After breakfast, Lief changed some light bulbs, put new batteries in the kitchen clock, and tightened the screws in the loose electrical socket in our bedroom. "Hmmm... I may need a nap after all this exertion," he remarked in passing. For my part, I was already installed on the sofa. I'd read the local paper and was now surfing around Netflix hoping something would catch my interest. "We were thinking of walking to the mall to see a movie this afternoon," I said to Lief when he passed through the living room again. "Would you mind if, instead, we stayed in and watched a move on television? I'd be very happy to spend the entire day here in the apartment." "Fine with me," Lief replied. "I agree. It's awfully pleasant here..." We're not ready for retirement, but we're at the start of the transition to that phase. This past weekend, we took the Medellín piece of our retirement plan for a test drive. Our ideal retirement is about moving around among very different places—big city, mountain hideaway, Pacific beachfront, etc. It's also about mixing business with pleasure. In each place where we plan to hang our hats during our troisième age, we've worked to establish not only home bases of our own, but also communities of friends and colleagues who share our interests and with whom we can continue to explore new ideas and to develop new opportunities as long... well, as long as our limbs and minds hold out. We're still all out right now building our Panama City-based business. We'd love to hop the 50-minute flight from Panama City to Medellín more often but can't justify the indulgence more than now and then. The impetus for this trip was the down Colombian peso. The current peso/dollar exchange rate makes Colombia more affordable for dollar-holders than it's been in five years. As we remain bullish on this market short-, mid-, and long-term, this window of currency opportunity was too interesting to ignore. How else could we and should we be taking a position in this country, we wondered... and then we got on a plane to come find out. We met Friday with our top resource in Medellín, attorney Juan Dario Gutierrez. "The economy is booming," Juan Dario replied when I asked for his take on the current state of affairs in his country. "You must have noticed all the new development taking place in the areas you drive through from the airport to the city?" he asked. Yes, we had. The Medellín International Airport is about 45 minutes outside Medellín. To get from the airport to the city, you drive down the side of a mountain through expansive green fields, pastures, and forests. Each time I make the drive I'm reminded of Ireland. This part of Colombia is green the way Ireland is green and pastoral. This trip, though, I noticed that these wide-open green spaces are punctuated now by signs indicating development under way, along with sales offices and heavy equipment already at work in some cases. A series of private communities is being established along this corridor. "The four or five new developments that have gotten permits and broken ground along that route are all strata 6," Juan Dario continued. "That is, they're very high end. And they're selling. I visited the developments with sales offices on site, posing as a potential buyer, just to see for myself what was going on. When I inquired about availability, the agents showed me maps indicating that most or nearly all lots had already been sold. I could choose from among a handful of leftovers. They didn't put it that way, but that was the idea. "The middle class across the country in general and in Medellín in particular is expanding quickly, as are many industries," Juan Dario continued to explain. "At the same time, foreign investment is increasing. We were so isolated for so long. The world was afraid of Colombia. For decades, nobody invested. Now that is changing. Indeed, I'd say it has changed. Foreign investors from around the world but especially from across Latin America are paying attention. They're liking what they're seeing, and they're taking positions. It's as though a lot of pent-up sideline interest is finally taking action. "A client asked me recently if I thought Medellín is a bubble market," Juan Dario said. "The question took me by surprise. I really had to think about it. "Medellín has been growing very fast for the past six or seven years..." "For sure," I interjected. "We're in the city every six months or so, and each time we return we see more apartment complexes under construction, new shopping malls, new health clinics, and new office buildings. Perhaps more telling, we've noticed that these places are all filled and busy not long after they're in place. Medellín's has all the signs of a healthy, active economy." "Right," Juan Dario said. "Definitely, we're enjoying a very healthy, active economy. Is it a bubble? I don't think so for one important reason. Colombian banks are ultra-conservative. Foreigners can't borrow, period. It's just not possible. I wish that weren't the case, but it is. "And Colombians can borrow only up to 70%. Usually, the best home loan a Colombian can get is for 50% of the purchase price. And borrowed money isn't cheap. Banks finance real estate purchases at 7% to 10%. A Colombian will pay interest of up to 20% for the privilege of borrowing from a Colombian bank for any purpose other than the purchase of real estate... again, if he can find a Colombian bank willing to lend to him. "It's hard to describe an almost all-cash market as a bubble," continued Juan Dario. "What we've got here is legitimate economic growth that I believe is going to continue for some time to come." The next morning, Saturday, we walked from our apartment in El Poblado to Envigado for a lunch meeting with two other Medellín friends. Rich Holman and Joe Greco are American expats and entrepreneurs who've been running their real estate business in Medellín for eight years. Over a couple of cold bottles of Prosecco, the four of us revisited the question I'd put to Juan Dario: What's the current state of this market? "Property prices have appreciated in Medellín 5% to 7% per year for the past seven years," Rich began. "That's solid, steady appreciation. "Meantime, the U.S. dollar has surged against the Colombian peso. The dollar is worth 35% more today than it was five years ago. In other words, the dollar buyer can invest in this market today at prices from five years ago." Real estate is a big opportunity in this part of the world right now but not the only opportunity. Lief and I met with other contacts regarding financial investments (that we're acting on) and agricultural plays (which we're researching). We'll have updates and details in time for this year's Live and Invest in Colombia Conference, taking place in lovely Medellín May 11–13. Kathleen Peddicord
