The 70% Problem: Why So Many Custom Home Builds in Cabo Are Going Wrong

By Fletcher Wheaton  |  fletcher@remexico.com

Two days ago I was on a property tour in Los Cabos when the agent I was with mentioned another client who had just gotten burned on a construction project. A house in Pedregal. Got to 70% completion. Money gone. Builder gone. Client left holding a half-finished property with no clear path forward.

This is not a one-off story. I hear a version of it constantly. And I want to be direct about what I think is happening: roughly 50% of custom home builds happening right now in Cabo and Baja California Sur are ending badly. That is not an exaggeration. That is what I am seeing on the ground.

Why 70% Is the Danger Zone

The 70 to 75% completion mark is where things fall apart most often -- and it is not a coincidence. By that point, the structure is up, the roof is on, the walls are closed. It looks like a house. But there is still a significant amount of work left: finishes, flooring, cabinetry, electrical completion, plumbing fixtures, HVAC, landscaping, pool if applicable. All of it costs money.

The pattern I keep seeing is this: the builder gets the client in with a competitive bid, draws down payments at each phase, and by the time the project hits the 70-75% mark, all the money has been spent -- or taken. At that point the builder either disappears, claims the project requires a new budget, or simply stops showing up.

Some of this is incompetence. Bad budgeting, no contingency planning, inexperienced project management. But a significant portion of it is outright fraud. Builders who had no intention of completing the project at the original contract price, and who structured the payment schedule to extract as much money as possible before the client figured it out.

The Trap You Cannot Easily Escape

Here is what makes the 70% situation so difficult: you are past the point of walking away. You have a structure on land you own. You need to finish it -- if not to live in it, then to sell it and recover what you can. I know people right now who are finishing builds they have no intention of keeping, just to get out.

But finishing a project that another builder started is not as simple as finding someone new and handing them the keys. Reputable builders -- the ones you actually want -- are busy. And more importantly, good builders are not going to put their name behind work they did not start. If there are structural issues, shoddy framing, substandard materials, or code violations baked into the first 70%, a new builder inherits all of that exposure.

I brought three builders to a client once who had been burned in exactly this situation -- 75% complete, original builder out of the picture. One of those builders called me afterward and said: "Fletcher, I can't touch this. The foundation on one side is sinking. We would have to do weeks of assessment work just to understand what we're dealing with before we could even think about moving forward." That is not a simple fix. That is a project that may cost more to complete than it was originally supposed to cost in total.

The Warranty Problem Nobody Talks About

Even if the construction that was done is structurally sound, there is another complication when you bring in a new builder to finish: warranties. Who is responsible for what? The original builder is gone. The new builder is only willing to warrant the work they did. That leaves a large gray area in the middle -- the work that was completed but may have been done incorrectly, or may fail later.

In a U.S. construction project this would be handled through contracts, insurance, and legal recourse. In Mexico, those mechanisms exist but are far harder to enforce, especially against a builder who has already dissolved their company or moved on. You are largely on your own.

What to Do Before You Break Ground

The best protection against this scenario is not finding the right builder after something goes wrong -- it is doing the right vetting before anything starts. A few non-negotiables:

Verify completed projects. Any builder you are considering should be able to show you finished homes they built. Not renderings. Not projects under construction. Completed builds you can physically walk through and speak to the owners about.

Tie payments to verified milestones. Do not hand over money based on a schedule. Tie every payment to an independently verified stage of completion, confirmed by someone other than the builder.

Hire an independent construction manager or inspector. Someone whose job is to represent your interests, review the work at each phase, and flag problems before they become expensive. This is not a luxury -- in this market, it is essential.

Work with a builder who has an established track record and a reputation they are actively protecting. Builders who are serious about their business do not disappear at 70%. Their future work depends on finishing yours.

The Bottom Line

Building a custom home in Cabo can be an incredible experience. I have seen it done right many times, and the result -- a home designed exactly for how you want to live here -- is hard to match. But the market right now has a serious problem with builders who are either unqualified, undercapitalized, or operating with bad intent.

If you are planning a build, go in with your eyes open. Vet your builder the same way you would vet any major financial commitment. And if you find yourself in the 70% situation, get experienced representation before you do anything else. The decisions made at that stage will determine how much damage you can limit.

Questions about building in Los Cabos or working with vetted construction partners? Reach out: fletcher@remexico.com