5 Things I Wish I Knew Before Purchasing My First Investment Property in Medellin

They say “a wise person learns from his mistakes. A wiser one learns from others’ mistakes”. Purchasing real estate as a first time investor can be challenging in any market and the endeavor becomes all the more difficult when you’re embarking in the process in a foreign country, trying to navigate an unfamiliar purchasing process.

That’s why for the first in a series of articles, we’ve interviewed MDEBNB clients and teammembers on some of the biggest lessons they learned over the course of purchasing real estate in Medellin, so that you can learn from their lessons and their mistakes.

Investor Profile: Steve M. is a 31 year old entrepreneur and ex-digital nomad, who’s been living in Medellin since 2016. He now owns two investment properties in Medellin, Colombia that he refurbished, furnished, and rents as monthly rentals units.

What did you mostly stress about with your first investment?

“I spent more time than necessary tracking the exchange rate between dollars and pesos, when it was something I couldn’t control, and I had limited control over the timing of the money transfer. I caused myself a lot of stress in the process that wasn’t’ necessary. I wish I worried less about the currency exchange rate – the appreciation I’ve seen has more than compensated for slight currency swings I was preocuppied with”

Overall, since 2015, the value of the peso relative to the US dollar has fallen approximately 40%, and while the future is hard to predict, the macro trends of the dollar/peso exchange are still heavily in your favor as a foreign buyer.

Did you find established agencies necessary and helpful for your process?

“I consider myself a fairly bright guy, and for the first few months of looking, I tried to piece-meal together a lawyer, agent, and bank account to essentially figure it out on my own. In the end, I opted for an existing team that had a network of people they worked with (banking partners, legal, and agents) and this provided efficiencies that were well worth the additional cost that I paid.”

Anyone who’s been through the process of investing (or even living in Colombia) can tell you that efficiency in the marketplace is not the country’s strong suit, and many sane investors have lost their mind trying to do-it-yourself when it comes to any complicated business transaction. It pays to work with a team that knows the process and the system, and can help you navigate through the whole legal and financial process to save you all the headaches.

How hard was it to match the property with the criteria you had in mind?

“I could have done a better job of establishing my clear criteria for my search, it would have made the process of purchasing a property easier for me and for the agents I worked with.”

Whether you’re buying for yourself or investment, or hoping to get a bit of both, this will affect your purchase criteria. Prepare your criteria before meeting with your agent, and then be open to what feedback he or she has to give you. A great agent will be able to tell you where you’re on-point and where you’ll need to compromise to come in on budget and on criteria.

Was the process really as difficult as you thought it would be?

“I think I made the whole process out to be more complicated than it actually was. Countless foreign investors have successfully purchased properties in Colombia before me and by working with established players and institutions, the final process went through without much event.”

Even though you may feel like a swashbuckling pioneer, hacking your way through uncharted territory, you’re not Robinson Crusoe and there’s PLENTY of people who have successfully purchased property in Medellin before you, the overwhelming majority of whom did so without issue. Yes, your family may think you’ve gone off the deep end, but they’ll be singing a different tune when they come to visit you and stay in your gorgeous new Medellin property and wish they had gotten in on the deal when you did.

Did the process take much longer than you expected?

“Unlike in other markets, there’s no centralized listing database, and the process of finding the right apartment is a lot of hunting, looking, and asking the right people. A great agent can help you with this process, but it might not be as fast as you’d like.”

For the typical investor, you’ll be faced with 2 options. First, you can be on the ground for the entire time your agent is looking for apartments to show you and see them as they are uncovered. Alternatively, you can establish a relationship with a trusted agent/team before arrival and line up a few visits over the course of a few days to help move the process along before you arrive (or, between trips). Later stages – like opening bank accounts, money transfer, and signing can be done by a designated agent (via power of attorney) or in a short visit. But, overall, you should allow yourself anywhere from 3-6 weeks to find and close on your property (and possibly longer, depending on your criteria).

To be able to optimize your search and help find the right property that closely matches your criteria, contact us today.

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