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This Country Offers More than Just Discounted iPads

Freaking Heck's picture




 

By Chris at www.CapitalistExploits.at

Everyone likes to buy things at a discount, right?

This fact, together with human irrationality, explains why masses of eager shoppers line up in front of stores on the first day of a holiday shopping season. Black Friday anyone?

While not exactly buying a new J. Crew V-neck sweater 30% off the standard price, the tenet of buying quality assets at attractive prices made the camaraderie of Warren Buffet and Charlie Munger the most successful investment partnership ever!

Discount

Recently, while scouting for investment opportunities in Medellin, Colombia, we stumbled upon something interesting.

In Colombia, you can today buy an iPad (and other Apple gadgets) for slightly less than what it sells for in the US, the base for setting the prices of Apple products around the world.

And I'm not talking about a sketchy looking hustler approaching you with a seemingly generous offer in front of the local train station. This was at an electronics store in one of the largest malls in the city of eternal spring, as Medellin is aptly called.

But as intrepid investors, what excites us more is the fact that this doesn't only go for iPads. It's the discounts available in the local real estate market that we're much more keen on.

For example, we have been looking at high-grade apartments in the heart of Medellin selling for about $1,000 per square meter.

Less than a year ago, the price tag on these same apartments was around $1,400 per square meter.

Medellin - Poblado

To be clear - buying individual apartments, as mentioned last week, is a novice means of investing and most investors rarely fully understand the risks they're taking.

But fortunately, you don't need to be focused on buying condos or apartments. Opportunities like that exist across the board - from hotel developments (speaking of hotels, Medellin is in desperate need of a decent five-star hotel) to raw land to luxury homes in the countryside!

The credit for that goes largely to the local currency, the peso, which lost more than 40% of its value over the past 12 months.

We have mentioned in many posts that we expected a sustained USD bull market. We're in the throes of it now and the opportunities to play the other side of this are visible here.

Any smart investor hedges risk and we see Medellin real estate as a fantastic hedge, both geopolitically as well as from a pure supply-demand perspective.

The demand for real estate will continue to be strong and this is being driven from large spending on infrastructure projects that are transforming various parts of the city.

This goes from positive impact of cable cars and outdoor escalators on poorer neighborhoods to ambitious highway projects currently underway. Buying in the line of this progress is attractive to us.

Medellin - Cable Cars

On top of that, growth in the property market is being driven by a burgeoning tourist industry, medical tourism and a rapidly growing entrepreneurial scene fueled in no small part by more than 30 universities and colleges.

For a real estate investor with a global appetite Medellin is definitely one of the places worth taking a closer look at.

As the old adage goes, the opportunity doesn't knock twice, and we believe this one is no different.

- Chris

PS: We'll be back in the country in August. If you'd like to join us look out for details in your inbox shortly.

 

"Success is where preparation and opportunity meet." - Bobby Unser

 

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Wed, 06/10/2015 - 18:00 | 6184187 techperson
techperson's picture

No one ever talks about the crime rate in these "live overseas" stories. Medellin has a slightly lower murder rate than Detroit. How comforting. What the rate is for gringos is never mentioned.

Wed, 06/10/2015 - 16:19 | 6183534 Pal
Pal's picture

I have been invested in Colombia for 3.5 years, I am there now.  I admit that these are my opinions and not others.  I don't care if you disagree, facts are facts, just sharing.

 

Let do a quick post.

-Cartagena, my favorite place to hang in Colombia, it's a neat place but not claim it's perfect.  Lot's of bubble there, real estate prices were off the charts and have cooled a bit.  See note at bottom about RE.

-Colombian wowen,  no exaggeratoins, they are amazingly beautiful and savvy to maybe date and upgrade to a foreigner.  Colombian woman, many are able to have natural beauty for many years longer than any western women I have ever seen.    Not being rude, it's all good in my eyes.  Colombians are savvy about opportunity, they are not shy.  They still love men, can be great wives, they have not be programmed to hate men like the USA. Because theire is no media here running that garbage line.

-Investing on the ground is challenging, bank system is difficult sometimes mild-blowing in its inability to do things in less than weeks,  the Colombians love stealing as long as they know they are not going to get caught.  50% of Colombians have no problem with morality of stealing [Gringo Pricing, fraud, non-performance on payment, etc and armed theft is a problem in large cities, got that is every country..nearly, but there are few armed drug addicts from what I have heard, foreigners are highly prized because the theif knows the foreigner does speak the language and doesn't carry a gun] from a rich foreigner..especially..and my opinion/experience is that 30% will aggressively seek an opportunity to do this ...to them you are 'Juego en vivo'  translates as you are 'live game'.  It's also sport to them. They will brag to their friends and family about their success ripping off or stealing from Gringos... even other Colombians.. but they know a foreigner is rich and will not hunt them down.  Another COlombia will hunt them down and maybe put a bullet in them so they like the odds of the Gringos a lot more when presented with an opportunity.

