Cabo Real Estate:
Real Estate & Homes For Sale in
Cabo San Lucas, Mexico
Real estate in Cabo San Lucas is often misunderstood by many citizens of the United States. While purchasing real estate in Cabo does come with its own unique risks, a little education as to how the real estate process works in Mexico will add a little peace of mind to the decision to buy real estate in Baja. Among the links below, you will find customized tools enabling you to learn more about Cabo real estate as well as locate, purchase, or just track Cabo San Lucas homes for sale better than anybody else. Enjoy!
Tools:
Cabo Neighborhood Reviews -
Ask a local, English speaking, American raised expert for neighborhood recommendations in Cabo San Lucas.
Homes for Sale in Cabo - Receive emails of all the Cabo homes that fit your needs and receive regular updates when hot new property comes on the market.
Vacation Rentals in Cabo – Visiting Cabo? Find out what kind of properties will be available for your visit.
Cabo San Lucas Real Estate Agents – Find the perfect local Realtor in Cabo. Feel more comfortable working with somebody raised in the States. We have English speaking and U.S. citizen agents available with all the local knowledge of Baja natives.
Ask a Question about Real Estate in Cabo – Got something on your mind? Go ahead and post it up!
General Cabo Real Estate Information
Real estate in the cities of Cabo San Lucas and San Jose del Cabo on the Baja Sur Peninsula falls into the municipality of Los Cabos. The area is known as an exotic destination featuring world-class sun bathing, swimming, fishing, scuba diving, 
snorkeling, golf, and sightseeing. Just a short flight from Los Angeles, CA, Cabo real estate is an option that even many Americans have yet to explore.
Cabo San Lucas hosts some of the most expensive and elaborate homes in all of he world. Its harbor is home to a long list of yachts belonging to an extensive list of celebrities, business leaders, and adventurers. While luxury real estate certainly does have an established home in Cabo, many people are surprised to find that there is a more affordable side to real estate in Cabo San Lucas.
Even if people are not looking to make Cabo their full time residence, many rental property options exist that will let them 
enjoy a fantastic residence on vacation, and still be able to make the financials work with part time tenants. One should not expect real estate in Cabo San Lucas to be a quick money maker, but should look more into the long term value that owning some of this well located property has to offer. We’d like to invite you into this page to learn more about real estate and homes for sale in Cabo San Lucas, MX.
Understanding Title To Real Estate in Cabo:
The Fideicomiso
Real estate in Cabo is held very similar to living or estate trusts in the United States. That is, the Mexican bank (Trustee) takes instructions only from the beneficiary of the trust (You). The beneficiary has the right to occupy, use and/or possess the property. Included in this is the right to develop or improve the property. The beneficiary may also liquidate or sell the property by telling the trustee to transfer the rights to a different 
owner or inheritor. The trust last initially for 50 years, and it can be renewed for additional periods of 50 years indefinitely. This provides the long-term control of the asset that many foreign buyers are curious about.
In Baja California, Mexico., buyers have the same rights of a property owner in the U.S.A or Canada. Included in this are the right to use the property, liquidate the property, lease the property, and improve the property.
People are often under the assumption that purchasing Baja real estate by foreign buyers is only done on a land lease. This is just not true. The property bought by a foreign buyer is placed in a trust with the buyer identified as the beneficiary of the trust, not a lessee. When foreign buyers buy property already held within a trust, they can assume the trust or create an entirely new trust.
During the transaction process, a Notario Publico is assigned and will represent the parties to a transaction. The Notario is an attorney, appointed by the government, who checks title to make sure the property can be legally transferred. Once it is declared free of any liens, no further liens can be attached. Any claims not filed before the Notario begins their search will not be considered.
Title insurance is optional on the purchase of home in Cabo. It is recommended but it is not mandatory, as it is in the United States.
Home Loans in Cabo San Lucas
The loan process in Cabo, and all of Mexico, is more complicated than home loans in the United States. A longer list of intermediary Mexican institutions will play a vital role in the origination and funding of a Mexican home loan. The closing process will often take 90 days.
FAQ’S About Buying A Cabo Home
I’ve heard the Mexican government can seize your property. Can I safeguard myself against this?
