Combine water and sugar in a small saucepan and bring to a simmer.
Cook until the sugar has dissolved then remove from the heat and allow to cool completely. The simple syrup can be kept in the fridge for up to a month in a sealed jar.
Combine the cubed watermelon, tequila, Cointreau, lime juice and simple syrup in a blender then blend until smooth.
Dip the rims of serving glasses into lime juice and then into salt. Fill the glasses with ice then pour over the Margarita mix.