... in response to Colombian real estate, posted by Pete E on Jan 5, 2002Good information Pete. I've been interested in Cali real estate in the past and maybe I can add some information to what you've already provided.
Regarding whether a North American can own real estate, the real estate people I have spoke to have always indicated yes and that there are no laws restricting this. I would want to verify this for sure before handing someone a check. (-: I was also told that I could probably receive a loan at a Colombian bank also. I was told but did not confirm, that interest rates were in the 13 to 16 percent range and reflect inflation in high single digits. So if you were converting dollars, a more stable currency, to pesos the interest rate would not be that much more than our rates here. Personally I would probably not consider borrowing from a Colombian institution but would either come up with the cash or take a loan out in the States.
Real estate in Cali is not very liquid. In other words it can be very difficult to sell once you own it. Myself and two gringo friends leased a very nice furnished penthouse off Avenida Sexta for about a year. The owner had it for sale during our leasing period and a year prior to it. It's never sold and during the six months I've lived there only two parties came by to view it. This is not a dumpy place but an upscale apartment in a better neighborhood.
Prices for real estate and rents can vary a lot depending on the neighborhood and the place itself. Apartments (condos) generally come with an administration fee. An admin fee is similar to a homeowners fee and it pays for building upkeep and staff, like the doorman for instance. Complexes with many apartments are able to distribute the costs to more people and so the amounts are generally less. For instance, my apartment building was 12 stories high but only about 16 apartments existed. The admin fee was 200,000 pesos ($89). If you're familiar with the tall apartment buildings on either side of chipi-chapi mall, the admin fee for the basic apartment there is 100,000 pesos ($45) .
In the better north Cali neighborhoods, I would not want to pay any more than 100 times rent (including admin) for the purchase of an apartment. To illustrate this, possibly the most sought after real estate in Cali are those tall apartment buildings on either side of chipichapi. These rent and sell much quicker than most real estate as they are a very desirable place to live. The basic unit is a four bedroom, 1300 sq foot apartment. It's upscale but the rooms are too small for my liking. In any event, this unit rents typically for 600,000 pesos ($266) and with the 100,000 peso admin fee that brings the total to 700,000 pesos ($311). These same units sell for 70,000,000 pesos ($31,000). So the most sought after and therefore liquid real estate is selling for about 100 times rent (including admin). To further illustate this further , I was looking at a small two bedroom 5th floor apartment with balcony and view near Avenida Estacion and Sexta. It was in good condition, had security (doorman), a garage space etc. but it wasn't upscale either. The asking price was 45,000,000 ($20,000). I asked around about the rent and similar units in the building were renting for 300,000 pesos and the admin was an additional 140,000 pesos. So in this case they were asking 102 times rent. I discussed this with the real estate person and she said the owner was willing to go as low as 40,000,000 ($17,777) or about 90 times total rent. I think it would have been a good buy for 36,000,000 pesos or so.
The last thing I'd like to add is that furnished apartments rent for obviously greater amounts. The nicer the furniture and accessories the more you can expect to pay. We probably paid an additional 300,000 to 400,000 peso premium per month for our furnishings. If we had furnished the place ourself in a similar manner we could have easily racked up a $5k to 10K bill. For us the premium made sense but for someone who'll be renting for the long term it might make sense to purchase furniture outright.
El Diablo
