Los Cabos: Mexico’s Southern California

Los Cabos is Baja’s most expensive and popular destination. Prices are “approaching the values and the price points of southern California in some areas, but in many areas …

Los Cabos is Baja’s most expensive and popular destination. Prices are “approaching the values and the price points of southern California in some areas, but in many areas there [are] still additional opportunities,” Jim Grogan, president and CEO of Loreto Bay Company, said.

“One of the biggest areas that I’ve seen people do very well with is buying…multiple condos, putting them into rental pools, holding on to them,” James Glover of Baja Real Estate and Consulting and publisher of bajainsider.com said. “If they break even…the appreciation alone is very good.”

The weekly and biweekly rental market for high to medium priced condos and homes is still huge and will continue to grow, Glover said.

Condominiums to rent cost around $300,000, Glover said. This is higher than in other areas of Baja, but investors can expect premium rental rates, he said.

“People will pay $1,000 USD or more per week for a modest unit in a popular area, during high season,” Linda Neil, an accredited buyer representative and real estate consultant based in La Paz, said.

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Unlike areas close to the border, such as Tijuana and Ensenada, which are strongly affected by the American market, Cabo is “tied to a world economy of very wealthy people,” Glover said. “We have hotels here where the base rate is $2,000 a night up to $7,000 a night. And they’re 85 percent full year round.”

As one of five resort destinations being developed by FONATUR, Mexico’s federal tourism agency, Los Cabos has already received significant infrastructure. The airports and marinas are continually improving and, in contrast with La Paz, which doesn’t have a golf course, Cabo already has eight major golf courses, Glover said.

The 20-mile corridor between the towns of Cabo San Lucas and San Jose del Cabo is undergoing major development, Alan Axelrod, Baja investor and managing member of Axelrod Capital Management, LLC, said.

Property management in Los Cabos is more advanced than in other areas of Baja. In Los Cabos, short-term vacation rental property management costs 20 to 30 percent, Neil said. Long-term property management fees would be closer to 10 percent, Glover said.

Development in Los Cabos has made it “very Americanesque,” Axelrod said. “It’s still Mexico, but…you roll into town and see the Ford dealership and McDonalds and the Hard Rock Café…and the beach being built out in a very kind of old style of hotel grabbing the beach,” Axelrod said.

For this reason, many people “just don’t really feel that Cabo does it for them, it has no authentic feel, it’s just a very pretty, warm place with a great beach,” he said.

Axelrod said he enjoys visiting Cabo but would not actually want to own a home there, so although he has vacationed in Cabo since the early 1970s, he recently purchased a custom home site and has been investing in Loreto instead.


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