What a Los Cabos Villa Actually Earns: 2026 Rates, Costs, and Net Yield by Owner Nationality

Three of the major short-term rental data providers currently report an average daily rate for this market. Airbtics says $177 for Los Cabos. AirROI says $413 for Cabo San Lucas. AirDNA says $674 for the same city.

That is a 3.8x spread. It is the first thing an owner should understand about Los Cabos revenue data, and it is not a scandal — it is a definitional problem. The three draw different polygons, count different inventory, and use different occupancy denominators. All three are internally consistent. None of them is describing your villa.

A 6-bedroom villa in Pedregal publishes $3,700 to $5,200 a night. An 8-bedroom estate in Palmilla publishes $8,500. The market-wide “average” of $413 is between 5% and 11% of those numbers, because the average is dominated by one- and two-bedroom condos renting at $188 and sitting empty two nights in three.

So the honest version of the question — what does a Los Cabos villa earn? — has to be answered in three parts. What it grosses. What it nets after the operating stack. And what survives the tax stack, which is the part that depends on which passport the owner holds and which is almost never modeled at all.

Part 1 — The arithmetic that produces wrong answers

Nearly every Cabo pro forma we are shown by prospective owners is built the same way:

ADR × occupancy × 365 = annual revenue

It is wrong, and it is wrong in a specific and predictable direction. Test it against the providers’ own published figures:

Both fail their own test, and neither is in error. Occupancy is calculated against available nights, not calendar nights. AirROI’s revenue figure implies roughly 228 available nights per listing per year; AirDNA’s implies about 143. The rest of the calendar is blocked, dark, or owner-occupied.

Multiplying the three published numbers together overstates revenue by 1.6x to 2.6x. Every underwriting model that starts this way is broken before the first cost line.

The more useful public number is AirROI’s performance-tier table, which is the only dataset we know of that separates the top of the Cabo market from the condo mass:

The top decile annualizes to roughly $129,600. That is the closest defensible public proxy for a well-run Cabo property — and it still understates a staffed estate badly, because Airbnb-derived data only sees Airbnb-listed inventory, and most genuine villa product in Pedregal, Palmilla, Querencia and Quivira distributes through operators and private books, not through the platform.

Part 2 — What villas actually publish

Published nightly rates, by community, from operator rate cards:

Two observations that matter more than the ranges themselves.

Pedregal is not uniformly luxury. The same gated community that publishes a $5,250 8-bedroom also publishes a $588 4-bedroom. Owners who benchmark against the address rather than the product consistently over-forecast.

Querencia, Diamante and Quivira publish nothing. This is a finding, not a research gap. Querencia routes rentals through the club; Diamante’s inventory is residence-club oriented. Any nightly rate quoted for these three online is either a single scraped listing or invented. If you own in one of them, market comps do not exist in public — which cuts both ways.

Seasonality behaves differently at the top

The whole Cabo STR market has a peak-to-trough ADR spread of about 17% ($420 at the March peak against $358 at the August trough). Occupancy does nearly all of the seasonal work.

Luxury villas invert this. Same-property published low-to-high spreads:

The condo market prices seasonally through occupancy. The villa market prices through rate. Any pricing model borrowed from market-wide data will badly under-price the December-through-April window — which is where the year is won.

One caveat on all published rates: they are asking rates, not achieved rates. The current promotional overhang in Los Cabos is visible and significant — 7th-night-free, 5th-night-free, two-free-nights-on-seven across multiple operators. A seventh night free is a 14% effective discount on a week. In a year when arrivals are down, treat published villa rates as carrying roughly 10–15% of hidden discount.

Part 3 — Gross to net: the operating stack

Here is a full-year model for a representative property type: a 6-bedroom Pedregal villa valued at approximately $2.4M, professionally managed, distributed across channels, achieving 115 booked nights at a blended realized ADR of $3,400.

This model is illustrative. It is built to show how the lines relate to one another, not to forecast any particular villa. Actual results vary widely with the property, the calendar, the channel mix and the year, and nothing here is a projection or a guarantee of what a villa under our management will earn.

