Investing In Los Cabos

Rick Parks

By Rick Parks - rick@caborealestate.com

Investing in property in Los Cabos is the beginning of a dream for many foreigners wishing to establish a financial base in Mexico for their retirement. It is a great idea that has the potential to produce an income while you sit on your own terrace, drinking your cerveza and enjoying the warm ocean breezes coming off the Sea of Cortez. That being said, there are some things to consider about your Cabo Real Estate decisions as you begin to look for an investment property in Los Cabos.

What type of rental do you want?

When I am approached by a buyer looking for a rental investment, one of my first questions is always, “what type of rental do you want this to be – a vacation rental or long-term rental?” The answer to this question allows me to target the areas in which we should be looking. Vacation rentals tend to be properties closer to the action and/or the beach. They are in complexes and buildings that are primarily short-term rental based and offer certain amenities that appeal to the rental market. They will demand more on a cost per night basis, but the overall operational costs will be higher as you must consider utilities, property management, rental management and maintenance. Long-term rentals tend to be more in the suburbsand offer more of a “home” feeling that provides you an opportunity to get to know your neighbors and be part of a community. They generally rent for less and the utilities are paid by the renter above and beyond the base rental. Can an investment be in both categories? Absolutely, but knowing what type of rental investment you want will make your real estate agents’ life a lot easier.

In long-term rentals the renter is generally responsible for the utilities. You may also choose to use a property management service but understand that rental marketing is done a little different with the rental agents taking up to one month’s rent on a 12-month lease.

What are the costs involved?

With any property you purchase in Los Cabos you will be responsible for the base costs which includes property tax, Fideicomiso (if applicable), closing costs (one time cost at closing) and the homeowner’s association fee (if applicable).

With a vacation rental you will also have the cost of the utilities, property management (if needed) and possibly rental management. Property management is generally a flat fee that you pay for someone to watch over your home and take care of any maintenance issues, pay the bills and ensure that the home remains well maintained. A rental management company generally charges a percentage (upwards of 30%) of the rental income and overseas the marketing, customer management and taxation on your rental property.

Where do I begin?

As with any real estate purchase you should enlist the services of a professional real estate agent. Even if you are buying from a developer who is offering a “rental plan,” having an agent by your side will provide you with a level of experience that is invaluable. There is no cost involved with having an agent assist you in the buying process. Take advantage of their expertise and knowledge. Once you have a professional on your side then you can begin to search for the type of property that works best for you. There is no cookie cutter solution to investing in Los Cabos. Rely on your instinct, the advice of your real estate agent and find something that you know will work for you. You are one step closer to sitting on that terrace, enjoying those warm breezes and living the lifestyle that you have worked so hard for. I wish you the best of luck.

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