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Are you considering building a home in Los Cabos? Begin your research here. In this comprehensive discussion, Fletcher Wheaton, broker at REmexico Real Estate, talks with Diego Borrayo, the director of Der Bauunternehmer, a full-service construction company based in Cabo San Lucas.
They delve into the essential elements required to bring a home to life in Baja. The conversation covers navigating permits, understanding construction timelines, budgeting, labor, and the lessons learned through experience, addressing the questions that many future homeowners may not think to ask.
Whether you’re seriously considering building or just exploring your options, this offers a realistic insight into the process from two professionals who truly understand it. Read on for expert perspectives!
1. What U.S. Buyers Get Wrong About Building a Home in Los Cabos
Meet Diego Borrayo: From Floor Remodels to Full-Service Construction in Cabo
Fletcher:
Hey Diego, let’s start with some background so people can get a sense of who you are and where you’re coming from. Could you please tell me a little about yourself, including your personal story and experiences, so we can paint a picture of who you are?
Diego:
Yeah, absolutely. My name is Diego Borrayo. I was raised in Orlando, Florida, and I’ve been living in Cabo now for the past 13 years. My early background is in sales, but I dove into the construction world about eight years ago.
Like most people, I began small, focusing on floor renovations and kitchen remodeling. And then once you do enough kitchens, the client asks, “Hey, do you know someone who can do the carpentry?” Then it becomes a bathroom. Then it becomes a whole home remodel. Then you’re expanding the house or adding a second level.
Before you know it, you’re getting comfortable with the process, gaining experience, and you start branching out into bigger and bigger projects.
Eventually, we moved away from relying on outside design help.
Now everything is done in-house. I have two architects on payroll, plus an engineer. That gives us full control over the design and construction process. So yeah, we do everything from A to Z. We design, we build, and we manage the whole process.
It’s definitely a challenge building in Cabo. We’re almost on an island, and that affects logistics, materials, everything. But that’s also what makes it fun. It pushes you to be creative, to plan better, to really be on top of your game. And I enjoy that.
Why It’s Crucial to Choose the Right Builder in Cabo’s Booming Market
Fletcher:
Let me just say, I’ve actually recommended Diego to people. Diego makes people feel comfortable, and his pricing is fair. That matters. You only build a home here once, most of the time. It’s not a repeat thing. A lot of people treat it like a transaction, but it really needs to be a relationship.
And unfortunately, there are builders out there who prey on expats. They know there’s money in the room.
So with that said, let me ask: If someone has some building experience in the U.S. and they come down to Mexico thinking, “I’ve got this,” what would you say to them?
Diego:
I’ve had cases where the client comes in with their own architect from the U.S., and the design just doesn’t take into account the reality of building here. They don’t understand the setbacks, the building code, the terrain, or even the availability of materials.
One time, the client gave us a design that called for all these materials that we simply couldn’t source locally, unless we wanted to pay an outrageous amount to import them. Some of the finishes they wanted just weren’t realistic for this market. In the end, we had to scrap the original plan and do a new project from scratch that fit the local context.
People often don’t realize that land use classifications in Mexico vary. There are height restrictions and limits on how much of the lot you can build on. Even the type of lot can change what’s allowed. If you don’t understand those things, you’re going to have problems right from the start.
Key Construction Differences Between Mexico and the United States
Fletcher:
Yeah, and construction is just different. In the United States, most homes are wood-frame and drywall.
Diego:
Exactly. It’s a completely different process. In Mexico, the only time we use wood is to form concrete. When we’re doing columns, slabs, or roofs. Everything else is block, steel, and concrete.
Now, the core structural elements are the same in concept — beams, slabs, columns, trusses — but the materials and techniques are totally different. That has a ripple effect on costs, timelines, and even the type of tools and workers you need.
What It Takes to Get a Building Permit in Los Cabos
Fletcher:
Alright, so let’s talk about permits. People think, “Okay, I’ve got my design, let’s go.” But you can’t just start pouring concrete. So what does that process actually look like here in Los Cabos?
Diego:
Great question. Getting a building permit in Los Cabos isn’t impossible, but it does require a complete executive project. That means architectural plans, structural plans, and engineering plans for everything: electrical, lighting, plumbing, sewage, voice, and data. You gather all of that, and then you go to the municipality.
Depending on where your lot is located, different permits might be required. Some areas need supervision or approval from additional agencies, what we call “dependencies.” So you go to each one, get their green light, and then bring everything back to the municipality. Once you’ve fulfilled all their conditions, they issue the construction license.
The cost of that license depends on the size of the home, the finishes, and the neighborhood. If you’re building in a working-class area like the barrio, your license is going to cost less than if you’re building inside Palmilla. That’s just how it is.
