Investing In A Rental Property Overseas—Panama City Versus Medellin, Colombia

“Kathleen, the article ‘Short Term Or Long Term, A Panama City Rental Is A Great Investment’ from Lief Simon is a great article. This is exactly the type of information the soon-to-be foreign property owner like myself needs to know. I’ve owned several rentals in the United States with mixed results. It is good to hear about how to handle things when problems with tenants arise, so I hope this will be a continuing theme. Likely the property I currently own will be my last one in the United States, although I am doing fairly well with it.

“I have a question related to this subject and to some of your other recent articles that is for Lief Simon specifically. Lief, if you were about to buy your first overseas residential property, considering both rental yield and capital appreciation, would you choose Panama City or Medellin?

“I lived in Panama City during most of 2010 and 2011. While there and afterward, I have been to Medellin about 12 different times. My first purchase will soon be in one of these cities, my second will be in the other.

“Also, I just signed up for your new weekly Overseas Property Alert, another great idea. I’m a subscriber to the Simon Letter also. Thanks.”

–William F., Indonesia

A main determiner in answering the question you ask (Panama City versus Medellin for a rental property investment) would be how much capital you want to invest. Medellin will have more and easier-to-find properties in the US$100,000 range. Panama has properties in the US$100,000 range but not many in neighborhoods where you could expect great appreciation. I’d say the best rental property options in Panama (considering location and ease of renting, as well as potential for appreciation) would fall in the US$200,000 range.

If you want to deal with financing, note that it is possible to get a loan in Panama, which would lower your initial capital requirement. This isn’t a possibility in Medellin.

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