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Post by Deleted on Nov 11, 2015 10:04:41 GMT -5
A friend of mine (Colombian) is looking at buying an office in Bogota in front of Unicentro for an investment. The office is for sale for 170 milliones and he said it has been rented for 1.5 (1 1/2) milliones per month.....plus the administration is 200 mil per month. That would leave him with $1,300,000 (1.3 milliones) per month in his pocket. He asked me what do I think?
I said I don't know and I don't care because I don't invest in Colombia. I said I had heard that in Colombia someone can expect to get a 1% per month return on a rental property and his office would return only 0.76% (Not sure about the math).
Is it true that 1% of the purchase price is what you should expect as a rent return per month in Colombia?
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Post by barrumundi on Nov 11, 2015 10:52:16 GMT -5
I have also heard the 1% rule, but I don't know if it is true.
12% per annum is actually not a bad return.....but investing in real estate can have some pitfalls and any possibility of something going wrong can easily be doubled for Colombia.
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Post by robbierobnj on Nov 11, 2015 16:26:29 GMT -5
Seems awfully cheap for an office space in bogota? and for 450 a month profit before taxes and the fact it would take like 12 years to recover your Inv. assuming it stays rented and has no unexpected expenses seems like a hassle. I assume this just an office in a building ? not the building ? So my guess he would have very little say except for rent? There are much easier ways to get 450/month pre tax income from a 57k nest egg I'd stay away but best of luck either way. One more thing I guess he is buying the office for cash ? and not financing it otherwise he would have to back the cost of borrowing out of the 450/ month pre tax profit. Now assuming he actually rented the office and recouped his Inv. in say 12 to 15 years he would than own an office space in Bogota and with the population of Bogota expected to double in 20 years that might be a pretty sweet deal. A few more things if it is just the office what if the owner sells the building? What if the building is damaged? What protections is he afforded so many things to think about without knowing all the specifics. If it were me I'd toss 25k in GOOGL and 25 K in FB the other 7k in ZIOP and call it quits for 10 years he will do far better but wont have the monthly income.
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Post by Deleted on Nov 11, 2015 17:14:03 GMT -5
Across from Unicentro --- those are old office buildings ----not much to look at--- particularly after Unicentro was totally renovated a few years ago to a modern look--
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Post by teeo9111 on Nov 12, 2015 12:53:26 GMT -5
I know three people that have bought rental property in Colombia and have done quite well but two are Colombian and one is gringo with a long time Colombian wife and they know what they are doing,even then in my opinion Colombian real estate is one or two car bombs away from a serious collapse at any time,may never happen but history tells another story.
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Post by gallito on Nov 12, 2015 13:21:04 GMT -5
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Post by robbierobnj on Nov 12, 2015 14:14:23 GMT -5
How's it work out if you need to change those pesos back to dollars several year later seem like you would take a huge hit ? 1700 to 3100 ouch
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Post by dandl93 on Nov 12, 2015 14:48:49 GMT -5
In Jan the new mayor is going to need to come up with some cash flow.Raising property taxes and reappraising property values will be the first and fastest way.Commercial property will be first.
A friend of mine and his family own about 15 wharehouse rentals in Bogota they are selling them as fast as possible.Now they are paying 48% of their rents to the goverment.
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Post by Deleted on Nov 12, 2015 15:54:06 GMT -5
My friend is Colombian. He doesn't care about the value of the dollar because he doesn't have any dollars. He owns several properties and over the years he has bought and sold different types of properties. Earlier this year he bought a 'consultorio' in the same area. It was less than 30 m2, just a room with a glass front to a foyer. It had a small bathroom and a window with a small balcony. It was vacant at the time. The previous tenant was a plastic surgeon and the wife got the consultorio in a divorce settlement. She had no use for it and was keen to sell it. My friend painted it and put it back on the market to sell or rent. He paid 130 millions and had it for 3 months. Didn't get a tenant and sold it vacant (3 months later) for 168 miliones.
The 'officina' he is currently looking at buying, he was thinking to hold on to it for a couple of years and that is why he was asking about the value of the rent return.
The question is "What is the normal percent of purchase price ratio one can expect on a rental property in Colombia?"
