Cartagena has some, if not all, of the most expensive real estate in Colombia and perhaps South America. Cartagena vacation rentals and luxury homes can exceed USD 450,000 for an apartment (not such a big one either). These costly homes are going up each day and I think the market is already saturated. Surely nobody in their right mind would consider this kind of real estate as an investment! Just how much higher can prices grow to make such an investment worth while? We mustn't forget about the monthly building administration costs either, which can go up to and over USD 200 a month. By the way that is over $2000 a year! That surely eats into your investment. Would you buy a stock if it cost you $2000 a year just for the pleasure of owning it? Of course you wouldn't, then why would you want to buy into a holiday home with such high up-keep costs? As I have said, and I believe I have made the point quite clear, Cartagena is VERY expensive. However, if you are looking for investments in real estate interesting properties can be found ... if you look hard enough. I want to tell you about a personal experience that happened with us last month (July 2009). We managed to find a small 3 bedroom apartment in a middle-low class lot that had a price of 40,000,000 pesos (20,000 USD). After negotiations we managed to get the price down to 37,000,000 pesos (18,500 USD) and placed a "For Rent" sign in the window. No ad in the local paper, just the sign in the kitchen window. We were getting on average of 5 calls a day from people wanting to rent the apartment. Even after removing the sign we were getting a couple of calls a day! We were able to rent the apartment for 450,000 pesos a month (225 USD) with no trouble whatsoever. That is more than 1% return on investment. We are now negotiating a second apartment in the same complex and a re currently talking to an architect who is interested in renting it for 1,000,000 a month USD 500). Needless to say we are very interested. There are many gems like this available that won't eat into your saving and can give you a very healthy return. If you want to live in a luxury apartment then buy one, but don't buy one here as an investment. Cartagena vacation homes can be found to fit your budget, just son't stop looking.
As the title says: "Beware". There are a number of scams regarding land for sale here in Cartagena that I'd like to share with you. The items mentioned in this post are only of concern to those of you who are considering buying a patch of land and building on it. If you fit into this category then please read carefully.
PROBLEM NUMBER 1 - Escritura de Posesion
If you are looking at a piece of coastal real estate, more than lightly you will be purchasing directly from one of the locals. While not every black fisherman is dishonest (I live with these people and have several wonderful friends) there are ALL poor would would love to make some money to live on and as a result often resort to unorthadox ways of doing it. In Cartagena, as I believe is true in the rest of Colombia also, if you have documented proof that you have lived on a piece of land for 20 years or more you then have legal possession rights to that land, but this does not mean that you have owners rights (propriedad) to that land. Therefore, if you purchase land from a local with a escritura de posesion you will not be the lawful OWNER of the land. You will have to go through the process of legalising your purchase afterwards. Whilst this will greatly increase the value of your purchase, it takes approximately 14 months and costs 10% of the value of your land (legal fees) plus a host of other fees. I will go over this in detail in a later post.
PROBLEM NUMBER 2 - Minuta
This is something that you should ALWAYS be very careful about. The minuta has even less value that the escritura de posesion, which is at least written up by a public notary. The minuta is just a simple piece of paper saying that Mr or Mrs so-and-so has possession of a given piece of land. You will have great problems verifying this and it is possible that the "owner" has already sold this piece of land to one or more other purchasers - believe me this has happened on many occasions so beware.
PROBLEM NUMBER 3 - Maritime Law
In summary, there is a law that states that no property can be built on coastal land that is closer than 50 or 60 meters (I can't remember the exact distance) from the highest tide. Looking at many of the properties in this area would never believe that such a law exists, but it does and word has it that this law will soon be enforced. Recently a condo complex was stopped in Santa Marta beause it didn't respect this law.
So, there you have it, while building you vacation home can be a wonderful and rewarding experience, please be careful when making a purchase. Always use a reputable lawer to carry out what they call a "studio" on the real estate you
Absolutley nothing to do with real estate or vacation rentals, but I just wanted to share an experience with you.
The other evening it was liberation day here in Colombia, this means party, rumba and a great time to be had in almost every city and town across the nation. Well, after a wonderfull afternoon spent at a friends beach cabin drinking wine, eating far too much food and enjoying a conversation that covered everything from investments to Micheal Jackson my wife and I set off for the walled city here in Cartagena. What we saw along the route was something we never expected to see in a thousand years!!