2. What to Expect from Permits, Payments, and Project Planning in Cabo
Permit Timelines: How Long Does It Take to Get Approval in Los Cabos
Fletcher:
Okay, so let’s say someone’s got their design ready, and they’re building in a typical expat-friendly area. Maybe in a gated community with an HOA. The project is well-defined. How long would you say the permitting process usually takes?
Diego:
If you’re doing it during a normal time of year (excluding Christmas, New Year’s, and the usual government slowdowns) permits typically take about three months. That’s if you’ve got your executive project ready and everything is in order. Sometimes, it moves faster, but three months is a good general estimate.
How Construction Payments Work Without Bank Financing in Cabo
Fletcher:
Alright, now let’s shift to budgeting and finance. Obviously, most people building here are paying in cash. By which I mean they’re not using bank financing. So let’s break this down.
Diego:
That’s a great question. First off, you’re right. Virtually everyone pays in cash, meaning they’re using their own funds. I’ve never had a client use construction financing in Mexico. They’ve either saved up for the build, or they’ve sold another property and are reinvesting. So, yes, it’s usually a $600,000 – $700,000 USD home being paid for outright.
Regarding the payment structure, I follow this approach: the first payment is a 30% down payment. That 30% is amortized across the entire build. So for example, let’s say the total budget is $100,000. That means the client gives me $30,000 up front. But I don’t burn through it all at once. I allocate 30% of it to each major milestone. Foundation, structure, masonry, finishings, etc.
When I hit a milestone, I then invoice for the remaining 70% of that stage. So if I finish the foundation, I’ll ask for the 70% remaining of that portion. When I finish the walls, same thing. Roof slabs are their own line item. These are one of the most expensive parts of the build due to the extensive use of steel, wood, and concrete involved. Then I split the finishings into two payments.
All in all, there are usually five or six payments across the life of the project.
How to Vet Builders and Evaluate Construction Quotes in Los Cabos
Fletcher:
Okay, so let’s talk about quotes and transparency. One of the big questions I get is, “How do I vet a builder?” So what do you recommend? How can someone tell if the person they’re hiring is legit?
Diego:
The first thing I tell every client is: shop around. Talk to more than one builder. Don’t go with the first person you meet.
The second thing is: ask to see how they quote. That tells you everything. I’ve seen quotes for million-dollar homes written on half a sheet of paper. That’s a red flag. You don’t know what kind of foundation they’re using, what type of concrete, what kind of steel. You don’t know your floor heights, your materials, your finishes — nothing. You’re just guessing.
My quoting style is quite different. My proposals are typically 12–15 pages long, organized by line item. I include everything: what size and type of windows, what kind of paint, what kind of aluminum, what size of floor tile, what brand of appliances. I want my clients to know exactly what they’re getting. It’s about full transparency.
3. Smart Building in Los Cabos: Managing Risk, Vetting Builders, and Avoiding Costly Mistakes
The Hidden Costs of Underbidding in Cabo Construction
Fletcher:
One thing that’s come up before is when a builder underbids a project, knowing full well that the client will end up paying more later. They give a low quote just to win the job. Is that something you see a lot?
Diego:
Yes, and it’s unfortunately very common. But I don’t think it always comes from a place of dishonesty. Often, it’s just a lack of proper budgeting. The builder doesn’t do a full cost analysis. They don’t sit down and look at the numbers carefully.
So they give a quote that sounds good, and they might even believe it themselves, but they haven’t factored in everything.
What happens then? Midway through the build, they realize they’re way over budget, and they have to come back to the client asking for more money. That’s when things get messy. But the real problem started at the beginning, when they didn’t take the time to build an accurate, comprehensive budget.
Why Remote Homebuilders Need On-the-Ground Oversight
Fletcher:
And especially in Mexico, people tend to accept this kind of stuff more often. Thinking it’s just how things work down here. But that’s not how it should be.
Now let me ask: if I’m not living in Mexico full-time while I build, do I need a construction supervisor or project manager?
Diego:
Absolutely. That might be the best question so far. If you’re not here full-time, you should definitely have someone representing you. Checking progress, making sure quality standards are met, keeping timelines on track.
What I do with most of my clients is create a group chat, and I send regular updates. Almost daily, and definitely weekly. Photos, videos, progress reports. Some clients come down every 30 or 45 days to walk the site and go over any changes. Others trust me enough that we do everything remotely. But that trust has to be built first, through meetings, site visits, and communication before the build even starts.
Still, whether it’s me, the owner, or a third-party supervisor, it only helps to have eyes on the project. Not every builder is going to be transparent or consistent. Having someone who’s paying attention makes a huge difference.
What Expats Should Know About Utilities in Gated Developments
Fletcher:
Alright. Let’s say I’m building in a place like Rolling Hills. Not quite a turnkey golf course community, but a gated development with numerous new homes being constructed. What’s the situation with utilities?
Diego:
If you’re building in a gated community, most of the time the infrastructure is already there. The development will indicate where the electrical meter is located and where to connect to the water line. Then it’s on us, the builders, to do the calculations: what gauge of cable is needed, how long the connection has to be, what type of hookup is required. But typically, in places like Rolling Hills, that part is pretty straightforward.
