The State of Vacation Rentals in Cabo (2025)

Vacation rentals in Los Cabos have matured into a high-performance asset class, blending luxury, lifestyle, and revenue in one of Mexico’s most attractive coastal markets. As demand continues from North American travelers, digital nomads, and remote workers, the landscape of short-term rentals is both lucrative and increasingly regulated. Here's a 2025 snapshot of what investors and owners need to know.

Typical Occupancy Rates in Cabo's Vacation Market

Average occupancy rates for vacation rentals in Los Cabos range from 58% to 72% annually, depending on location, property class, and seasonality. Premium properties in beachfront communities like Pedregal, Palmilla, and Cabo del Sol can see even higher occupancy—particularly when professionally managed. In contrast, properties further from the coastline or in less tourist-centric neighborhoods may average closer to 50-60%.

High and Low Seasons Defined

• High Season: November through April, especially during winter holidays, spring break, and major events such as fishing tournaments or cultural festivals.
• Mid Season: May, early June, and October often see moderate bookings, particularly attractive to remote workers and retirees.
• Low Season: August and September, which coincide with the peak of hurricane season and extreme heat, typically reflect the lowest occupancy and daily rates.

Properties that maintain strong summer marketing and offer competitive pricing or monthly stays can still generate consistent cash flow during these months.

Revenue Ranges: From Modest to Million-Dollar Listings

Annual gross income for vacation rentals in Cabo varies dramatically:

• Entry-level condos in San José or near downtown Cabo San Lucas can yield $18,000 to $35,000 USD per year.
• Mid-tier villas in gated communities often generate between $50,000 and $120,000 USD annually.
• Luxury estates in high-demand zones such as Pedregal, Palmilla, and El Encanto frequently earn between $200,000 and $500,000+ USD per year, depending on services, occupancy, and management.

Professional management, smart pricing, and high-end amenities (such as concierge service, pools, or chef options) dramatically impact performance.

HOA Restrictions: Every Community Has Rules

Homeowners Associations (HOAs) in Cabo vary in their approach to short-term rentals:

• Some, like Pedregal, allow rentals but impose registration fees, guest behavior rules, and service limitations (e.g., noise regulations, vendor lists).
• Many condominium HOAs require prior approval, registration with the HOA, and insurance or liability waivers.

Investors must review CC&Rs (Covenants, Conditions & Restrictions) carefully and seek legal review before assuming income potential.

Municipality Permits: Legal Requirements Tighten

The Municipality of Los Cabos now requires that all short-term rental properties:

• Pay applicable lodging taxes (approx. 3%) and report monthly earnings.

Conclusion: High Opportunity, High Responsibility

Vacation rentals in Los Cabos remain a powerful income vehicle, but the market is no longer informal or loosely monitored. Successful investors in 2025 are those who balance revenue strategy with full legal compliance, respect HOA guidelines, and invest in premium experiences.