Most of the attention in a foreign property purchase goes to the transaction itself: the price, the legal structure, the closing. For American buyers in Los Cabos, some of the more lasting surprises come afterward, in what it costs to hold the property year after year.
Property taxes
The clearest example is property tax. Mexico’s annual property tax, known as predial, is low by U.S. standards. Ed Eakin, a Texas broker and Certified International Property Specialist based in Cabo San Lucas, puts the rate in Los Cabos at roughly 0.1 percent, or about $1,000 a year on a $1 million home.
For buyers from Texas, where property taxes are among the highest in the country, the difference is substantial. “People are surprised at that,” Eakin said. “It’s been that way for a long time.”
The tax is not the only recurring cost. Foreign buyers holding coastal property through a fideicomiso, the bank trust required within 50 kilometers of the coast, also pay the trustee bank an annual fee. Homeowners’ association dues and club memberships in master-planned communities vary widely and can outweigh both.
Eakin adds that property insurance has generally been inexpensive relative to many U.S. markets.
Healthcare
Healthcare costs are a second recurring surprise. Many owners find that routine care, dental work and prescription medication cost considerably less than in the United States, depending on what their U.S. insurance covers.
The region has also built up a following for elective and orthopedic procedures, such as knee and shoulder surgery. For owners spending several months a year in Los Cabos, the quality and availability of local care is often one of the first things they ask about before buying, and one of the things they mention most once they own.
Community
The third surprise is social rather than financial. Eakin says new owners are often struck by how many Americans are already established in Los Cabos, some of them for decades.
“If you didn’t know you were in Mexico, my neighborhood looks and feels like something in Arizona,” he said. “We just have the Pacific Ocean.”
That familiarity shows up in daily routines. Golf is a large part of life in the region’s master-planned communities, and sport fishing draws an international crowd each fall. Seasonal patterns echo those of U.S. winter destinations: occupancy rises as the weather cools up north, and many owners leave during the hottest months, from July through October.
What owners weigh
None of this changes the basics of a sound purchase. Buyers still need to verify the property and the developer, understand the trust structure, and budget for the costs that do apply. What it does change is the long-term math. For many owners, the expense of holding a home in Los Cabos turns out to be lower than they planned, and the decision becomes less about whether to buy than about how much of the year to spend there.
Financing is the next variable to watch. A small number of lenders now offer mortgages in Mexico to U.S. buyers, a market that could broaden who is able to buy as it matures.
About the Expert: Ed Eakin is a Texas real estate broker and Certified International Property Specialist who leads Eakin Group in Cabo San Lucas, Mexico. He focuses on luxury and golf-community property in Los Cabos. eakingroup.com
This article is based on information provided by the expert source cited above. It is intended for general informational purposes only and does not constitute legal, financial, or real estate advice. Readers should conduct their own research and consult qualified professionals before making any real estate or financial decisions.
