Another penthouse remodel investment story

[Aaron B.]

Hello! It is time for me to share another story concerning one of my international investments in Medellin, Colombia, South America.  This is a 30-year-old penthouse that I bought and completely remodeled. I went over budget with the remodel and then decided I wouldn't have one anymore, I just wanted to design it well.

First, here is the background property information for context. Note that all prices here are converted to their USD equivalent for your convenience, but are actually paid in Colombian Pesos (COP) at the exchange of the day. Since this was a remodel, all expenses were paid overtime at various exchange rates. So I am providing an approximate cost average. I pay cash for my international purchases.

Penthouse specifications:

• Purchase price in 2019: $220,000
  250 square meters = 2691 square feet
• Average price per square meter = $1,000
  Average price per square foot = $81.75
• Remodel cost in 2020 (including all furniture, appliances, etc.) = $150,000 
• Total investment = $370,000
  • Average price per square meter (with remodel) = $1,480
    Average price per square foot (with remodel) = $137.5
• 4 bedrooms
• 4.5 bathrooms
• 2 glass enclosed patios
• Annual property taxes = $1,700 per year
• Monthly utilities are about $300/month
• Administration (HOA) is about $200/month
• Cable+Internet package is $50/month, I pay for fast speeds for remote workers and digital nomads
• Annual insurance is approximately $835 for the year and provides complete umbrella coverage for $1,000,000
• The full-time housekeeper is $425/month and helps with all cleanings between reservations, but because she handles two properties, her cost average per month for this property is really about $213/month.
• The maintenance guy is paid ad-hoc and as needed; I estimate only about $50/month

My overall cost of ownership is low totaling about $975/month.

Rental history:
I first began to rent this remodeled penthouse in 2021. I took professional photos and put the property online, and then within three days, I had my first reservation. I successfully rented the property at $2,000/week in the summer of 2021, and that was great. However, my neighbors became problematic and did not like me having weekly tenants. In order to avoid drama, I switched to monthly rentals at $5,000/month. I have been renting it at that rate since October 2021, and at a 100% occupancy rate. Half of my tenants came through Airbnb and the other half were organic and rented directly through me for cash. I am confident I could increase the rent to $6,000/month based on the demand and current market which is hot (even better than before COVID).

However, I did get an offer from a former tenant to buy my penthouse turn-key this week. One of my former guests is interested in putting this property under contract next week. I will let you know if I flip it. He is interested in the rental income stream. I estimate that I put about 1.2 billion Colombian pesos (COP) into this property with the repurchase and remodel. I may be flipping it for 2 billion COP. The appreciation is great given the relatively short time I have owned it, but you must also consider the difference in exchange rate this year versus the year I bought and the year I remodeled. All that being said, I may be earning a $90k-100k profit if I do flip it at my asking price. All within the span of 3 years. If I do sell it, I will be taking all of the capital and re-investing into a new project that I have already begun. Otherwise, I will be happy to continue collecting my monthly rental income, and I will increase the price to $6,000/month.