Strong Dollar Makes This Market A Screaming Bargain
One important and timely topic of discussion at my Global Asset Protection and Wealth Summit in Panama City last week was the strong U.S. dollar.
Or, as some prefer to say, the weakness of certain currencies against the U.S. dollar.
However you want to characterize the current situation, the bottom line is that in U.S. dollars terms you have as much as a 60% discount in some markets today compared with 2010. That’s the case in Brazil, where the U.S. dollar buys 150% more reals than it did five years ago.
The dollar buys you 32% more euros today than it did in 2010.
And, in Colombia, a market I’ve been recommending strongly since 2010 and that I’m more bullish on today than ever, the U.S. dollar has 68% more buying power (that is, you’re getting a 41% discount in U.S. dollar terms) as of this writing than it did five years ago when I first told you to think about investing here.
Of course, property prices have gone up in key Colombian markets, including Medellín, my market of focus, over the last five years. However, the current down peso means that, in many cases, you’re buying cheaper in U.S. dollar terms today than in 2010.
That’s a remarkable thing. How often does a situation like this present itself… where investors have a chance for a do-over?
Real estate prices in Medellín have appreciated 5% to 10% a year for the last five years and are expected to continue to appreciate at a decent rate thanks to the city’s growing economy and expanding middle class.
How long will the U.S. dollar remain this strong versus the Colombian peso? Who could say? My advice is not to wait to find out. This is an extraordinary window of opportunity. As I encouraged attendees at last week’s conference: You want to act now.
We looked at a number of Colombia investment and property opportunities with the group in Panama City last week. I’d like to share details of one of these with you now. The opportunity is a condo hotel project in Bogotá with a low investment threshold. In addition, this investment can lead to residency in Colombia.
Bogotá isn’t the lifestyle play that Medellín is; however, for the property investor, Colombia’s capital city has much to offer. That’s why one of my contacts from Medellín is branching out to Bogotá. The investment model is straightforward. The developers identify a small building with room for up to 20 apartment units. They buy the building and renovate it into furnished rental properties.
Originally, the developers pursued this strategy in response to the Colombian law making short-term rentals (rentals of fewer than 30 days) illegal unless the building association rules specifically allow for short-term rentals. This was becoming a serious restriction. In Medellín, for example, only a handful of buildings specifically allow for short-term rentals, meaning that anyone investing in an apartment in any other building is breaking the law when he rents it for a month or less.
Buying and controlling an entire building eliminates the concern.
Unfortunately, it’s not easy in Colombia (or most anywhere) to buy an entire building. Usually, each apartment is individually owned, meaning you have to contract with the owner of each unit separately. As soon as word gets out that someone is trying to buy every apartment in the building, prices go up, making the numbers less attractive for an investor.
Still, these developers have been able to put together five projects in Medellín. Now they are adding Bogotá to their repertoire.
Investors buy into the project directly, then the development team redesigns and renovates the building, furnishing the apartments, preparing them for rental, and then managing the rental units once they are ready.
Management is key to the success of any rental investment, and this team has a proven track record.
The first project in Bogotá is in the Chapinero Alta part of town, within walking distance of Zona G, which is considered one of the best restaurant zones in the city. The area has a university, so the atmosphere is young and vibrant… the kind of place that attracts tourists.
In the other direction from Zona G is the financial district, meaning these comfortable condo suites should appeal to businessmen, too. The rentals will draw from two universes—tourists and business travelers.
The units will be renovated with these markets in mind, as opposed to longer-staying tenants. The building will include 17 units ranging from 16 square meters to 25 square meters each. Small but spacious enough for short-term stays.
I like the investment, first, because it’s in Colombia. As I’ve explained, I’ve issued a screaming buy signal for this country.
I like it second because it’s a next project of a couple of “serial developers,” as I call them, guys with a track record offering a new opportunity based on a proven model.
I also like the minimum investment, which is only US$25,000. This is a turn-key chance for you to get your feet wet in the Colombian real estate market without putting up a lot of capital, as hassle-free a way as I can imagine to take a position in a market I believe will continue to reward investors both short and long term.
Also, as I mentioned, at the current exchange rate, this investment qualifies you for residency in Colombia.
For more information, contact the development team here.
Lief Simon
P.S. We recorded every presentation during last week’s conference, including those for all of the Colombian property, investment, and residency opportunities we considered with the help of my top Colombian resources and experts, all in the room with us.
You can access complete details of every investment, business, residency, banking, citizenship, and property opportunity presented over the three full days of last week’s event in our new Wealth Building and Diversification Kit, which includes audio recordings and speaker materials from every presentation, workshop, and Q&A panel discussion. Details are here.
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