I want to purchase investment properties in Colombia

[Everett Bardelman]

I want to know where to begin accomplishing my dream of having rental properties in Colombia. I don’t know where to begin. I’m 5 years away from executing. I would like the get things rolling. Any advise will be much appreciated

[Mike Lambert]

Colombia (and in particular Medellin) is a fantastic place to invest provideo that you do the right kind of investment (like everywhere else for that matter). Tourism is exploding, it's one of the digital nomad hotspots in the world and more and more retirees from North America and Europe are moving there to enjoy the awesome quality of life. Moreover, the Colombian peso is at a multiyear low against the USD.

As @Larry Nectar mentioned, the problem is that long-term rentals are not profitable. Colombia's salaries are still low so the average renter cannot afford to pay much. Then, if you target the affluent, they would own their place most of the time and, if they don't, what you can charge is limited by law, as you can't charge more than 1% of the value of the property in long term rent. A 1% monthly return would actually be great if you could get financing. However, it's very hard for foreigners to get financing and, even if they could, the interest rate would be very prohibitive.

So the best play is to do short-term rentals. The problem is that, if you buy a condo, you need the approval of 70% of the co-owners to do short-term rentals, which is very difficult to get. The city has been very aggressive in eliminating illegal short-term rentals and it is working.

The play is therefore to buy and renovate a whole building and convert it into short-term rentals or build such a building with my local connections, who would become partners. This is what I'm looking at doing with my investors, as I'm already doing it in other Latin American countries. However, to make it worthwhile, I still need to find local financing, which is my biggest challenge. I managed to get local financing in other Latin American countries where foreigners normally can't get it using my personal relationships with Latin American banks so I'm hopeful I'll be able to get it done in Colombia as well. If I'm successful, I'll be able to offer a superior investment opportunity with no competition in Colombia like I've already done in other Latin American countries.

Of course, not everybody can do this by themselves without the proper knowledge and connections. However, it goes to show that there is a way to make money in pretty much any market if you know how to and BiggerPockets is a great place to learn about how to do it.