The Next “It” Destination on Mexico’s Baja

Real Estate

On Mexico’s Baja California Sur, the beaches are often so heavy with sand drift that even an off-road, four-wheel-drive Jeep Wrangler will sink in them.

I found this out the hard way on a recent real estate scouting trip to the Baja’s East Cape.

When I first came to the Baja in 2014, Los Cabos was undergoing a major boom. The big resort groups were establishing and expanding there. Billions of dollars were piling into development. And I was there alongside them bringing deals to my Real Estate Trend Alert group.

But being an international real estate scout is about always moving forward. searching for the next “it” place… and getting there years or even decades before the crowds do.

Finding the right opportunities always starts with long days on the road (often off-road). Walking dirt tracks and beaches… bringing in experts when needed… looking at what’s going on with my boots firmly on the ground.

The East Cape proper starts a few miles east of San José del Cabo and runs along the Sea of Cortez, to the north of Punta Pescadero and Los Barriles. To explore the entire stretch, you need to prepare for a bumpy ride on 50 miles or so of bad road…

A bad road that’s being paved close to San José. A bad road that leads to land parcels that are being snapped up by big hotel groups right now.

Indeed, the Path of Progress gripping the Baja is no longer confined to Los Cabos. It’s exploding in all directions. I’m talking new roads, infrastructure, resorts. Big money is pouring in. More flights are coming, demand is growing fast… wealthy people are here. And even more are coming…

I’ve been following this Path of Progress very closely… all the way to its outer edges. And then going beyond. I’ve traversed unpaved cliff trails with sheer drops. I’ve been impeded by feral donkeys and wild horses. And I’ve spent a lot of time stuck in the sand.

But it’s all been worth it. Because there are some incredible opportunities here. In the East Cape I see two areas for smart investment. The first area is just past San José del Cabo. Less than 10 minutes’ drive east of this artsy, cultured town is the master-planned community of Puerto Los Cabos. There’s a marina, top-class golf, high-end hotels, and the famed Flora Farms is close by.

Past this though, you have limited to no infrastructure—no water, electricity, paved roads. You just have a pristine beach and other-worldly scenery.

But a new big hotel, Vidanta, is slated to open here later this year. And I think this will mark a transformative event in terms of the development of this part of the East Cape.

The second opportunity is around Los Barriles, further north in East Cape. It’s a straight shot on a paved road from the airport—just under an hour’s drive—and it’s where the Four Seasons has already gone in. And where other big resort groups are following.

It’s beautiful here. The beaches are stunning. But it does tend to be windier at certain times of the year… sometimes uncomfortably windy (but great for attracting the kite surfers who come here in big numbers).

Still, second homes here are in demand. As are homes for the resort workers and well-paid executives, managers, and professionals. So by getting in early, you can own the homes and condos they will want.

But following a Path of Progress is always about timing. Just because there’s a huge development rolling out in an area, you still need to be very careful about what and where you buy. The right moment might come after the huge hotel chains have already funded the infrastructure. Then you swoop in and reap the benefits.

Meddlesome HOAs Abroad?

◼ Steven B. says: So many of the overseas properties I have been looking at are condos, townhomes, or some type of attached dwelling. I am curious if these properties have issues with homeowner associations similar to those in the U.S.

◼ Ronan says: Hi Steven. Homeowner associations are broadly the same everywhere. So long as there are shared spaces, utilities, or infrastructure, there needs to be community management (the homeowner association or HOA). And like with any management structure, issues can arise—no matter where you are.

Just like in the U.S., it’s important to do your due diligence before you buy. Find out who will manage the HOA, what the projected monthly dues are, and whether there are checks and balances in place to ensure that funds are managed correctly.

With the CCRs (Covenants, Conditions, and Restrictions), make sure there’s nothing you can’t live with. Keeping certain pets may go against CCR rules. See what standard of maintenance you are obliged to carry out on the exterior of your property and what remodeling is allowed. Perhaps subleasing your property for vacation rentals interests you. Check that the CCRs allow that.

Make sure too that the rules are tight enough that what your neighbors do won’t adversely affect you. You may not want chickens in the neighbor’s yard waking you in the early hours.

This is all standard, whether you are buying in the U.S. or abroad. But generally speaking, where you’ll see a big difference is with your HOA fees—as well as other costs, such as property taxes. For instance, for my beachfront condo on Portugal’s Silver Coast, my total monthly payments (HOA fee plus my mortgage, taxes, and golf club dues) come in at just under €1,110 ($1,182). For an equivalent condo in California, you’d be paying much more than that in HOA fees alone.

Just like the U.S., issues can arrive in any community. But at least when they do, you’re paying a lot less to resolve them.

Editor’s Note: Ronan McMahon is the editor of Real Estate Trend Alert and a contributing editor to IL. Email Ronan with your real estate questions and comments at mailbag@internationalliving.com. We may publish your question along with Ronan’s reply in IL Postcards or here in IL Magazine.