Home? Investment? Vacation property?

What’s the first question to ask when deciding to invest in Medellin real estate?

With the interest in Medellin and Colombian real estate growing every day, it’s important for all buyers and investors to answer one question before any other: is the purchase you’d like to make

a) A home

b) An investment

c) Something in the middle?

I’m going to make an assertion and am happy to entertain anyone elses point of view: the best homes to live in are not the best investments and the very best investments may not be where you want to actually live.

Why are the best investments not the best places to live?

Based on our experience from Casacol Property Management, the absolute highest and most consistent demand year round is the classic, modern studio/1-bedroom apartment. These are short and long term business travelers, retirees, tourists, snow birds, corporate relocations, internet entrepreneurs, etc., and they make up the bulk of our rental business month after month. This is the demographic you want to target for high yield income properties in Colombia in the Airbnb generation. The question is how would you like living in a 600 sq foot 1 bedroom apartment?

The answer is, of course not. Where you really want to live is the 3 bedroom Penthouse. But the question is, who rents the 3 bedroom penthouse? Bachelor parties, groups of friends, large families, and people just generally looking for a good time not necessarily a long time. The demand for these types of properties is centered around high-season Summer/Winter periods and usually remain empty unless highly discounted in the low season periods. This is not how you make a 10% ROI on your investment, this is where you actually want to go and live.

Then there’s something in the middle. It’s that spacious 1 bedroom apartaestudio, smallish 2 bedroom or maybe a high quality but not overly expensive 3 bedroom that is big enough that you as the buyer will enjoy living in part-time, inviting friends/family down and yet not something so expensive that your rental is priced out of the market. In these cases your personal enjoyment of the property overrule the monthly income that it generates when it’s rented and your goal is then not necessarily an ROI number.

The bottom line is that there’s not a right/wrong answer to investing in Medellin or Colombian real estate. The answer depends on your goals for the investment, how much time you spend living in it, your need/desire for steady monthly income, etc. Answer those questions for yourself first and you’ll be well on the path to finding the investment that makes the most sense for you.

Siempre a la orden,

Brad Hinkelman – brad@casacol.co

Founder/Owner – Casacol SAS

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