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Lief and I began shopping for this buy more than three years ago. It took us more than a year to make it, not because we had trouble finding an apartment that fit our investment criteria (we found at least three or four of those our first day out looking), but because, the more time we spent in Medellin, Colombia, looking for a piece of real estate to invest in, the more we realized Medellin, Colombia, is much more than a great investment market. This city, we recognized quickly, is also one of the nicest, most pleasant places in the world.

With that realization, our simple rental investment became more complicated. Once we knew we wanted to be able to return to Medellin as often as possible, we were looking for an apartment that fit not only our investment criteria but our emerging personal agenda, as well. Whereas one or two bedrooms would be the ideal for a rental, now we needed three so we'd have room for the kids if they wanted to visit with us. We also needed a bigger kitchen...and a location and building that would appeal to would-be renters but be comfortable for us, too.

Our search carried on, giving us an excuse to return to Medellin monthly for a while. Eventually, organically, without Lief or me speaking of it directly, the apartment we were looking for was less a rental and more a home base. We began speaking of dividing our time between Panama City and Medellin...maybe opening a satellite Live and Invest Overseas office in this City of Flowers. We even found Medellin creeping into our very long-term thinking, as a place to include as part of our eventual retirement rotation, along with Paris.

Once we'd made this leap, we were no longer interested in standard inventory. We were looking for something special, worth holding on to. The renovation of the apartment we finally found took nearly a year-and-a-half and challenged us in all the ways that a long-distance renovation in a foreign country will challenge you.

Now, this weekend, more than three years since our first property scouting expedition in this city, we're back in Medellin, with the kids, in our now finally renovated, fully fitted-out apartment. This is the first stay when we haven't arrived with long to-do lists. No more meetings with contractors and carpenters. No more measuring for drapes and cushions. No more bathroom fixtures to purchase or punch lists to review.

This visit, at long last, we arrive with a single objective: To enjoy this place. This is when all the hassles and headaches, all the endless details reviewed and revised, all the lost-in-translation conversations and sometimes heated "discussions" between Lief and me over un-budgeted-for "extras" begin to transition from painful and exhausting to part of the family folklore.

"When we get home today, I'm going to spend the rest of the day in my room," Jack remarked yesterday as we stood in the check-in line at the airport for our flight from Panama City to Medellin. In fact, we were leaving "home" for a Spring Break stay in Medellin. Still, I understood what Jack was trying to say.

"I like my room there," he continued. "It's cozy. I'm just going to hang out in it all afternoon."

I'd say that, this trip, finally, for all of us, returning to Medellin feels like coming home.

Meantime, our new "home" in this expanding marketplace is worth at least one-third more than we have invested in it (including the purchase price, the cost of the renovation, and the furnishing). We're meeting next week with a local rental manager who says we should be able to rent the place (as we now intend to do, part time) for a net annualized return of at least 8%. All this from a hard asset valued in a currency we like long term and located in a market where we believe the appreciation will continue (Medellin is just getting started attracting the attention of foreign property investors).

No, the road from there to here hasn't been straight or quick, but, now, finally, we sigh and settle back to take stock. We have met all our original investment objectives...and the personal ones that evolved along the way, too. We've enhanced our long-term holdings and our right-now lifestyle at the same time.

Certainly, not every investment in Medellin would or should require an investment of three years of your time. You could keep this much more straightforward, investing simply in an apartment suitable for immediate rental. The inventory for this remains plentiful, and the demand continues to expand. Per-square-meter prices, especially for resale properties, remain an absolute global bargain, but this is changing. Values in El Poblado and other prime neighborhoods have increased 20% to 25% on average over the past three years that we've been paying close attention. Again, we see this appreciation continuing.

This will be a key topic for discussion at our upcoming Live and Invest in Colombia Conference taking place here in Medellin in May. We very much look forward to the chance to return then to what has become one of our favorite places in the world to introduce conference attendees to all that this lovely city has to offer.

Lief and I hope to meet you then.

Kathleen Peddicord

P.S. Medellin is one of 24 markets I cover in detail in my new book, "How To Buy Real Estate Overseas," released by Wiley just last week and already a #1 best seller on Amazon. If you've bought a copy...thank you! I really do appreciate your support. If you haven't yet...what in the world are you waiting for?

Seriously, this is the best getting-started primer to how to invest in real estate around the world you'll find (if I do say so myself). You can buy your copy here now.

P.S. What else this week?

