With a little due diligence and the help of an experienced Cabo realtor, the process can be streamlined and hurdle-free.

Los Cabos has a lot to offer if you want to buy or invest in real estate here. Beautiful scenery, a rich tapestry of cultural diversity, and a variety of unique architectural styles make Los Cabos one of the best places to invest in all of Mexico. Whether you’re looking for a dream home or a smart investment or both, you will find the property you need in Los Cabos. The Mexican housing market is more robust than ever. The nationwide house price index rose 5.8 percent during the second quarter of 2020, and house prices rose by 1.2 percent during the latest quarter (1.7 percent when inflation-adjusted). The Mexican housing market is healthy. And house prices are expected to continue rising, proving resilient despite the pandemic. Los Cabos abounds with new development that includes the arrival of such ubiquitous American chains as Costco and Walmart and familiar brand-name stores in local malls. Foreign investors have access to legal services, modern medical facilities, high-speed Internet, well-maintained roads, excellent international schools, exciting art and music scenes, and world-class dining destinations. The rapid economic growth of Los Cabos is also spurred by its sizable expatriate population. Many locals speak English, so even foreign nationals who don’t speak Spanish will be comfortable navigating the area. And it’s easy to get here. More than a dozen airlines provide direct flights to the Los Cabos International Airport from many major U.S. cities, and the scenic 1,059-mile drive along the Baja Peninsula leads from Los Cabos to the U.S.-Mexico border in Tijuana. In short, these days it’s easier than ever to buy property in Mexico. Of course, there are a few rules governing homeownership and the acquisition of other property that differ from those in the U.S. and Canada. But with a basic grasp of Mexico’s rules and the help of an experienced Cabo real estate agent, you can complete the process with ease.

Due Diligence

Buying a home in Los Cabos is a straightforward process. When you are buying a house here, the parties involved in the deal include the buyer, the seller, the real estate agent, the escrow agent and closing agent, the notary public, and, sometimes, a bank.

Fideicomiso means trust.

The first thing to know about purchasing property in Mexico is the meaning of fideicomiso (fee-day-coe-me-so): a long-term irrevocable bank trust. This is a renewable trust that the Mexican government holds for 50 years. The ability of foreigners to legally own real estate in Mexico got a boost from the 1973 Foreign Investment Law, which had emerged from efforts to attract foreign investment to Mexico’s coastline. The law enables foreigners to own land within the so-called restricted zone, thereby circumventing the 1917 constitutional ban of foreign ownership on land within 62 miles (100 kilometers) of any national border and within 31 miles (50 kilometers) of the ocean. Most of Los Cabos lies within the restricted zone. What all this means is that the new owner of the property becomes a beneficiary of the trust for 50 years, at which point — and every half-century thereafter — the trust permit is guaranteed to be renewed. The buyer is the executor of the trust and has total rights to the use and disposition of the land and improvements. If you happen to buy any property outside of the restricted zone, you hold title directly in your name. Although home buyers must pay a fee for the trust at closing in addition to an annual fee, the trust does provide the major benefit of a seamless transition when the property changes hands after the death of the property owner. Despite the roundabout terms of the arrangement, once you buy a house in Cabo, you are not a lessee. You have the same exclusive right over the property that you would enjoy as a property owner in the United States, including the right to improve, rent, sell, or simply dwell in the property.

The Closing and Your Los Cabos Property Taxes

The purchase of the property takes place at the office of a notary public. At this time, the seller may assign his beneficial interest in the trust to the buyer. The buyer may establish a new bank trust with respect to which he is the primary beneficiary. The notary closes the sale. Closing costs typically include an acquisition tax, a city appraisal fee, fees for foreign permits, a bank-trust setup and administration fee, and the notary fees. Title insurance is also readily available in Cabo. These costs range from 2 percent to 6 percent of the purchase price of your property. The main reason that closing costs tend to be this high is that the local government collects a transfer tax of two percent of the purchase price. The good news is that after you get past this hurdle, your annual property taxes will be very low: in fact, a fraction of 1 percent of the purchase price. You can also save as much as 20 percent on your annual property taxes if you pay them early in January. Paying property taxes is your own responsibility. Unless you make additions to the property, you will pay the same amount that the seller had been paying. If you do need to update the value of the property — and thus the property tax — you can do so through the municipal authority. Cabo Life has two closing companies with which we work very closely. The attorney of one of the companies is licensed to practice in both America and Mexico. The other company, Secure Title Latin America, is American-owned and conducts business throughout Latin America. The persons working on your behalf are thus conversant with the cultures and languages of both north and south, so that the communication required to conduct and complete business is clear and unambiguous. All this makes closing a breeze. You won’t be tearing your hair out over last-minute snags.

Financing Options for Buying a House in Los Cabos

Although getting a mortgage is not as common in Mexico as it is in the United States, financing is still possible for many properties, especially for new developments. Whether you’re paying cash or getting financing from a Mexican bank, consider using an independent escrow company to handle your finances and communications with the closing agent. You can also get financing from an international company. Buyers often have access to international loans that pay up to 60 percent of the value of the house, and interest rates on such loans start at just 7 percent. It’s a great way to buy a property in Cabo without having to provide a lot of cash up front.

Work With a Cabo Real Estate Agency You Trust

If you don’t plan to be in the country during the process of buying the property, don’t worry; a seasoned real estate agent can manage most of the details. These days, most paperwork can be handled electronically. If you cannot sign the deed transfer in person, consider providing power of attorney to someone you can trust. Our real estate agents will guide you through the available properties and the paperwork requirements, recommend financing options, and help you find the home or investment that meets your requirements — and fits your budget. The agent can also answer all of your questions about cost of living, lifestyle, local culture, and neighborhoods. We offer honesty, integrity, trust — and dedication. We are your friends throughout the buying process and after the deal has been closed. As we always say, “Our clients become our friends, our friends become our clients, and our friends are treated like family.” If you are thinking of buying in Los Cabos, let us be your reliable ally. Contact us anytime to get started.