Quote from @Austin B.:
Hello all,
I spent my summer in Medellin, Colombia. At this very moment, I am hanging out in sunny Guayaquil, Ecuador. I have a passion for Latin American culture and love to speak Spanish and visit Central / South America. This got me thinking -- how, as an Estadounidense (American from USA), could I invest in short-term rentals in South America? Each country has their own laws & customs. In most South American countries it seems that mortgages, especially with foreigners, are nearly impossible to obtain. However, the home prices are very low compared to what I am used to in the States. I have been told by some other expats that you do not want to purchase property as it is extremely difficult to sell later on. The idea, of course, is to generate cash flow and not to purchase a capital investment. It is a legitimate concern, of course.
I also have a fantasy of owning, say 1 or 2 dozen homes all over the continent and just going wherever I please when they are not being rented out. That may not be realistic but it's kind of swirling around in my head. I can only imagine that managing such a portfolio would be very time-consuming.
Has anybody got experience doing this?
What you are describing is actually my lifestyle! I own properties in different countries, and round-robin between them whenever I feel like and rent them when I am away. They generate good cash flow and more than pay for my endless world travels. You can achieve this! My most recent property acquisition was in Bonifacio Global City in Manila. It's like the mini-Singapore of Manila. I am currently in Colombia though and have a new property under contract - I am taking advantage of this 20-25% discount due to the exchange rate and power of the inflated dollar. I won't be stopping and I find it far less burdensome than owning and taking care of properties in the USA. I am looking towards Bangkok next and then Bali for my next properties.
Regarding financing Colombia, this is the short version of how it works. For a residence, you can borrow up to 70% of a property amount and must put down 30%. The mortgage terms range from 5-20 years. And the interest rates are terrible, they average 12%/year and I have seen as high as 24%/year!!! Imagine a mortgage in the USA at a 24% APR; that is a liability, not an investment. For commercial property, it is up to 30 years and you can borrow up to 90% with some banks, and up to 80% with others. They offer both fixed-rate interest loans and variable-interest loans that are indexed to inflation and CPI. I don't recommend the latter, especially with the current economy, you would lose.
Thus, I do not recommend financing at all in Colombia unless you really need it and you REALLY know that the numbers work out in your favor (cash flow to debt). You'd have to find one hell of an amazing deal to make financing make sense. Thus, you should buy the property in full and do your due diligence and number crunching. Prices down in South America are relatively lower than in the USA and in my experience, cash flow is better but that is because I am very selective and only pick properties where the numbers make sense. Really, no different than the USA but without financing considerations and related costs.
Regarding Ecuador, from what I know, I would not invest there. But then again, I haven't spent enough time getting to know the country, so I can't say that I would never invest there. While it is cheaper than the USA, everything in Ecuador is in dollars from the cost of food to real estate. That does little for you with respect to diversification. Unless you find a killer deal where you know you can't lose (or at least it is unlikely), I wouldn't buy. That is my general rule for any country. I have a friend who is currently looking for beachfront property in Ecuador. She is not sure yet how she would monetize it yet or what that looks like from a rental perspective, so she is trying to find her win by getting a really good purchase price. However, she is in love with Ecuador. You can own in any country and earn rent in dollars if that is what you want. Thus far, the deals I have looked at for her were not good enough for me to invest and I told her that I wouldn't invest in them personally. It does not mean that there is no deal to be found...just not a great one yet.
Don't give up, keep hunting for deals, be patient, and always do your due diligence, and eventually, you will find the right deal for you. If you need help analyzing something, just ask!
