Cabo vacation rental properties generate $18,000 to $120,000+ in gross annual income depending on community, property type, and management quality. Average occupancy across the market runs 65-78% annually, with peak season (November-May) hitting 80-92%. Gross rental yields average 6-9%, with net yields of 4-6.5% after management and operating costs. This community-by-community analysis provides the data you need to evaluate rental income potential for any Los Cabos property.
1. Nightly Rates by Community
Nightly rates in Los Cabos vary dramatically by location, property type, and season. The following data reflects 2025-2026 peak season averages from Airbnb, VRBO, and local property managers.
| Community | 1BR Condo | 2BR Condo | 3BR Villa | 4BR+ Villa |
|---|---|---|---|---|
| Pedregal | $200-$350 | $300-$500 | $500-$900 | $800-$2,000 |
| Palmilla | $250-$400 | $350-$550 | $550-$1,000 | $900-$2,500 |
| Cabo San Lucas (Marina) | $120-$220 | $180-$350 | $300-$550 | $450-$900 |
| Diamante | $200-$350 | $300-$500 | $450-$800 | $700-$1,500 |
| Quivira | $180-$300 | $250-$450 | $400-$700 | $600-$1,200 |
| Cabo del Sol | $180-$300 | $280-$450 | $400-$750 | $600-$1,300 |
| San Jose del Cabo | $100-$180 | $150-$280 | $250-$450 | $400-$800 |
| Cerritos Beach | $80-$150 | $120-$220 | $200-$400 | $350-$700 |
| East Cape | $80-$140 | $120-$200 | $200-$380 | $300-$600 |
| Costa Palmas | N/A | $400-$600 | $700-$1,200 | $1,200-$3,000 |
Peak season rates (November-May) run 40-60% higher than summer rates. Holiday weeks (Christmas, New Year, Easter, US Thanksgiving) command an additional 25-50% premium above standard peak rates.
2. Occupancy Data by Season
Occupancy rates are the second variable that determines your annual income. Cabo's 350 sunny days per year support stronger year-round occupancy than most resort markets.
| Season | Months | Avg Occupancy | Rate Index |
|---|---|---|---|
| Peak / High | Nov-Mar | 80-92% | 100% (base rate) |
| Shoulder | Apr-May, Oct | 60-75% | 75-85% |
| Summer / Low | Jun-Sep | 40-55% | 55-70% |
| Annual Average | Jan-Dec | 65-78% | N/A |
Top-performing properties hit 78%+ annual occupancy through competitive summer pricing, strong reviews (4.8+ stars), professional photography, and dynamic pricing tools. Properties below 60% annual occupancy typically have poor listing quality, restrictive minimum stays, or suboptimal locations.
3. Annual Revenue Projections
Combining nightly rates and occupancy data produces realistic annual revenue estimates. The following projections assume professional management and optimized listings.
| Property Type | Purchase Price | Gross Annual Revenue | Gross Yield |
|---|---|---|---|
| 1BR condo, Cabo San Lucas | $200,000 | $18,000-$24,000 | 9-12% |
| 2BR condo, Cabo San Lucas | $350,000 | $28,000-$40,000 | 8-11% |
| 2BR condo, Quivira | $450,000 | $32,000-$45,000 | 7-10% |
| 3BR villa, Pedregal | $1,500,000 | $80,000-$110,000 | 5-7% |
| 3BR villa, Palmilla | $2,200,000 | $90,000-$120,000 | 4-5.5% |
| 2BR condo, Cerritos Beach | $180,000 | $16,000-$22,000 | 9-12% |
| 4BR villa, Diamante | $2,500,000 | $110,000-$150,000 | 4.4-6% |
| 2BR condo, San Jose del Cabo | $280,000 | $20,000-$30,000 | 7-11% |
The highest gross yields (9-12%) come from moderately priced condos in high-demand locations. Lower-priced properties produce better percentage returns even though absolute dollar amounts are smaller. This makes 1-2 bedroom condos in the $180,000-$350,000 range the sweet spot for pure income investors.
4. Operating Costs and Net Income
Gross revenue is not profit. Understanding the full cost structure is critical for accurate ROI projections.
Property management: 20-25% of gross revenue for full-service management. This includes listing optimization, guest communication, key exchange, cleaning coordination, maintenance dispatch, and monthly reporting.
Standard operating costs (annual, as percentage of gross revenue):
- Property management: 20-25%
- Cleaning and turnover: 5-8%
- Maintenance and repairs: 3-5%
- Supplies (linens, toiletries, consumables): 2-3%
- Platform fees (Airbnb/VRBO host fees): 3%
- Insurance: 1-2%
- Property taxes: 0.5-1%
- HOA fees: Variable ($300-$1,000/month)
- Utilities: 1-3%
- Mexican income tax: 25% of net rental income (or ISR scaled rate)
Total operating costs typically consume 35-45% of gross revenue before income tax, leaving 55-65% as pre-tax net operating income. After Mexican income tax, net cash flow is roughly 45-55% of gross revenue.
