| | | | | $15,000 just to break even. |
| Some interesting information to go over today: | | | | As I have said, and I believe I have made the |
| how to actually make money (instead of losing it) | | | | point quite clear, Cartagena is VERY expensive. |
| from your investment of a vacation rental by | | | | However, if you are looking for investments in |
| owner home.Today we are focusing on the | | | | real estate interesting properties can be found ... if |
| Caribbean resort city of Cartagena in Colombia | | | | you look hard enough. |
| for the simple reason that this is the city we | | | | My experience here has taught me to keep |
| operate our business from. However, I believe | | | | things simple and to work with lower priced units |
| these simple rules apply to any destination you | | | | that hard working Colombians can rent. Forget |
| choose to invest in. | | | | about fancy condo units, beach rentals and luxury |
| Cartagena is a costly location and has some, if | | | | apartment complexes for foreign tourists. Such |
| not all, of the most expensive real estate in | | | | properties generally rent out for two months a |
| Colombia and perhaps South America. Vacation | | | | year. I prefer to have my properties rented out |
| rentals by owner especially oceanfront or beach | | | | twelve months a year. |
| rentals and luxury homes in Cartagena can well | | | | I want to tell you about a personal experience |
| exceed USD 450,000 for an apartment (not such | | | | that happened with us last month (July 2009). We |
| a big one either). These costly homes and new | | | | managed to find a small 3 bedroom apartment in |
| resort complexes are going up each day in a | | | | a middle-to-low class gated complex that had a |
| market is already saturated (at least for the | | | | price of 40,000,000 pesos (20,000 USD). After |
| moment). Surely nobody in their right mind would | | | | negotiations we managed to get the price down |
| consider this kind of real estate as an investment! | | | | to 37,000,000 pesos (18,500 USD) and placed a |
| Beautiful these units may be but just how much | | | | "For Rent" sign in the window. No ad in the local |
| higher can prices grow to make such an | | | | paper, just a simple sign in the kitchen window. |
| investment worth while? Prices of real estate are | | | | We were getting on average of 5 calls a day |
| at an all time high here and it's difficult to see the | | | | from people wanting to immediately rent the |
| possibility of making heafty profits from these | | | | apartment. Even after removing the sign we |
| luxury vacation rentals in the near future. We | | | | were still getting a couple of calls a day! We were |
| mustn't forget about the monthly building | | | | able to rent the apartment for 450,000 pesos a |
| administration costs either, which can go up to | | | | month (225 USD) with no trouble whatsoever. |
| and well over USD 200 a month. By the way that | | | | That is more than 1% return on investment. |
| is over $2000 a year! That surely eats into your | | | | We are now negotiating a second apartment in |
| investment like a plague of killer ants. Naturally it is | | | | the same complex and are currently talking to an |
| of no importance if you occupy the unit a day, | | | | architect who is interested in renting it for |
| week or all year ... you have to pay your fixed | | | | 1,000,000 a month (USD 500). Needless to say |
| costs on your vacation rental investment home.. | | | | we are very interested. There are many gems |
| A Question For You ... | | | | like this available that won't eat into your saving |
| So we've already seen some of the negatives for | | | | and can give you a very healthy return. We are |
| these upmarket vacation rentals and beach | | | | fortunate enough to own a handful of these |
| homes in Cartagena, now try answering this | | | | properties and they give us very healthy returns. |
| question: Would you buy a stock if it cost you | | | | If you want to live in a luxury apartment then by |
| $2000 a year just for the pleasure of owning it? | | | | all means buy one, but don't buy one here as an |
| Of course you wouldn't, then why would you | | | | investment. Vacation rental by owner homes in |
| want to buy into a holiday beach rental, as an | | | | Cartagena can be found to fit your budget, just |
| investment, with such high up-keep costs? Such | | | | don't stop looking. Of course it takes time and |
| costs mean that in just over four years you | | | | effort but the important thing is that you don't |
| would have eaten a chunk of almost $10,000 | | | | need to follow some over-priced, hyped-up, |
| from your investment. Translated, this means if | | | | course on real estate investing, all you need is |
| you wanted to sell for a profit after four years | | | | dedication and common sense. |
| you'd need to be looking at somewhere around | | | | |