It can only do so, as in the US, through eminent domain proceedings, for an established public purpose and with appropriate compensation. This seldom occurs. There has been a lot of adverse press about injustices done to foreign buyers in Mexico. The truth is, in these cases developers and/or buyers did not have a proper title to the land. Often times, to avoid closing costs, or simply out of ignorance, a buyer has paid for a property and taken possession of it but never obtained a registered title, and so never discovered an underlying title flaw. It is imperative – except in rare cases – to always obtain a registered title (a Trust) for your real estate purchase. Always insist on it just as you would insist on free and clear title in the US. Remember, you can also purchase title insurance for property in Mexico through companies like Fidelity, First American and Stewart.
I heard buying in Mexico was a cash investment only.
In the past, mortgage loans in Mexico for US citizens required 40-50% down, with over 12% interest, payment terms 15 years or less, and were often cross-collateralized on US real estate. Today, mortgage loans are available with 20% down, interest rates starting at 7.99%, and payment terms of 20 or even 30 years.
How is purchasing in Mexico accomplished?
Mexican real estate laws still differ substantially from the American system, and there are many crucial nuances to consider before cutting a deal for Mexican property. While foreigners can buy real estate in their own names throughout the country’s interior, on the Baja Peninsula and along all the country’s borders and shorelines (the “restricted zone”) they can only buy as the beneficiary of a Mexican bank trust called a
“fideicomiso,” which is essentially identical in structure and function to an American living trust.
In this arrangement, the bank technically holds legal title to the real estate, in trust for the foreign buyer (in US terms, the trust beneficiary). The Mexican bank trust, which costs about $500 USD to establish, with a similar annual maintenance fee, is good for 50 years and is easily renewable for another 50 years by the original purchaser or their successors. As the ‘beneficiary’, you, as purchaser have all rights of ownership including the ability to sell, transfer, mortgage, build on, and of course use and enjoy.
How is the mortgage loan secured?
Loans are secured on the real estate in Mexico being purchased, not on US property. In the past, loans in Mexico were often secured by real estate in the US, which would allow the lending institution to foreclose on the secured property in the US in case of default.
Is the interest paid on the loan tax-deductible?
Per IRS regulation Section 163 ©, as well as Publication 936, interest paid on primary and secondary residences up to an aggregate one million dollars in loan amount is tax deductible. The IRS regulation does not specify that the home must be located in the United States, and thus it is the opinion of reputable tax consultants that interest paid on a home loan on property in Mexico is in fact deductible (please consult your tax advisor for applicability to your specific tax situation).
What are minimum and maximum available loan amounts?
Generally, minimum loan amounts are $100,000 and the maximum loan amounts are currently set at $5,000,000.
What kind of documentation is required to apply?
Documents required by the lender vary according to your individual financial situation and FICO scores. Your Century 21 in-house closing team and your chosen loan broker will assist you through this process. Documentation may be based on the following descriptions:
- Full Documentation: Your tax returns for the last two years, as well as W-2s for two years plus current pay stubs to determine your qualification. This can be accomplished in a matter of hours or even minutes. Rates are the lowest with this form.
- Alternate Documentation: Instead of tax returns and pay stubs, lenders use 24 months’ worth of bank statements looking only at the deposits in the account. These are added and averaged by 24 to grant qualification.
- State Income: State income bases qualification on credit score and/or cash reserves. A minimum FICO score (credit score) of 680 is required to qualify for Stated Income, as well as evidence of higher cash reserves.
What are property taxes in Mexico?
Annual property taxes are only 0.5 percent in the Los Cabos region of Baja California, and assessed values are also almost always well below market numbers. Annual taxes on a home or condo in the $400,000 USD range are likely to be just a few hundred collars – MUCH less than is typical in the US.
How important is the mortgage broker in the transaction?
Unlike loans in the United States, closing real estate and lending transactions in Mexico is more complicated and time consuming. Mexico transactions can be significantly delayed, and even cancelled by the seller, if there are documentation errors or delays attributable to the buyer. It is important to seek representation by a mortgage broker or lender that is reputable and has successfully overseen, processed and closed transactions in Mexico. The best advice is to ask for references on the broker or lender, to ensure they have a significant number of Mexico transactions closed and will successfully represent you in the transaction.
Are foreign loans safe?