 

-Money is flowing in Colombia because of big infrastructure projects and the Colombians are super proud of all the new stuff but be aware of two things.  Colombians ..many are just poor and always will be...others even with salaried jobs have limited disponsable income.. a lot of new professionals instantly buy a car and a house then BAMM! they are paying those and have no money to spend otherwise.  Debt Debt Debt big mistake but they look big to their friends because they have stuff.  Is  trap for these few following USA ways and creates the illusion that Colombia is doing better than it is.  It's not, I am here on the ground and let me tell you, spending by our clients is half of what it was three years ago.  At same time we have three times the number of competing restaurants because the Colombians have huge shortcoming in business knowledge.  They keep opening more new restaurants by first time owners when the exisiting ones are sitting empty. Sorry they are just stupid about business knowledge.. seen it over and over an over.   Colombians are pretty good folks otherwise, I like them but just be aware the limitations when it comes to business...geez you will not believe me but I'm warning you.... they have no respect for higher quality, efficiency [they don't know what that word really means, they think is means move faster and nothing else] or organization or statistics and accounting

-The best example of how things can be hard here is the word 'salsa' which is truly translated as 'sauce' in English, ever liquid that can be poured onto food is called salsa and they are incapable to being specific in the first sentence.  If they are asking for mustard they must first ask for for salsa as they refuse to use detailed word requiring to ask which sauce at which time they look at your like 'are you stupid? I want mustard' which requires another answer then Mustard.  Syrup...salsa, ketchup...salsa, mayo...salsa, gravy...salsa, glaze...salsa, icing...salsa, and the list goes on.  THey do the same thing in referencing bolts, nuts, rods, sizes,  everything is 'poquito' even when it large.  They do this all the time, they have no accuracy in language, instructions, methods, protocols, etc absolutely totally unorganized all the time.  They have no ability to plan anything.  I sometimes think planning a company picnic would bring a company to a standstill here.  It is astonishing how unprepared they are for anything but come the time they will work lke a MF if you pay them. l...just don't expect them to do it in a modern ...efficient way.

-Money laundering is all over cities like Cartagena, Medellin, Bogota, Cali etc.  There are huge amounts of money sunk into companies, chain stores and especially real estate.  This create local bubbles and you should be aware, just because it sells for $200 does not guarantee yours will sell for $200 in 3 years.  Bubbles pop but you may not know when.  Competing against a business financed by money laundering is not profitable as the ML business has no interest in making a profit only being able to launder funds. 

 

-Remember these things before you fly down here and start throwing money around.  If you can determine what you want pay and then have your agent negotiate for you w/o seller knowing the buyer is gringo, offer a max price and make aggreement with your agent to negotiete for you and tell them they get a commission for every $1K in price below the max price.  YOu might be amazed how hard your agent will negotiate and yell wave their arms, slam things, exit return, make 500 phone calls to the seller to demand a better price you never know. the hard workers once there money in the game for them. You might be better off just taking a Colombian girlfriend or wife then risking money here.  The payoff might be more in quality of life.

-One side note, colombian food is fresh, wholesome and bountiful but amazingly monotonous, bland and limited... you cannot buy pepper or chilis from other countries as the supermarkets won't stock them because Colombians abhor any form of spice.  PERIOD. Most supermarkets have salt, adobe, about 6 other spices and that is it.  There is not concept of the need for spice rack n Colombia as there are no spices available or desired. You can visit restaurants for weeks and ask for black pepper for your fried eggs and they don't have a single shaker of black pepper in the entire restaurant. No exaggeration! you cannot even buy cheddar cheese in most supermarkets probably not even cheap American cheese ...colombian cheese means mozarella and a really low quality one.  There is no concept of higher quality i Colombia, cheap is the only thing that sells.  Good luck on finding a steak to cook on the BBQ.  If you like variety and quality of cuisine you will not like Colombia, it is a culinary wasteland. I think I could cook every Colombian recipe in one week and have a day left over.  Bakery bread sucks horrible, pastries are poor quality, there is not real baknig tradition [90% of homes have NO oven and most colombian woman have never baked a pie or cake in their life, never] so they have no idea what baked goods can taste like when done well.  I asked all my staff and my partners what 'al dente' pasta was and none new, so I asked them how many mins they cook their pasta and none had an answer...'until its done.' but in fact they ALWAYS overcook their pasta here in Colombia.  Disgusting to me, yukk.  They most exotic pasta dish is a can of cheap canned tuna, salsa rosada [cream laced with tomato sauce], spaghetti noodles and maybe a few green peas thrown in.  They go nuts for that.  All the above different in few places serving int. tourists.