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The cost of an apartment in Medellin has appreciated 5% to 10% a year for the last four years and longer. Still, property prices in this city have remained a great bargain compared with prices in other major cities throughout Latin America. Since last October, when the U.S. dollar began its move on the Colombian peso, those bargain per-square-meter Colombian peso prices have converted to ever-greater bargains in U.S. dollar terms. Right now, as I've said, property prices when converted to greenbacks are close to 2011 levels.This is the time to be shopping.Focus on El Poblado in the heart of the city. Apartments here are most rentable, for this is where tourists and expats migrate, meaning big and diverse rental pools. El Poblado is also the high-rent district. Each neighborhood in Medellin is broken down into what are referred to as "strata," numbered from 1 to 6.Strata 6 is the highest level. In strata 6 neighborhoods you find the most expensive properties and the highest levels of services, as well as the highest associated expenses. Property taxes, electricity rates, and other property-related costs increase strata by strata. El Poblado properties are mostly stratas 4 and 5. El Poblado is your best bet for a property purchase in Medellin, but it's not the only part of the city that can make sense. Other, more affordable neighborhoods to consider include Laureles (another neighborhood in the city) and Envigado (the suburb just outside the city, on the edge of El Poblado).Office space, commercial space, and even condo-hotel rooms are other real estate options that can make sense in this market. With the economy remaining reasonably strong (growth of 4.2% in 2014 and projected growth of 4% for 2015), I expect property values to continue their steady appreciation of the past half-dozen years.I still can't predict the direction of currency markets, including this one. The U.S. dollar could continue to strengthen against the Colombian peso, or it could fall from the current 2,350 back into its general trading range of the last five years (between 1,750 and 2,050). Regardless, real estate in Colombia, in particular in Medellin, is a smokin' deal in U.S. dollar terms right now. Take action while you can.Lief SimonEditor's Note: Lief Simon will be hosting our Live and Invest in Colombia Conference taking place in Medellin May 11–13. You can register online here now as a VIP attendee. Note that only 10 VIP places remain of this writing.You can reach our conference team with your questions by phone toll free at 1-888-627-8834 or by email here.
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May 19, 2014
"Kathleen, I have been following you since your days of paper publication. For me, that's at least 20 years! "I know you moved to Paris and lived there for years. This is a dream I have wanted to fulfil for over a decade. My plans were put on hold as I helped my elderly parents through their end stage of life. Sadly, they have now both passed. Bitter sweetly, I am free to go. I don't exactly know where to begin. "I thought I'd inquire with you. Thank you for any response." --Lyndee L., United States Here is a good getting-started resource. And here's a good getting-started contact: attorney Jean Taquet.
A crew tore up the tiles and the concrete of the terrace, resloped it, and relaid it, with new drains. Then another crew tore up the flooded parquet from the living room floor and relaid it, too. Only they didn't do a good job of it...and had to tear up what they'd done and try again. Word from the scene indicated that this redo of the redo would be completed in time for the place to be cleaned and ready for our arrival on Saturday. Walking through the door on Saturday to be greeted by the three women working hard to restore order, we realized things hadn't played out as planned. Turns out, the floor crew had been at work until 7 p.m. Friday evening. And they hadn't covered all the furniture in the apartment during the sanding phase of their work. Thus the pile of linens, towels, and cushion covers on the floor in the kitchen. Claudia was stripping and laundering. While I tried to take stock of the scene, Lief walked to the back to unlock the owner's room. Uh, oh. What went on here? Piles of stuff we hadn't left in this room...and, Lief confirmed after an extended search, no cellphones. Then Claudia took me by the hand to show me the dead flowers on the terrace...damage here...wear and tear there... It was only 3 p.m., but I reached inside my suitcase for the bottle of duty-free wine we'd brought with us from the airport. I poured a glass and sat down in the corner. Claudia and associates returned to their work. Lief fired off an email to our property manager to ask about the missing phones. The three women continued cleaning and organizing until 6 o'clock, when I told them to call it a day. See you again Monday, I said. Lief and I awoke early Sunday morning to do what we could to continue setting things right. I got the kitchen in order. Lief sorted out the owner's closet. Then we went out to buy new cellphones and groceries for the week. Back in the apartment late Sunday afternoon, we made ourselves a snack and settled in to finish our bottle of wine on our newly retiled terrace. The view stretches across the valley. The light at