Actually, there are numerous US banks offering financing for investors in Mexico. The U.S. behemoth General Electric was the first major company to take note of the growing exodus to the south and the potential that move held. They lend through a subsidiary called GE Capital/GE Money to offer U.S. denominated loans to foreign buyers. Spanish-owned BBVA (lending to foreigners through its US subsidiary, Laredo National Bank), Citibank’s Banamex, and Canada’s Scotiabank are also jumping onto the bandwagon by offering home loans specifically targeting the foreign buyer market. These are safe and solid companies with established presence and procedures.
Will I use escrow account or a title company?
We generally recommend using a US escrow for transactions. Most fund transfers into and out of that escrow will be done by wire. In some cases, though, a 
developer will insist on direct payment or on release of all or part of the deposit (sometimes as much as 50%, and often in a series of steps as construction proceeds). Talk with your agent about this and the use of a formal Mexican contract to insure the certainty of your bargain. Make sure that procedures and requirements for release of funds are spelled out in writing. In a situation in which you are buying a unit under construction, it is important to ensure that the release of escrow funds is monitored to make sure the contractors and other service providers get paid and that no liens will be attached to the property.
Can you tell me what the closing costs will be?
Closing costs on your residential Mexico real estate transaction should be estimated about 4 to 10% of the purchase price. The loan related fees are similar to the US. However, the 3 rd party Mexican fees comprise the majority of the closing costs.
Some examples are below. Keep in mind some fees will vary, and totals may change with the Mexican economy as mandated by government and other offices.
Municipal Fees
Acquisition Tax = 2% of purchase price
Value estimated for property tax = 18% of purchase price
Public Registry Fee = .5% of purchase price
Certificate of Freedom from Liens = $34
Bank (Trust) Fees
Foreign Affairs Permit & Registration (SRE) = $1300
Trust Initiation = $500 – 695
Bank Trust Fee (paid annually) = $500 – 695
Transaction & Legal Fees
Notario Fee - $2750 (varies)
Translation Fee = $100
Transaction Fee = $550
Escrow & Legal Fees
Escrow Fee = $500 – 750
Title Insurance (not required, but sometimes recommended) = $7 per 1000
Lender Fees
Origination = Case by Case. Don’t be afraid to inquire prior to making your decision.
Underwriting = $400
Administration Fee = can vary depending on the lender requirements. Usually $200 – 500
Processing = can vary depending on lender requirements; usually $500- 900
Lender’s Appraisal Fee = .1% of purchase price (max $1500)
Can I have the house I am interested in inspected before I buy it?
Yes. There are several inspection companies here, using procedures similar to those in the US. Inspection is not as important here, since most of our construction is block or poured concrete, and although there is an issue with termites, they do not pose the same fundamental threat they pose in many US locations.
Can I have an appraisal before purchasing?
A tax appraisal is part of any purchase in Mexico, but is not a market value estimate as is the case in the USA. It is usually much lower than the market value. With financing becoming part of many purchases, an actual market appraisal will often be required. It will be arranged by your lender or loan broker, or by our closing department.
What do Loan Brokers do in this market?
As in the USA, the Broker will work with you and one or more actual lenders to match your needs and capabilities with an appropriate loan product. They also participate actively in the closing process, maintaining contact with buyer’s and seller’s agents and the notario, ensuring that the documentation flow is going smoothly, and that the lender’s funds and paperwork are ready when the title is ready to transfer.
Why use a US Escrow for a Mexican transaction?
For the same purpose as in the US or Canada: to have an independent person hold funds until title transfer or some other agreed event occurs. Through this device, you can be sure that the funds you place in escrow will be held and released only when they should be, and from the seller’s perspective it allows him to know that the funds are on deposit and ready for distribution before he signs the document transferring title to you.
A Note From Your Local Real Estate Professional
Most of the information contained in this site is free to use and share with friends, family, and coworkers. All we ask in return is that when you see an article or property that you like, you give us a call to let us know and then tell all your friends and family about our wonderful services!
While these tools, articles, and guides about buying a home in Cabo San Lucas will be extremely helpful, we would like to note that they are no substitute for our own personal insight and attention. Please don’t hesitate to contact us if you have any further questions, comments, concerns, or ideas regarding the Cabo real estate market.
Other Links:
Home > Library > Geographic Location > Cabo San Lucas, Mexico Real Estate:
A Buyer’s Guide