-On positive note. Colombia is liveable and affordable. Weather around central colombia, aka Antioquia is the best I have ever experienced. The homes no a/c and no heaters.. the temperature ranges from high 60s to high 80s  and there is no change in seasons, it's beautiful every day of the year here.. very tranquil for a relaxed lifestyle.  If you like the outdoors the mountains are wonderful

For Me, I selling some real estate in central colombia now and moving to Thailand to correct my tatse buds after years here in the taste-wasteland, anyone wants to buy, send me PM and I share all info. it in the ballpark for 55K USD.

Wed, 06/10/2015 - 14:18 | 6183254 ILikeBoats
ILikeBoats's picture

So 1 square meter is about 10 square feet.  $1000/sqm = $100/square foot; outside of expensive parts of USA you can get a house plus land for that amount per sf.  I will pass, thanks.

Wed, 06/10/2015 - 11:39 | 6182621 Duc888
Duc888's picture

 

 

I was in Cartegena in the early 1990's.  I loved it.

Cheap (excellent) food, lovely ladies... what a blast.

Wed, 06/10/2015 - 11:21 | 6182525 The Delicate Genius
The Delicate Genius's picture

I'd love to go, great food, beaches, hot women, but our leaders have not made it precisely safe for Americans in places like most of Columbia, or, at least so I've been told.

Wed, 06/10/2015 - 09:57 | 6182206 Dewey Cheatum Howe
Dewey Cheatum Howe's picture

Discount = overpriced to begin with price correction.

Discounting maybe one of the few 'market' principles that still follows fundamentals.

Wed, 06/10/2015 - 09:12 | 6182054 1033eruth
1033eruth's picture

Listen to all the males saying Columbia is a great place to invest because the women are going to flock to them simply because they are Americans.  Just go and visit for a month or three, then tell me if you think its going to be worth it.  I spent a month in Mendoza, Argentina, (plus a couple of other trips) and determined rather easily that its not the place to relocate.  Great to visit, BAD TO LIVE PERMANENTLY.  

In any case, ten years ago, there was a constant drum about Argentina being the place to invest and relocate to.  Guess what?  Argentina has had a steady erosion of economic strength (lets call it siphoning from the peons to the elite in power).  It used to be cheap, but not any more.  It continues its steady slide into third world territory.   

 

Wed, 06/10/2015 - 08:47 | 6181973 epicurious
epicurious's picture

Sure and next year the price may $800 per square meter and the year after that perhaps $400, so jump right in.

Wed, 06/10/2015 - 07:36 | 6181771 Boozer
Boozer's picture

My gingo lawyer buddy had a website slinging those beautiful women to ussa loser

men as possible brides some years back.  Married one in fact and things were going quite

well until a stream of bullets peppered his car.  RIP Bob.

Wed, 06/10/2015 - 07:21 | 6181750 XqWretch
XqWretch's picture

Sign me up, I have been wanting to go to Colombia for a while now. Had a few friends go there over the last few years, said they met the most beautiful women they have ever seen while there. And, as this article points out, everything is dirt cheap.

Wed, 06/10/2015 - 12:13 | 6182776 Jumbotron
Jumbotron's picture

** ALERT **

Watch out ZeroHedge commenters.  The DOJ could be coming for you.

http://motherboard.vice.com/read/the-government-wants-names-of-online-co...

Wed, 06/10/2015 - 15:17 | 6183491 OldPhart
OldPhart's picture

***Alert*** also, Fact

Since Monday, when using my personal PC, I can no longer type comments without disabling rich-text, cannot look up my own account or type anything into the field.

This applies to any other website, also.  And, my iexplorer app usually had two instances running, now I suddenly have six- to a dozen instances.

 

Wed, 06/10/2015 - 09:14 | 6182061 Doña K
Doña K's picture

Nice to go there for turismo and take advantage of the peso devaluation. But leave the investing to the pros who can afford to lose money and can afford to wait ten years for the appreciation. Gringos need instant gratification.

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