I'm not sure if any of our readers are familiar with Cartagena, Colombia. Well, the airport's runway ends right at the ocean's coast line, the only division between the runway and the beach is the road from Cartagena to Baranquilla. Well, as fate would have it that evening, an Isreali jet (Colombia purchased five of them) for some reason wasn't able to take-off and blew it's way through the boundery fence, across the road and burst into flames on the beach!!
We arrived about 10 minutes after the accident, foam and god knows what else all over the place, heaps of colombian police and military already there trying to organise an almost unorganizable situation. Luck had it (for us at least) that we were using our motor scooter that evening and we were able, not without difficulty, to pass the wreckage and finally get to our destination: the old walled city of Cartagena.
We watched a fantastic firework display from one of the old balconies of the recently opened Hard Rock Cafe whilst eating a huge plate of wonderful nachos. What an evening. I never did her what happened to the pilot, but the cockpit looked ok.
Today I want to talk about one of the most beautiful places in this part of Colombia: Isla Baru.
This is a spectacular island not so far from Cartagena, one of the Rosario Islands, more or less an hour by boat. This place really does seem like the Caribbean; white sand crystal clear water, palm trees – it’s lovely. A perfect place for a home, a real dream and a FANTASTIC investment. At least that is what the glossy brochures will tell you. The truth is that Isla Baru is unique, but personally speaking I would never put my money there and there are several reasons for me saying this.
Namely there are many ongoing disputes as to who actually owns the land. Bulldozers have been there on several occasions demolishing everything in their path. Other “owners” of hotels in the area now find themselves in the position of having to pay rent for the hotel that they built on the land that they paid for. Another reason for not falling in with the “gringo crowd” is that this place is REALLY hard to get to. Please, oh please, don’t listen to the developers. We have all heard about the approved local government project for building a road to the area. Forget it, it’s not going to happen any time soon. Sure you can get there by boat, generally speaking the outward trip is ok, but the return journey can be very rough, in fact it almost always is. I can only imagine the problems of getting a freezer and plasma TV to you new dream home on the Isla of Baru – that should be fun! Joking aside, the only way to get there is by 4x4 jeep (only in the dry season) or by boat.
Several properties are going up as I write this and many people are waiting for the resort on Playa Blanca. Hey, things take time. This said, there are some interesting developments way underway that may prove to be a good investment. There are also plenty of voices about the future also: I have heard that Donald Trump is planning to build a resort there. I wonder????
Lots of great, and much safer, alternatives for investing in Cartagena, we’d all like to live on an island, but I don’t think Baru is the right one. At least not for the time being.
When will the bubble burst?
I am a foreigher living in Cartagena and almost every day I can found driving past some of the most expensive real estate in Latin America. I often speak to my wife, or more exactly thin out aloud, and ask who actually has the money for these properties? Or, Who in their right mind would actually buy one?
You see, Cartagena is a lovely place. I live here and am very happy, we've got it all: sun, sea, nature and a laid back lifestyle, but all thgis comes at a price. I don't actually live in downtown Cartagena, but a short drive away along the beach. Here for instance land prices tend to double in value every 2-3 years (buy now or it will soon be too late). In my area (Boquilla/Manzanillo) there are numerous up-scale resort developments currently being built, very nice too. But the prices are really high! Over US$400,000 for an 1800 square feet apartment! You do also get a balcony for that price. How about US$350,000 for a 1600 square feet house? In my modest opinion, these prices are fine if you actually want to live here, but I honestly can't see these prices rising much higher in the near future, and you can forget about using this kind of real estate as a rental property -- you'll never get a monthly 1% + return on your investment. By the way, not to boast, but if you buy something right you can almost get a 2% monthly ROI here in Cartagena.
So many apartments, houses, 5 star hotels and boutique resorts are going up I just wonder when the bubble will burst? Don't the builders know that there is a recession in Europe and USA, and millions of COlombians were hit by a nation wide pyramid scam just recently. So, in short, there isn't a lot of money going around -- but these places keep on going up.
Just thinking out loud to anyone who wants to listen. What do you people think?
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