  • In New York last week, Lief and I have met the retired Minister for Foreign Investment for Macedonia (more on this in a minute)...a friendly Greek selling old maps of his country on the street corner...an ambitious Mexican working hard to make a go of his new restaurant (Trece, on 13th Street...I highly recommend it)...and a Pakistani taxi driver who went well out of his way to make sure we made it to my Bloomberg interview on time.

Everywhere we've been across Manhattan these past several days, we've met people from all over the world...travelers, businesspeople, diplomats...

"In Panama, I'm always switching between Spanish and English," Lief remarked one afternoon, "depending who I'm talking to. Here in New York I have no idea what language to speak."

America's melting pot...a city with one of the most diversified populations on the planet. That's New York.

An appropriate place for me to be addressing what I see as the most important agenda of our day. No matter who you are and no matter where you are, I can tell you what you should be spending your time and energy doing--namely:

Diversifying.

"Kathleen, how can you be promoting the idea of Americans buying real estate in other countries when the whole world right now is looking to the United States for opportunity?" asked CNBC host Kelly Evans when she interviewed me Monday morning...

  • Brazil belongs on any list of growth markets. It presents opportunity for both the investor and anyone looking for a second home in the sun. However, buying in Brazil can be tricky, making it an interesting case study.

The buyer in Brazil has to navigate constant fluctuations of the currency exchange rate, in this case between the real and the U.S. dollar. In addition, Brazil imposes exchange controls, meaning you must be very careful about how you bring money into the country or you could have trouble when the time comes to take it (and any associated profits) out. I know investors who tell horror stories about their experiences trying to repatriate funds from Brazil, including one American who tried to enlist the U.S. embassy as an ally in his battle. FYI, the U.S. embassy can't really help with this kind of thing. This is what your local attorney is for. Satisfy yourself that yours understands the complexities associated with moving money in and out of this country. If he doesn't, find another attorney.

Meantime, it's not uncommon in this country to find developers offering financing with a very low down payment. This presents a great and unique opportunity for leverage; it also creates its own set of risks.

I knew, a few years ago, of a well-publicized launch of a pre-construction project in Fortaleza, on Brazil's northern coast. Promoters had secured a block of condos with exclusive rights to market them prior to the public launch. The developer agreed to extend a 20% discount to these early buyers and to provide developer financing with only 1% down. The condos were intended to serve the business traveler and tourist market as short-term rentals, with an eye to the anticipated demand created by the 2014 World Cup taking place in Fortaleza. The offer was well-received, and scores of investors participated.

When the official public launch was held for invited local real estate agents, the units were offered at a 5% discount, meaning the early buyers had bought for 15% less than the initial public price. As a result, some investors made good money.

Some, though, saw only modest gains, some lost money, all things considered, and many are still holding their units. What's the difference in the outcome to date?...

  • One of the most important choices you have to make as you think through your options for launching a new life in a new country overseas is whether you're more comfortable moving to an established expatriate community, a place where you'd have no trouble slipping into the local social scene and finding English-speakers who share your interests...

Or whether you want, instead, to go local, immersing yourself in the new culture completely.

This important early decision may not have occurred to you. But I encourage you to consider the question directly, for the answer sets you on one track or another, and they lead very different places...

  • Monday was tax day in the United States. Too late to do anything about your 2012 taxes other than to file a last-minute extension if you need to. Meantime, you can (and should) begin to think about ways to mitigate and manage your tax burden going forward.

To that end, you may be wondering: Is it possible to reduce your U.S. tax bill by going offshore?

It depends who you are and, most important, where your money comes from.

The one and only true option for an American to eliminate his or her U.S. tax burden is...

Plus, From Lief Simon This Week:

Coastal living comes in many varieties, but perhaps the most common dream of a life on the water involves the rugged and hilly California coast. One reason is the views. Sitting high up on a hill overlooking the Pacific Ocean, catching a breeze while sipping a cocktail and relaxing on your terrace, with the surf crashing beneath your feet...for many, that's the ultimate retirement dream.

The trouble is that, while this is perhaps the variety of waterfront life most often dreamt about...it's also the most costly (in large part because it is so in demand). 
If the Pacific Coast is the backdrop you seek for the retirement of your dreams, I suggest you focus your search not on the coast of California...but somewhere a bit farther south, where you still can afford the view.

