... in response to purchase real estate, posted by Colonialjd on Aug 25, 2001Jim,
I am a Realtor in the states and am always interested in real estate values wherever I travel.I married my wife in Cali and have been there several times.
It appears there are some real bargains to be had,but it comes with the territory,you have to leave it there.
What I have been told:
The government begin craking down on drug dealers several years ago.We are talking rich people who lived in the best areas of Cali but were behind alot of the drug trafficing.Previously these people had pumped alot of money in to the economy.When they were jailed or forced to run this money was no longer being spent and it hurt the local economy.Real estate prices plummeted because mostly only the drug people could pay the high prices.The economy is in bad shape and even people with money who weren't in to the drug business have been leaving because of fear of getting kidnapped.There is a much greater fear of this among the upper classes because they are the targets.The middle and lower class people tend to dismiss the risk,because for them its not there,just the problem with street crime.
I hear all kinds of stories of values.My relatives live in a 3 bedroom 2 bath duplex type house.The lady who lives above owns it.My brother inn law said it was worth $15,000 or so.Other people say less.They pay 225,000 pesos a month rent,about $100 US.Utilities can be very high,sometimes their phone bill is more than the rent.Electricity is high but they don't use that much.
At the other end of the scale is the Christal Palace,old home of Latin Love.It is 18,000 Sq.Ft.I heard the rent dropped to $2800 a month before they let it go.I was told it was worth $2,000,000 at one time.Someone guessed $400,000 now,maybe less,maybe $200,000.It is in Ciudad Jardine,the best neighboorhood in Cali,in the South near Unicentral.I am told smaller houses in the same neighborhood can be bought for $50,000.
I think if you can afford it and overcome the short term risks(short term could be 20 years)they will be worth alot more in the future.Part of the Gamble is what do you think will happen with Colombia.The country could go under to the rebels and all property be lost.I don't think that will happen.I think the US would be in there big time before that was allowed.I think the Colombians are getting tired of the rebels and appeasers like Pastrana and are about ready to get tough with them and maybe eliminate them.There could be 5-10 years of turmoil and then things could get much better.If the country was stabilized it could prosper economically.
Back to the investment in real estate.I doubt it can be financed there at anything like a reasonable rate.You would probably have to pay cash.You could borrow the money on Real estate you have here.
What will you do with it in the meantime?You could rent it,but I would advise against renting to locals,there may be all kinds of problems.You could rent by the week to people from here,like from this board.Even if you rented it a week a month it would probably be more money than you could get from locals.You will need someone local to look after it that you can trust.You could visit for up to 6 months a year and still deduct right off as income property.
(a friend recently bought a condo in Hawaii,this is what he tells me,check with your tax person).If you have relatives there they could wind up living in it,and you could still use it for vacation.
Now,the other problems.Everything is going to look cheap compared to here,so go slow and do alot of research.You may want to look alot and then start making low ball offers.They will probably think they have a live one when they start dealing with a gringo.
You need legal advice about property laws and rights.Who can you trust.You might want to try talk to an attorney who has no stake in what you do.Talk to another attorney to check the first one out.
And perhaps the most important question,is there something better you can be doing with your money here?In my case the answer to that question has been yes.After I have made some more money here I may look in to buying a house in Cali.My wifes family would live in it,but we are sending them money now so maybe this could be eliminated.My mother in law asked me on my last trip if I would ever buy a house in Cali.I told her I was afraid to live there full time.I'm sure they are hoping I will buy one and they can live in it.
So,if it can make some short term sence,as in saving money on your trips or money to family,or renting it out.It has alot of risk,but thats why prices are low,so maybe it would be worth the gamble if it is money you can afford to lose.
Someone mentioned other safer places.Costa Rica is safer but real estate prices are not cheap,they can be as expensive as most parts of the US or more.So high risk + low price,and vica versa.
I wouldn't even consider buying in Colombia if I was not tied to it by marriage,I would go somewhere safer,but maybe not yet expensive.Chile?Brazil?Argentina my be a good buy right now with their money problems.Rand McNally has a " map "risk and safety in the world"I was looking at yesterday.There were 4 catagories,low rish,moderate risk,high risk and extreme risk.The US and Canada were low risk,Mexico and most of South America was moderate risk,with the exception of Colombia,which was high risk and Chile,Uraguay and some other areas low risk.The extreme risk places were Afganistan,several African countries and some other small Asian/Russian areas.
Right now I wouldn't live in Colombia for more than a month at a time.Its not worth the personal risk.Because of family I could wind up buying Real Estate which might turn out very good over a number of years,or maybe just stay in their family for generations,which could be my gift to them and perhaps some insurance for my wife.Good subject,if anybody gets involved please share the imformation.
Pete