sunset is mesmerizing. Next door to us is a small colonial-style church. It must be the most sought-after wedding venue in the city. Five or six weddings every weekend we've been in residence, including this one. We listened to the wedding march play then the church bells toll as we sipped our wine and watched the sun slide into the horizon. Other than the music from the church, all around was silent and still. The city lights twinkled in the valley. "Maybe we should sell this place," I said. "When we bought it, we imagined coming for weekends and holidays, making the quick trip over for regular breaks from the hustle, bustle, and heat of Panama City. But we've been here twice in the past 12 months. "It's hard to take care of the place long distance," I continued, "hard to keep up with maintenance and repairs..." "Yes," Lief said, "we could sell. I'd say the apartment is worth twice what we have invested in it. But, if we sold, what would we do with the money? That is, where else would you rather have that money invested?" "Nowhere I can think of," I admitted. "Me either," Lief said. "We've doubled our money in the three years we've owned this place, but I think that's only the start. I believe values will continue to appreciate slowly and steadily in Medellin near- and long-term. I like being invested in Colombia, and I like being diversified into the Colombian peso." We sat sipping and staring out over the valley, enjoying the breeze and the twinkling lights. As Lief reminded me, Colombia in general and Medellin in particular are among the most appealing investment markets in the world right now. More than that, though, Medellin is one of the nicest places in the world to spend time. Beautiful city, great weather, friendly people, lots to do... Making it what I've come to think of as a perfect-storm destination, a place that appeals for both lifestyle and investment. We continued sitting and sipping. By the time we decided to turn in, Medellin had worked her charms. This living and investing overseas thing isn't without its road bumps. Sometimes the day-to-day hassles can distract you from the point. Fortunately for us, this Sunday evening, sitting on our terrace soaking up some of what this special city has to offer, Medellin reminded us. Kathleen Peddicord P.S. Lief and I are in Medellin for this week's Live and Invest in Colombia Conference. "Congratulations on taking the bold step to come here," one current Medellin expat said to the room as he took center stage to share his story with those assembled. "I firmly believe you will be very happy you ignored all the friends and family who I'm sure told you that you were crazy to travel to Colombia this week. "You're going to be awfully glad you mustered the courage and opened your mind to give this place a chance..." More live from the scene tomorrow.
"Escobar has caused a lot of trouble for the city of Medellin, but, the truth is, he's also providing a service for us global property investors. He's keeping prices down. Real estate prices in this city are seriously undervalued because the world doesn't understand what this city really is. And that's all thanks to Pablo. "What is Medellin really?" Rich asked the crowd. "It's Latin America's best-kept secret. "Who here has been to Medellin?" Eight or nine people raised their hands. "OK, great. Keep your hands up," Rich instructed. "Now, everyone else in the room, take note of those with their hands raised. At the break, ask those folks what they thought of Medellin. "I'll save you the suspense of waiting for their answers. I'll tell you now what they all thought of Medellin. They loved it. "How do I know? I know because I have never met any expat who has visited Medellin and didn't love it. The challenge isn't selling Medellin to anyone who has ever seen it. The challenge is getting people to go take a look. Once you've seen it, the city sells itself." Thanks to Medellin's status as the world's best-kept property investment secret, you can buy here, at the best addresses in town, for as little as US$800 per square meter...and you can rent for a net yield of 8% a year. In addition to that ongoing cash flow, you've got the potential for currency upside (which, yes, can also go against you...though it's worth noting that the Colombian peso is up 35% against the U.S. dollar since 2009 and is expected to continue on an upward course) and capital appreciation. As Lief told the group this morning, "When investing in a rental property anywhere in the world, you don't want to count on appreciation. Make your buy decision based on your yield and cash flow projections. Then any capital appreciation you may enjoy is the icing." That said, property values in Medellin have increased a steady 5% to 7% per year for the past five years (fear of Pablo notwithstanding), and we expect this trend to continue for several years more. A rental property investment in Medellin buys you a hard asset in a market with an expanding middle class and an appreciating currency. It also buys you a pied-a-terre in one of the world's premier cities. Lucky for you, few others have figured this out. Yet. Kathleen Peddicord P.S. As I explained yesterday, Lief Simon and I are convened this week with two-dozen of the world's most seasoned and savvy global property experts for our First Annual Global Property Summit. Together, they are introducing the assembled group to the world's best places to buy real estate overseas right now...including Medellin, Colombia. As always, we're recording every presentation, workshop, Q&A, and panel discussion from this one-of-a-kind event. These will be bundled to create our all-new "Your Dream Home Overseas: The How To Buy, Own, And Profit From Foreign Property Program," which will be released within two weeks of the finish of this week's conference. Meantime, you can reserve your copy prerelease for more than 50% off the regular price. Do that here now.
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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.
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