Much of the Pacific coast of Mexico is comparable to the coast of California in terms of natural beauty and terrain. The difference is to do with infrastructure and amenities. Few spots along Mexico's Pacific coast are anywhere near as developed or, therefore, as comfortable as most of the California coast.

One important exception is Puerto Vallarta and, to the north, Nuevo Vallarta.
Even in Puerto Vallarta proper, prices in high-end neighborhoods close to the marinas and golf courses are going to be less than in comparable locations along California's coast. However, for the best bargains, you need to look beyond central PV and at the edge of progress...north.

Fonatur, the Mexican government's tourism investment arm that helped to create Los Cabos and Cancun, has more recently been focused on the Riviera Nayarit, investing in and incentivizing new infrastructure, hotels, and other tourism-related businesses. As Fonatur's efforts progress, so does the area they are focused on (in this case, the Riviera Nayarit)...resulting, usually sooner rather than later, in escalating property prices. Get in early in a region where Fonatur is focused, and, as an investor, you can see nice appreciation.

Or, if your agenda is not investment but retirement, you could acquire the Pacific coastal retirement home of your dreams for a bargain price, certainly compared with the cost of something comparable in California.

One very appealing current opportunity for this is to be found in a development community called Vista Encantada that sits about an hour from the infrastructure and amenities of Nuevo Vallarta--the marinas, the golf courses, the shopping, the restaurants...

Vista Encantada is a small Pacific ocean-view community in the middle of the Riviera Nayarit path of progress and only a few minutes from the nearest beach. Fonatur's efforts are evident just down the road, meaning infrastructure improvements and more amenities in progress.

The location of Vista Encantada is ideal if you like the idea of being able to enjoy all that Puerto Vallarta has to offer but don't want to be smack dab in the middle of the tourist trade this town sees. At home at Vista Encantada you could enjoy quiet sunsets at the property's waterfall, daily walks down to the beach, and golf on their private 3-hole course...all while being within an hour of developed services and nightlife.

Puerto Vallarta and environs is our top pick for what we refer to as affordable luxury living on the Pacific coast. And Vista Encantada is one of the most appealing and most affordable options I've found for establishing a retirement base here, either full- or part-time.

Current lot prices start at US$69,000, and, in the current pre-construction stage, you can buy a one-bedroom apartment for just US$119,000.

I have to say that I am most impressed with Vista Encantada, both the product and the pricing. For more information, you can get in touch here.

Also, Puerto Vallarta, Mexico, is one of 24 markets featured in detail in my wife's new book, "How To Buy Real Estate Overseas."

If you haven't bought your copy of Kathleen's new book yet (thank you if you have...it's already a #1 bestseller on Amazon), I urge you to go here to do so now.

Read more...
 

Not a bad return, especially as it doesn't include any potential appreciation.

Of course, not everyone has the time or the inclination to manage a renovation or a rental property in another country, and not everyone wants to put as much money into Colombia as it takes to buy and furnish an entire apartment.

That's why I was excited when one of my real estate contacts in Medellin, Rich Holman, told me about a project he's put together. It amounts to a very reasonably priced first step into this market that comes with the added bonus of a Colombia residency visa.

One way to establish residency in Colombia is to invest 100 times the monthly minimum wage in a private company. At today's minimum wage and exchange rate that works out to about US$35,000. Of course, finding a private company looking for investors at that level isn't easy, so the reality is that gaining residency in Colombia this way isn't normally a realistic idea unless you're ready to invest a much greater amount.

Rich and his partner Joe Greco, however, have put together an offer using a building that one of their real estate investors bought and renovated in Medellin. The three-unit building is in the Zona Rosa in this city's tourist epicenter. Fully furnished, the units are being prepared for short-term rental.

The idea is simple. Investors can buy a share of the company that owns the building for, not coincidentally, US$35,000, thereby qualifying you for a residency visa in Colombia. The units then will be rented out, and owners will receive their shares of the net rental income after rental and property management fees have been covered.

Projected net yields are 4% to 6% after Colombian taxes (my projected net yields above for my rental scenario are before Colombian taxes, which can be as high as 33%). That's a decent yield especially when you consider that the main benefit of the investment is residency in Colombia. This is also an opportunity to get your feet wet as an investor in Colombia with a modest amount of capital.

If you were to buy an apartment in Medellin and furnish it, the minimum total amount of capital required would be around US$100,000. (One reader found a great apartment last year for US$75,000 and furnished it for another US$10,000, but that was last year.)

