How To Enhance Your Long-Term Holdings And Your Right-Now Lifestyle At The Same Time
It started out as a straightforward investment in a market we perceived to offer potential for diversification, cash flow (from an expanding demand for rentals), and capital appreciation (uncommon in today’s world where few property markets can be counted on for growth)…all at absolutely bargain prices on a global scale.
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.