It only gets complicated when you’re building in very remote or undeveloped areas, where there’s no existing access to utilities. Then you’re talking about bringing everything in from scratch.
Construction Site Liability and Labor Insurance in Mexico
Fletcher:
Okay, now a big one: liability and labor laws. In the U.S., if someone falls off a roof on your job site, it can become a serious legal and financial issue. What happens here?
Diego:
Good question. In my case — and in most professional setups — workers are insured. It’s especially important when you’re working inside a gated development, because they require that documentation. You have to provide a list of personnel and prove that they’re insured before they can even enter the site.
In my contracts, I take full liability. It’s not on the development, and it’s not on the homeowner. That responsibility falls on me.
Final Walkthroughs and Legal Closure in Cabo Homebuilding
Fletcher:
Let’s talk about what happens at the end of the project. Once the house is built, what does the final stage look like?
Diego:
Here’s how I do it: I hold back 5% of the total cost until everything is 100% complete. That gives the client a safety net. Once we’re done, the owner has to be on-site, or they can send a third party, to do a final walkthrough with me. We go over everything, room by room. If they’re satisfied, we move on to filing the terminación de obra.
That’s the formal document that says construction is complete. It closes the permit with the municipality and allows the house to be registered with the Public Records Office.
That’s crucial. If you skip this, the house won’t be legally recorded, and you could have trouble selling it later. You also lose the ability to claim construction costs when calculating capital gains.
4. Key Lessons, Final Costs, and Advice for Building Your Dream Home in Los Cabos
Building in Remote Areas in Baja: What It Really Costs
Fletcher:
Here’s a question a lot of people ask when they’re thinking about building in more remote areas. Maybe on the East Cape or somewhere that’s not fully developed. Does the cost to build increase significantly in those locations?
Diego:
Yes, absolutely. It typically costs about 10 to 15% more to build in remote areas. That’s because of several factors.
First, materials — what we call aggregates, such as sand, gravel, and water — cost more to deliver out there. Some suppliers charge extra delivery fees if you’re way out of town.
Second, you’ve got to factor in labor logistics. If there’s no nearby housing, you have to rent a place for your crew or even set up a camp. That adds to your cost.
Who Builds Cabo? The Reality Behind Construction Labor
Fletcher:
Let’s talk about labor for a second. This is a surprising statistic for many people. Still, in Baja, a significant percentage of the labor force originates from mainland Mexico. How much of your crew is local versus from other parts of the country?
Diego:
All of my guys come from mainland Mexico. None of them are local. It’s well known in the industry that workers from central and southern Mexico are incredibly hardworking. These guys leave their families, come here for four or five months at a time, work hard, save up, and then go back home for a while. Then they return.
This isn’t just in Cabo. The entire tourism-driven construction industry in Mexico relies on these workers.
How Exchange Rates Affect Construction Costs in Mexico
Fletcher:
Okay. Now, how does the U.S. dollar vs. the Mexican peso affect someone building here? Let’s say the exchange rate drops during the build. Does that hit the client in a meaningful way?
Diego:
Yes, it definitely can. For example, a few months ago, the dollar was stronger than it is today. Now it’s down about 6 or 7 percent, and that’s real money when you’re talking about a big build. Unfortunately, it’s a risk that’s hard to control.
What I do to protect both sides is quote everything in pesos. I don’t accept payment in U.S. or Canadian dollars. That way, I’m not gambling on the exchange rate.
Timeline for Building a 2,500-Square-Foot Home in Cabo
Fletcher:
So let’s say someone’s building a 2,500-square-foot home in an urban area, and they’ve already gone through permitting. From the day you break ground, how long does that build take?
Diego:
That’s an eight-month build. Maybe nine. If it’s a larger or more complex home, you’re looking at closer to a year.
What Kind of Warranty Can You Expect From a Cabo Builder?
Fletcher:
And what about after the build. What happens if something breaks or doesn’t work? Is there a warranty?
Diego:
Yes. I offer a one-year warranty on everything we build. That includes the A/C, the floors, the walls, the pool. Everything. If something goes wrong, we come back and fix it. On top of that, all of the equipment we install, like appliances or lights, comes with its own manufacturer warranty as well.
The Best Advice for Anyone Building in Los Cabos
Fletcher:
Let’s wrap up with this: What’s your best piece of advice for someone who owns land and is thinking about building in Los Cabos?
Diego:
Do it once, and do it well. That’s the biggest thing. For most people I work with, this is their retirement home. It’s the place they’re going to live in for the rest of their life. So don’t cut corners. Don’t build something you’re only halfway in love with.
Think about how you’re going to live in that home 10, 15, 20 years from now. Make it efficient. Make it yours. And most of all, make sure it’s something that will still feel like home a decade from now.