Can US Citizens Buy Property in Cabo San Lucas?

Paul Goldsmith April 30, 2023

Can US Citizens Buy Property in Cabo San Lucas?

There was a time a few decades ago when the process of buying property in Mexico, and Cabo San Lucas in particular, was a complicated, somewhat unpleasant ordeal. Buyers either needed an extensive or hereditary connection to their plot of land or to have inroads with Mexican investors and landowners to get the purchase off the ground. Not so today. Indeed, an American can buy property in Cabo San Lucas with little trouble today.
 
We’re currently living in a sort of golden age when it comes to buying property in Mexico. Yes, there are intricacies that U.S. citizens will need to iron out along the way. Regardless, it’s entirely possible to do it, bearing in mind you know how. Read on below for everything you need to keep in mind.

The basics

Let’s start with the groundwork of what you’ll have to do. Before you decide on the more detailed concerns, you’ll first need to sort out the following:
 
  • Where in Cabo San Lucas do you plan to buy a home?
  • Who can I contact to serve as my realtor and/or attorney?
  • What is my financial health at the moment?
  • What type of property do I wish to buy?
While it may seem like a lot to start off with, it’s easier than you might think to gather all your information quickly. Our first piece of advice is to reach out to a local real estate agent. They can act as your support system throughout the process and connect you with the proper authorities to complete the buying process in good time.

Understand the definition of a “restricted zone”

The first thing to understand about buying property in Cabo San Lucas is that it lies in a part of Mexico called the “restricted zone.” This means that American citizens cannot legally purchase property in it without going through a few extra steps. Essentially, the restricted zone is defined as 50 km (about 31 miles) from the entire coast of Mexico and 100 km (about 62 miles) from any Mexican border.
 
Since nearly all of Cabo San Lucas lies in the restricted zone, Americans cannot own a direct title to property here. Instead, they must set up a bank trust (known in Mexico as a “fideicomiso”). All foreigners without legal residency in Mexico need to follow this channel.

Find your property and sign for it

Your first step to buying property in Mexico is to find the property in the area that you dream of. Make an offer on the home or condo as soon as possible. When the deal is done, sign the sales agreement.
 
You’ll usually have to provide a deposit of 5-10% if the property is still in pre-production. That figure jumps to a 40% minimum if the home is already built. Make sure you contact your Realtor ahead of time because the official documents will be written in Spanish by a Mexican lawyer or official. We recommend sending the funds via wire transfer, but your real estate agent may have other preferred options.

Need financing?

We estimate that over 90% of all property sales in the area are cash sales. Reasonable financing plans in Cabo San Lucas can be extremely difficult to find. In most cases — if not all — there will not be an American mortgage loan available for property in Mexico. You should talk with your Realtor in advance if you think you’ll need to find funding. Mexico lenders may be able to help you.
 
The best option you may have is to look for a home that’s part of a new development. Some of these companies may offer financing. Nevertheless, even if you find a financier or lender, expect to pay a sizeable down payment north of 30-40% with higher than average rates.

Set up a bank trust or fideicomiso

Once you’ve fully funded your Cabo San Lucas property, it’s time to get the title. Here is where the fideicomiso comes into play. First, the seller has to contact your bank to start the process.
 
So, what exactly is a fideicomiso, and how do you set one up? Luckily, the process has been streamlined in the last decade or more, so it’s easier than ever as long as you can get over the language barrier and certain differences between the Mexican and American housing systems.
 
A fideicomiso is a type of trust that allows foreigners to purchase a home or condo in the restricted zone just as if they were a Mexican citizen. It is a very common thing for interested American buyers to pursue and obtain. It’s perpetually renewable, and you can own it or share ownership with others. You can declare an heir for it, and it costs anywhere from $500-$1,000 to renew every year. It does not expire as long as you continue to renew it. Initially, it will cost about $1,000 to set it up.

Closing costs and closing dates

Now that you’ve connected the seller with your bank and obtained a fideicomiso, you’re almost there. First, make sure you pay closing costs, fees, and taxes. These rates change widely across the country, but you can expect them to fall somewhere between 4-6%.
 
Once all the closing paperwork is done and signed, all you have to do is wait for the official documents from the Public Registry to arrive. At this point, you’ll have access to the final deed to the property. Congratulations! You’re now an American with property in Cabo San Lucas. All that’s left to do is start enjoying the Mexican lifestyle from your own front door.

Reach out to a local and experienced real estate agent today

With that, we’ve put a cap on our how-to guide for buying property in Cabo. We hope we’ve fully answered the question, “can an American buy a house in Cabo San Lucas?” The answer is a resounding yes, as long as you’re patient enough to see it through.
 
If you have any questions or comments to share about buying property in Cabo San Lucas, don’t hesitate to reach out today! Contact the Goldsmith Group for more information. Led by Paul & Daria Goldsmith, this team of experts is here to help.





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