Revenue and distribution

Two taxes are deliberately excluded from this bridge because they are not owner costs when handled correctly: 16% IVA on furnished lodging and the 4% Baja California Sur lodging tax (ISH). Both are charged to the guest and remitted, not absorbed. They matter anyway for two reasons — they raise the all-in price to the traveler by roughly twenty percent, which suppresses achievable rate; and an owner without an RFC cannot credit input IVA on furnishings, commissions or management fees, at which point a pass-through becomes a real absorbed cost.

The blended channel figure deserves a note. Airbnb charges 16% in Mexico — not the 15.5% global host-only rate. Vrbo runs about 8%. Direct booking costs roughly 3% in payment processing. On a $30,000 booking week, the difference between an Airbnb reservation and a direct one is about $3,900. Over a year at this volume it is larger than most ancillary revenue lines combined, and it is the entire commercial case for owning the guest relationship rather than renting it from a platform.

Operating costs

Three of these lines are routinely misbudgeted by a factor that changes the whole answer.

Staffing. Mexican employment carries a loaded burden of roughly 32% before you account for the IMSS fixed contribution, which is a flat peso amount per insured worker per day and therefore weighs disproportionately on lower wages. The realistic multiplier for villa staff is 1.35x to 1.45x gross salary. On top of that sits a constitutional severance indemnity of 90 days’ integrated wage that exists from an employee’s first day, plus up to 32 days per year of service accruing thereafter — 20 days under Article 50 of the Ley Federal del Trabajo and 12 days of prima de antigüedad, the latter capped at twice the minimum wage and therefore materially less than 12 days for better-paid staff. Treat 32 days as the ceiling rather than the expected case. Budgeting staff at raw salary understates the true cost by about a third and ignores a balance-sheet item entirely.

Electricity. This is the line that surprises new Cabo owners most. CFE’s residential subsidy is withdrawn once a property’s rolling twelve-month average exceeds 850 kWh per month — the DAC tariff. Baja California Sur carries the highest DAC energy charge in Mexico, at roughly 7.05 pesos per kWh in summer as of early 2026 (the rate re-indexes monthly). An air-conditioned villa of this size running at high occupancy consumes 3,000 to 5,000 kWh a month in summer; at DAC rates with IVA, and at approximately 17 pesos to the dollar, that is $1,450 to $2,415 a month. DAC roughly doubles the bill, and because the trigger is a rolling average, reducing consumption takes up to twelve months to clear.

One thing worth raising at closing: some Cabo buyers have succeeded in asking CFE to re-baseline the DAC consumption history at change of ownership by presenting the fideicomiso or escritura. This is not published CFE policy — the standard position is that consumption history follows the meter, not the account holder — and it is not granted uniformly. Ask. Do not underwrite on it.

CapEx. Salt air compresses replacement cycles hard. HVAC that runs 12–15 years inland is widely reported to replace at 7–10 years in coastal salt-air exposure, with coils in severe exposure failing sooner. Palapa thatch runs 5–8 years in direct exposure and 8–15 years well-laid and maintained, with re-thatching costing 40–60% of the original roof. Outdoor furniture and exterior finishes cycle in 3–5 years. Reserve against the replacement cost of improvements, not the purchase price — in Cabo, land and view premium can be 40–60% of the ticket, so a percentage-of-value rule misallocates badly.

At this point the villa shows a 5.75% NOI yield on asset value and a gross rental revenue equal to 16.3% of value. That is a genuinely good result for the market. Then the tax stack arrives.

Part 4 — Where the passport starts to matter

Everything to this point is an operating question. The next one is not, and it is the reason two owners of identical villas, running identical operations, can end the year in materially different places.

Mexico taxes a non-resident’s rental income on a gross basis rather than on profit. That single design choice is the most consequential fact in Los Cabos villa ownership, and it is the one that almost never appears in a broker’s pro forma.

The consequence is structural rather than arithmetic. A foreign tax credit — the mechanism your home country uses to stop the same income being taxed twice — is built to relieve a rate difference between two countries that measure income the same way. It is not built for a base difference. When one country taxes receipts and the other taxes profit, the credit is capped at your home country’s tax on the profit, and it runs out well before the double taxation does. Owners routinely discover this only after a full year of operating, at which point the year is already decided.

