Editor’s Pick—Top Rental Investment Opportunity In Our Favorite Emerging Market
We don’t normally report on individual real estate listings in these dispatches, but Kathleen asked me to write to you today about an unusual opportunity in Medellin, Colombia, in an area that’s been on the upswing for the past two years.
A small, three-story townhouse in Envigado has just come on the market, and it’s the first of its kind that I’ve seen for sale. The price is good, and the property is well suited for rental. The forecast net return works out to between 6.8% and 8%.
We’ve written about Envigado in the past. This is the municipality adjacent to Medellin’s more famous El Poblado. Over the past couple of years, the Envigado area known as Barrio Jardines has come into its own. This friendly, shady neighborhood has built a reputation as a gourmet restaurant district. New and more upscale restaurants are opening all the time. As a result, Barrio Jardines is drawing increased attention from foreign investors, travelers, and property buyers.
In addition, the city planning department is rezoning the area. The intent is to:
- Increase density allowances (which should result in new development projects)
- Create a new public park
- Develop a cobblestoned pedestrian-only thoroughfare
- Reconfigure the through-streets and traffic flow
A new 16-story hotel and commercial complex is underway in the neighborhood, which is a further sign of investor interest.
Last year, properties in Barrio Jardines outperformed those in El Poblado in terms of increased average cost per square meter. The rezoning plans and the new commercial development tell me that the city and the locals have jumped on board and are supporting further development of this area where development began as the initiative of a few entrepreneurs.
The property that has gotten my attention is a three-story townhouse with the sought-after two bedrooms and three baths, each bedroom on its own floor. The house is a total of 106 square meters, or 1,141 square feet. You can take a look at some property photos here.
The property is turn-key; no major rehab would be required. You could clean and furnish and then move in or put the place on the rental market. My projections for rental return assume that you’ll spend around US$12,000 for furnishings and sprucing up.
The property is in a completely walkable area. You could live here comfortably without a car, and walkability is a top priority for renters in this market. Further, the townhome is located just around the corner from the popular new restaurant district, which is just a half-block away.
I like this as a rental buy for a number of reasons, including:
- The selling price is inexpensive for this area
- The area has come into vogue and is popular now, meaning occupancy should be high
- It’s a house, meaning you can rent it into the lucrative, short-term rental market—something that is difficult to do with an apartment. To rent an apartment short term in Medellin, the entire building must specifically allow for this in the HOA documents
Best of all, financing is available for this purchase if you need it.
The recently reduced asking price is 315 million pesos (US$152,800), but I know the owner will take less. Discuss this directly with the real estate broker.
Note further that this is a good time to buy in Colombia, with the U.S. dollar at a five-year high against the Colombian peso.
As I mentioned, we normally don’t write about single property listings, but we’ve decided to highlight this property because it represents a unique opportunity in Medellin, which is one of our favorite global property markets. There’s virtually nothing else for sale in this area, and it’s the best-performing sector in the city right now.
Editor’s Note: Lee Harrison, with more than 12 years of experience investing in real estate overseas, is editor of our weekly Overseas Property Alert.
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