5. Airbnb Regulations and Legal Requirements
Mexico's regulatory environment for short-term rentals is relatively permissive compared to many US and European cities.
Federal level: No federal restrictions on short-term vacation rentals. Mexico welcomes tourism investment.
Municipal level: The Los Cabos municipality does not require a specific short-term rental license or permit. However, you should register your rental activity with SAT (Mexico's tax authority) and comply with income tax obligations.
HOA level: This is where restrictions exist. Many gated communities and condo buildings have rules governing rentals:
- Minimum stay requirements (7, 14, or 30 days)
- Guest registration requirements
- Noise and party policies
- Pool and amenity access rules for renters
- Some communities prohibit short-term rentals entirely
Always verify rental policies with the HOA before purchasing an investment property. Communities like Quivira and most Cabo San Lucas condos are rental-friendly. Some ultra-luxury communities like Querencia have stricter policies. Review our buying guide for the full legal framework.
6. Best Areas for Rental ROI
Based on the combination of purchase price, rental demand, occupancy rates, and appreciation, here are the top areas ranked by total investment return:
Tier 1: Best overall rental ROI (8-12% gross yield + 5-7% appreciation)
- Cabo San Lucas Marina area -- Highest demand, walkable, strong year-round occupancy
- El Medano Beach -- Cabo's only swimmable beach, top tourist location
- Quivira -- Resort amenities, golf, beach, excellent management infrastructure
Tier 2: Strong rental income (7-10% gross yield + 5-8% appreciation)
- Cerritos Beach -- Surf tourism, lower prices, growing demand
- San Jose del Cabo -- Art district, culture, walkable downtown
- El Tezal -- Affordable condos close to Cabo, solid occupancy
Tier 3: Moderate rental income + high appreciation (5-7% yield + 7-10% appreciation)
- East Cape -- Emerging market, rapid appreciation, lower current rental volume
- Todos Santos -- Boutique tourism, lower occupancy but premium nightly rates
7. Maximizing Your Rental Income
The difference between average and top-performing properties comes down to execution:
- Professional photography: Properties with professional photos earn 20-40% more revenue. Invest $300-$500 in a professional shoot.
- Dynamic pricing: Tools like PriceLabs or Wheelhouse adjust nightly rates based on demand, events, and competition. Dynamic pricing increases revenue 15-25% over static pricing.
- 5-star reviews: Properties with 4.9+ ratings earn significantly more than 4.5-rated properties. Invest in guest experience: quality linens, fast Wi-Fi, local restaurant guides, and responsive communication.
- Multi-platform listing: List on Airbnb, VRBO, Booking.com, and local platforms like CaboVillas.com. Diversification increases total bookings 15-30%.
For a broader investment analysis including appreciation data, see our Cabo real estate investment guide. Ready to find your investment property? Contact our team for properties with proven rental track records.
Frequently Asked Questions
How much rental income can a Cabo property generate?+
A well-managed 2-bedroom condo in Cabo San Lucas generates $25,000-$40,000 in gross annual rental income. A 3-bedroom ocean-view villa in Pedregal or Palmilla can gross $80,000-$120,000 annually. Luxury 4+ bedroom properties in communities like Chileno Bay or Diamante can exceed $150,000. Net income after property management (20-25%), maintenance, and taxes is typically 55-65% of gross revenue.
What is the average occupancy rate for Cabo rentals?+
Average annual occupancy for well-managed Cabo vacation rentals is 65-78%. Peak season (November through May) occupancy runs 80-92%. Summer months (June through September) drop to 40-55% but can be boosted with competitive pricing. Properties with ocean views, pools, and walkable locations to beaches consistently outperform the market average.
Are Airbnb and VRBO legal in Cabo?+
Yes. Short-term vacation rentals are legal in Los Cabos. Mexico does not have federal restrictions on short-term rentals. Some HOAs and gated communities have minimum stay requirements (typically 7-30 days) or restrict rental activity. Always verify rental policies with the HOA before purchasing. Rental income is subject to Mexican income tax, typically 25% on gross income or a scaled rate on net income.
What does property management cost in Cabo?+
Full-service property management in Cabo costs 20-25% of gross rental revenue. This typically includes listing management, guest communication, check-in/check-out, cleaning coordination, maintenance dispatch, and financial reporting. Some managers charge a flat monthly fee of $500-$1,500 instead of a percentage. Budget an additional 5-8% of gross revenue for cleaning, maintenance, and supplies.
Aaron Cuha
Real Estate Advisor & Los Cabos Market Expert
Real estate advisor and founder of Living In Cabo. 15+ years helping families navigate complex real estate decisions. Strategic partner with Ronival — Baja's largest brokerage.