As an investor in the project, you enjoy a discount if you'd like to stay in one of the units. Further, the cost of your residency application is included in the investment amount, meaning this is a fully turn-key opportunity.

I think the yields Rich and Joe are projecting are probably conservative. These guys put together a similar project last year (for investment only; there was no residency component). The rental returns for that effort are beating their projections. As they own a real estate company with a rental management arm, they have a steady flow of rental inquiries from tourists, businessmen, and investors. They also have experience managing rental properties in this city.

Along with the yields, investors should see some capital appreciation of the underlying asset. While Medellin real estate prices have increased over the last few years by as much as 10% a year, prices are still very reasonable on a global scale. In addition, the local economy is growing nicely. Therefore, I expect property values to continue up.

The bottom line is that you won't find many real estate investments in this price range, and you won't find an easier residency option for Colombia. And you can reserve a unit with a fully refundable deposit of but US$500. For more details, get in touch here.

Lief SimonContinue Reading:

Read more...
 

I bought the unit partly as a rental and partly for personal use. One Medellin rental manager who has inspected the property now that the renovation has been finished and the unit furnished projects rent and occupancy rates that would translate to a net yield of 11.7% based on the purchase price (and including the monthly HOA fee). If we sold the apartment furnished at the price I think it should sell for, the projected net rental yield would be 7.5% to 8%.

Not bad returns, as they don't include any potential appreciation. Of course, not everyone has the time or the inclination to manage a renovation in another country and not everyone wants to put as much money into Colombia as it takes to buy and furnish an entire apartment. That's why I was excited when one of my real estate contacts in Medellin, Rich Holman, told me about a project he's put together. It amounts to a very reasonably priced first step into this market that comes with the added bonus of a Colombia residency visa.

You can get residency in Colombia if you invest 100 times the monthly minimum wage in a private company. At today's minimum wage and exchange rate that works out to about US$35,000. Of course, finding a private company looking for investors at that level isn't easy, so the reality is that gaining residency in Colombia this way isn't normally a realistic idea unless you're ready to invest a much greater amount.

Rich and his partner Joe Greco, however, have put together an offer using a building that one of their real estate investors bought and renovated in Medellin. The three-unit building is in the Zona Rosa in the heart of this city's tourist epicenter. Fully furnished, the units are being prepared for short-term rental (no worries here about the short-term rental laws in Colombia, as the building has but a single owner...the company that you can invest in).

The idea is simple. Investors can buy a share of the company that owns the building for, not coincidentally, US$35,000 and thereby qualify for a residency visa in Colombia. The units then will be rented out, and owners will receive their shares of the net rental income after rental and property management fees have been covered.

Projected net yields are 4% to 6% after Colombian taxes (my projected net yields above for my rental scenario are before Colombian taxes, which can be as high as 33%). That's a decent yield especially when you consider the main benefit of the investment is residency in Colombia. It's also an opportunity to get your feet wet as an investor in Colombia with a modest amount of capital.

If you were to buy an apartment in Medellin and furnish it, the lowest total amount of capital required would be around US$100,000. (One reader found a great apartment last year for US$75,000 and furnished it for another US$10,000, but that was last year.)

As an investor in the project, you enjoy a discount if you'd like to stay in one of the units. Further, the cost of your residency application is included in the investment amount, meaning this is a fully turn-key opportunity.

I think the yields Rich and Joe are projecting are probably conservative. These guys put together a similar project last year (for investment only; there was no residency component). The rental returns for that effort are beating their projections. As they own a real estate company with a rental management arm, they have a steady flow of rental inquiries from tourists, businessmen, and investors and experience managing rental properties in this city.

Along with the yields, investors should see some capital appreciation of the underlying asset. While Medellin real estate prices have increased over the last few years by as much as 10% a year, prices are still very reasonable on a global scale. In addition, the local economy is growing nicely. Therefore, I expect property values to continue strong.

The bottom line is that you won't find many real estate investments in this price range, and you won't find an easier residency option for Colombia.

You can reserve a unit with a fully refundable deposit of US$500. For more details, get in touch here.

Lief SimonContinue Reading:

Read more...
 
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Kathleen Peddicord

Kathleen Peddicord is the founder of the Live and Invest Overseas publishing group. With more than 25 years experience covering this beat, Kathleen reports daily on current opportunities for living, retiring, and investing overseas in her free e-letter.

Her book, How To Retire Overseas—Everything You Need To Know To Live Well Abroad For Less, was recently released by Penguin Books.

Read more here.

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