Ownership & operations · Research memo
Vacation Rental ROI in Los Cabos: Is It Worth It in 2025?
Los Cabos rental yields split sharply by neighborhood type — here's what luxury enclaves and rental-friendly zones actually return, and how to tell which one fits your goals.
Executive summary
Los Cabos is not one rental market but two: established luxury communities where rental yields run 1–3% and the thesis is appreciation and lifestyle, and rental-friendly zones near the beach and marina where yields run 4–8% under professional management. Knowing which category a property belongs to — before buying — is what separates satisfied owners from buyers of the wrong property for their goals.
Key takeaways
- Luxury enclaves (Palmilla, Querencia, Pedregal, Chileno Bay, Twin Dolphins) often restrict short-term rentals and yield 1–3% annually — the investment thesis is appreciation and lifestyle, not cash flow.
- Rental-friendly zones (Medano Beach, the Marina corridor, El Tezal, Cabo Bello, Tourist Corridor condos) yield 4–8%, with two- and three-bedroom ocean-view units under strong management outperforming studios and self-managed listings.
- High season (Nov–May) runs 75–90% occupancy versus 45–65% in summer; management fees typically take 20–35% of gross rental revenue.
The two categories of the Los Cabos market
The established luxury communities — Palmilla, Querencia, Pedregal, Chileno Bay, Twin Dolphins — carry the highest prices, the most rigorous HOA structures, and often explicit short-term rental restrictions. Gross yields here typically run 1–3% annually. That's not a market failure; these communities are designed to preserve long-term value and lifestyle, not generate cash flow — buyers here are buying a store of value, not a cash-flowing asset.
The rental-friendly zones — Medano Beach, the Marina corridor, El Tezal, Cabo Bello, and Tourist Corridor condos — are built around short-term rental demand, allow flexible arrangements, and carry lower entry prices. Gross yields here typically run 4–8%, with the upper end reserved for well-located, well-managed two- and three-bedroom units with ocean views or beach access. Location, amenity quality, and management quality — professional photography, responsive property managers, strong reviews — all meaningfully affect where in that range a given property lands.
What the rental numbers actually look like
High season (roughly November–May) runs 75–90% occupancy for well-positioned properties; summer (June–September) is softer at 45–65%. Annualized, a well-run rental in a rental-friendly zone can expect 60–75% occupancy.
Daily rates vary by property type: a one-bedroom near Medano Beach typically runs $150–$275/night; two- and three-bedroom ocean-view condos run $300–$600+; marina-adjacent luxury condos can reach $400–$750 at peak. On the cost side, HOA fees run $250–$800/month, and property management typically takes 20–35% of gross rental revenue on top of per-stay cleaning costs. Rental income is taxable in Mexico under the IVA and ISR frameworks, with monthly filing through a local accountant.
The hybrid approach
The largest buyer segment falls between the two categories — wanting a property for personal use a few weeks a year, with rental income offsetting carrying costs the rest of the time. Cabo Bello, select gated developments in El Tezal, Marina Zona Dorada condos, and Medano-adjacent properties are purpose-built for this pattern, with the rental track record to underwrite the purchase on realistic numbers.
The question to work through: what's the minimum rental income that makes the ownership economics comfortable, and does this specific property, under realistic management assumptions, get you there?
Sources and limitations
Based on first-person guidance from Nolan Bonnstetter (Own Cabo Homes / Outliance), 13 years in real estate, 7 years exclusively in Los Cabos, 250+ transactions.