With a year round high occupancy rate and a stream of new tourists, owning and short term renting a home in Cabo has never looked more appealing. The rental income you can realize will help pay for the whole cost of ownership within 5-10 years, depending on the location of the property. This is not a get rich quick idea but a way to pay for your retirement home. If you are considering living in Los Cabos within 5-10 years you must start now so that you can take advantage of the current market conditions and ripe short-term rental opportunities. Let’s review them here:
Current Market Conditions
Even with a market that is heating up, our current real estate is still a buyers market. This is due to a variety of factors including an aging phase 1 market that is now exiting Cabo. Think 80+ year olds that bought here when they were 60. This turn over is in primarily older neighborhoods that might need some renovating but have excellent cost to location ratio. Think Cabo Bello, Misiones Del Cabo and Gringo Hill in San Jose for starters. These neighborhoods were away from the action back in the day but now are prime locations. They are surrounded by the high end neighborhoods where the prices start at over $2 million, think Punta Ballena, Maravilla, Querencia. In this article we are focusing on the $150,000 – <$700,000 dollar homes and condos where you can realistically recoup your investment within 5-10 years.
New Developments
There are 15 mega projects and several more smaller developments in the new home market. While we don’t disregard the validity of these offerings it has caused some softening on prices for the older existing homes and condos. These yet to be built developments will in many ways be lovely and full of amenities that attract buyers. They do not however have any rental history and if you are taking advantage of the early price incentives you may need to wait <1-2+ years to get your keys and possibly some of the amenities. Yes you got an amazing deal but you also tied up your money when you could be renting them during those years. For new home buyers looking for the perfect home that can afford the price there are many great options that we will cover in another post. If you want your place to pay for itself while you work the next few years and then retire, you will want to get something soon and start getting it rented now.
Short Term Rental Opportunities
The are many reasons Cabo is a highly desired destination. Let’s focus our attention on why- weather, location, infrastructure, the friendly local Mexican culture, safe environment, world class hotels, restaurants, activities plus many more reasons. The season has widely expanded to 10 months of high occupancy and two months of great fishing. Our worst weather is during fishing season in late August to late October. These 8 weeks represent our rainy season and a good time to shut down your rental for repairs and storms. Plus the high cost of electricity makes it a good time not to rent.
The major expansion of the resort properties is focused on high end projects with room rates in the 5+ star range. Just look at the names of the newest resorts being built, Four Seasons, Ritz Carlton, St Regis, Montage, Auberge, Grand Velas, Nobu Resorts, JW Marriott etc… These are super pricy and gives the home and condo market a bump because of the affordable option. Most of these expensive projects offer full ownership options that are very appealing for the well healed buyer.
Overall the market has some extreme pricing variance. The rule of thumb here is the highway along the corridor is the divider where you have the ultra wealthy on the ocean side and the reasonable prices on the other. There are exceptions and places where the road is closer to the white water, so you have to know the ins and outs. That’s where a good buyers agent comes in, Us with Cabos Finest.
A Computer Connected World
There has never been a better time in the world for finding a vacation rental. People are just a click away from powerful information and options, options, options. Even Expedia has now started listing individual homes and condos all over the world. This all started with www.vrbo.com and www.homeaway.com then came www.airbnb.com and www.flipkey.com. You don’t have to pay an upfront fee so many owners use them all and keep a master calendar so there is no overlapping. With hotels and resorts charging such high rent, the bargain option with amazing location is the new gold standard for value minded travelers. Find the right place preferably within walking distance to a beach and place your listing and start collecting.
Rental Income
One bedroom condo in Misiones Del Cabo with whitewater views and close by beaches list price $195,000 and upwards. You can see daily rental rates on www.vrbo.com as well as the other rental sites. If you get a high occupancy rate, that equals up to a nice amount anually. In several years you would have recouped the list price (you can do the math). Of course you would have some added costs like utilities, HOA, Fideicomiso and taxes plus the property management cost. But you would have a great house or condo in Cabo and a chance to use it the other percentage of the unrented time while you wind down your career and prepare for retirement.
We are happy to assist you find the perfect home, we know which developments have the higher occupancy rates – just ask!
Or you can do your research and start your search. You can start here and now:
https://cabosfinest.com/mls/
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