property on Airbnb in Mexico?
Yes. There are no restrictions on foreigners listing their Mexican property on Airbnb, VRBO, or other platforms. You’ll need an RFC (Mexican tax ID) to comply with tax obligations.
What is the typical ROI on a rental property in Los Cabos?
Gross rental yields of 5–10% are achievable in Los Cabos, depending on location, property type, and management. This is before appreciation, which has averaged 5–8% annually in BCS.
Do I need a property manager in Mexico?
For vacation rentals, a local property manager is highly recommended. They handle guest communications, cleaning, maintenance, and key exchange. Typical fees are 20–30% of rental income.
What taxes do I pay on rental income in Mexico?
Mexico taxes rental income at rates from 1.92% to 35% (progressive scale). Most vacation rental owners qualify for deductions that significantly reduce effective tax rates. ISR (income tax) is the primary obligation.

Find Your Investment Property

As BCS’s leading luxury real estate agency with years of market expertise, Baja Sur Realtors identifies high-yield investment properties that match your goals.

Updated March 2026.

Baja Sur Realtors — Luxury Real Estate in Baja California Sur

📍 Plaza Cerralvo, Local 6, Paseo Alvaro Obregón 1665, La Paz, BCS 23000, Mexico

📞 +52 612 288 9722 | 📧 contacto@bajasurrealtors.com

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