Two owners in the same gated community can therefore face very different outcomes:

• A U.S. owner has an option under the U.S.–Mexico treaty to be taxed in Mexico on a net basis instead of a gross one. Taking it involves Mexican tax registration, a formal filing, and an annual renewal — and the election binds for subsequent years, so it is not a decision to make casually. But where it applies, it aligns the two tax bases and removes most of the mismatch.
• A Canadian, British or German owner has no equivalent. We compared the immovable-property provisions of all three treaties against the U.S. text; that net-basis option appears only in the U.S. one. Their planning has to happen elsewhere.
• Canada is the least forgiving of the group. Unused foreign tax credit on this kind of income cannot be carried forward or back, so relief that goes unused in the year is simply gone rather than deferred.

There is a second lever, available regardless of passport, which is whether the owner is registered with the Mexican tax authority at all. An unregistered owner is withheld at a substantially higher rate by the booking platforms than a registered one, on both income tax and VAT — and a 2026 rule increases VAT withholding further where the host’s payments are deposited to a bank account outside Mexico, which describes most absentee owners.

We are deliberately not publishing rates, article numbers, or filing references here. Mexican tax rules for non-resident landlords changed at the start of 2026, including the reference numbers for the filings themselves, and there is a genuine unresolved question about how the platform withholding regime interacts with the rules that govern non-residents. Anything specific enough to act on would need to come from someone who can look at your actual ownership structure and be accountable for the answer. What we can say with confidence is the shape of it: the tax layer on a Cabo villa is large relative to net operating income, it is decided by administrative choices rather than operational ones, and the gap between an owner who has taken advice and one who has not is wider than anything an operator can add or lose on the revenue side.

If you take one thing from this section, make it that last sentence — and then go and have the conversation before you buy, not after your first season.

Part 5 — The 2026 market, honestly

Los Cabos is in a down year. International arrivals were off 7% through July, about 100,000 fewer visitors, with May, June and July hardest hit — June alone down 14.2%. STR supply contracted 11.3%. Market RevPAR fell 13.2%. Destination ADR slipped from $458 in 2024 to $429 in 2025.

The luxury segment is not participating in that decline. Virtuoso-network properties — roughly 2,500 of the destination’s 19,500 rooms — grew bookings against a falling market, with luxury travelers reported to be staying meaningfully longer than average. FITURCA’s director, Rodrigo Esponda, said as much publicly at Virtuoso Travel Week this month: the segment is proving more resilient than the broader market.

For a villa owner, the read is straightforward: the softness is concentrated in the mid-market and in domestic demand, the top of the market is holding, and the spread between a well-operated villa and an average one widens in exactly this kind of year. It also means the promotional overhang is real, and asking rates should be discounted before they go into a model.

What this actually means for an absentee owner

The villa modelled here grosses $391,000 and nets $138,100 before tax. What Mexico then takes varies widely — and it varies on administrative decisions, not operational ones: whether the owner is registered with the Mexican tax authority, and what relief the owner’s country of residence can actually reach.

Neither of those decisions is an operating decision. Neither is affected by how well the villa is managed. Both are made once, cost a few thousand dollars in professional fees, and are worth more than a full year of revenue optimization.

Owners who want to run these numbers against their own property can model the revenue and cost side in our yield calculator; the operational counterpart to this briefing — fideicomiso mechanics, HOA regimes, binational vendor logistics — is covered in our guide to Los Cabos short-term rental management for foreign owners.

That is the argument of this piece. The revenue side of Cabo villa ownership is where the attention goes and where the marketing lives. The structural side — tariff classification, employment burden, reserve methodology, tax base election — is where the returns are actually decided, and it is almost entirely invisible in the public discussion of this market.

All figures in this briefing are illustrative and are drawn from published market data and modelled assumptions stated in the text. They are not a forecast, projection, or guarantee of the income or return of any property, including any property under Virestia management. Individual results vary.

Nothing here is tax, legal, or investment advice, and it should not be relied on as a substitute for it. Mexican and home-country tax treatment of a non-resident owner depends entirely on individual circumstances and ownership structure, and the rules applying to non-resident landlords in Mexico changed at the start of 2026. Before acting, take advice from a qualified Mexican accountant and an adviser in your own country of residence.