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Post by gallito on Nov 12, 2015 16:08:12 GMT -5
How's it work out if you need to change those pesos back to dollars several year later seem like you would take a huge hit ? 1700 to 3100 ouch It doesn't really matter to me...economically speaking I missed that boat it sailed several years back along with my savings.I'm just a poor Canadian now.
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Post by robbierobnj on Nov 12, 2015 16:16:34 GMT -5
It may not matter if you in pesos but it kills colombia as an investment I laugh at the articles with 6 to 8 % ROI what bullsh--
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Post by gallito on Nov 12, 2015 16:25:13 GMT -5
Yes and there's an international living seminar pitching similar bs...
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Post by robbierobnj on Nov 12, 2015 16:28:45 GMT -5
Yes and there's an international living seminar pitching similar bs... Yea lots of those paid advertising sites promoting it Gringos robbing gringos
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Post by gallito on Nov 12, 2015 18:05:31 GMT -5
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Post by Deleted on Nov 12, 2015 18:23:25 GMT -5
I don't know about Bogota, but impossible to make 1% per month renting real estate in Santa Marta or Medellin. More like 0.3%. I can rent a new 160m2 apartment right on the beach for 4 millions including administration. That same apartment goes for 800-900 millions and the owner pays administration, taxes and 10% to the agency. It can get better if you buy estrato 2 and 3, but then good luck in collecting the rent or using an agency. What a pain in the ass it would be! 10 years ago it was possible to make 1%, nowadays forget about it. Commercial real estate is a bit better, but you still won't make that and you risk more.
My advice is to stay out of Colombia and invest nothing. But if you decide to stay, I would understand if you want to build your own house, as almost everything sucks. In that case, be sure to remember the golden rule "location location location" as you may find yourself in the position of owning something that you will never be able to sell if not loosing tons of money. We saw that happening in the years to several gringos: you cannot sell a spec house in a bad barrio for its real value. Invest in lot more that you will invest in the house and you MAY be fine when you will want to sell. It should be 2 to 1. That is: if you think of building a 200 m2 spec house which will cost 250 millions then the ground must cost you around 300-500 millions.
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Post by gallito on Nov 12, 2015 18:32:21 GMT -5
Yep...rent and save your money for loose women and party favors...that way you'll only have yourself to blame.
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Post by Deleted on Nov 12, 2015 18:38:11 GMT -5
The other thing to consider is that if you buy an apartment your neighbours are Colombian. That is, especially on the coast, a huge problem. You rent, you see the building deteriorate fast, you see the f*#k ups acting as f*#k ups, you don't care. It is even fun. Think about having to attend to a condominium meeting with 20 Colombians... ahahahah!
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Post by gallito on Nov 12, 2015 19:42:06 GMT -5
Living in a Colombian apartment is like a real life novela;every day is another episode...bigger the complex the better,especially the ones with unlimited views of your neighbours. Across the road we had a neighbour;party guy,every night he went at it...women everywhere,apparently he had a party favour subsidy
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Post by Deleted on Nov 12, 2015 20:49:33 GMT -5
I rent an apartment in SM. One million dollars view, estrato 6, pretty expensive complex. The landlord (poor guy) tells me to change the windows. So I go to the manager office and ask about the code for windows. I did it mostly for laughing about her as everybody does different. The manager did not know what to tell me, so we walk outside and look at the mess of the facade. I tell her, you'd better start having a rule (I feel for my landlord) and she tells me "yes, you're right, buy them natural aluminium colour". One week later they install my windows. Two more days and I see one guy getting in with white windows. He is in the management board of the building. I tell him "hey, the manager told me to buy natural colour". He answers "Don't worry, he does not matter, from far they look the same". Ahahahahahah
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Post by Deleted on Nov 12, 2015 20:56:59 GMT -5
Three years ago at a meeting, it is always costenos vs. cachacos, screaming and fighting, a guy pulled out a piece. Not joking. lol
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Post by gallito on Nov 12, 2015 21:05:06 GMT -5
Three years ago at a meeting, it is always costenos vs. cachacos, screaming and fighting, a guy pulled out a piece. Not joking. lol Sounds like a an xmas long weekend in Rodadero jajaja
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