Rental Income Properties in Cabo

Protecting yourself as a landlord in Mexico requires balancing opportunity with risk. The Los Cabos market, like many parts of the country, is experiencing a surge in rental activity, with more people moving full-time, seeking seasonal homes, or booking extended stays. This growth creates income potential but also raises questions around tenant screening, leases, eviction, and liability. Whether you own a single condo or multiple properties, safeguarding your investment starts with the right legal and practical steps.

A written lease is essential—it’s not just a formality, but your first line of defense. It clearly defines rights and obligations, sets rental terms, and protects you in cases of non-payment or damage. This applies to long-term, medium-term, and even vacation rentals, particularly when third-party services like cleaners or caretakers are involved. Beyond the lease, landlords in Mexico should follow several best practices. First, request upfront payments, typically first month’s rent, last month’s rent, and a security deposit equal to one month’s rent. This provides three months’ worth of protection and demonstrates tenant reliability. Second, whenever possible, use a surety (aval)—a guarantor with real estate assets in Mexico who can be held responsible if the tenant defaults. Third, consider requiring a promissory note covering the lease term, which provides another legal safeguard. Finally, conduct thorough background checks. While Mexico’s credit bureau data is limited, personal references and verified financial history go a long way.

Prevention is especially important because evictions in Mexico are often slow and costly. Courts in Los Cabos, for example, handle thousands of new cases annually but resolve only a fraction. The landlord’s primary goal is usually regaining possession rather than recovering lost rent. This makes careful tenant screening essential. Liability also functions differently in Mexico. Tenants are generally responsible for their actions, but landlords must ensure properties are structurally safe and free of hazards. For example, a balcony without a railing would make the landlord liable, but accidents on a well-maintained property usually fall under the tenant’s responsibility. Carrying landlord liability insurance and requiring renter’s insurance is wise to avoid lengthy disputes.

Finally, tax compliance cannot be overlooked. Rental income, including short-term vacation rentals, must be reported in Mexico, and failure to do so can create significant legal and financial problems.

The key takeaways for landlords are straightforward: always use a lease, require deposits and upfront rent, consider sureties or promissory notes, screen tenants thoroughly, maintain and insure your property, and stay compliant with tax law. With these precautions, rental property ownership in Mexico can be both profitable and relatively stress-free. In markets like Los Cabos, success comes from treating rentals like a business and protecting your investment at every step.

For more information on investment properties in Cabo, contact Fletcher Wheaton - fletcher@remexico.com