Cali Colombia, Pablo Escobar, and drug wars. These things make for a great investment.
The first time I visited Colombia was back in 2005. At the time, everyone thought I was crazy for going.
Colombia was just crawling out of an extremely violent drug war that had been raging for years. To be fair, the war was still technically going on, but not nearly as widespread as during the 1990’s.
On that first trip, I visited most of Colombia. Cartagena, Barranquilla, Santa Marta, Medellin, and the country’s capital Bogota. Keep in mind that I’m a six-foot gringo who sticks out like a sore-thumb. And to make it worse, at the time I was a nineteen-year-old kid with barely a couple whiskers on my chin. I was ‘the target’ if there is one.
I traveled mostly by bus with a backpack and surfboard. Talk about sticking out in the crowd! I had to weave my way through bus stations and busy streets carrying a six-foot board bag stuffed with two shortboards.
Even though Colombia borders both the Pacific Ocean and Caribbean Sea, the country is not really a surfing destination.
The Caribbean side is usually very small or too windy, while the Pacific side is thick with jungle mangroves making access to the coastline near impossible.
Even though I had my surfboards and kept my eye on the coast, I was continually blown away with what the interior of the country offered.
Stunning greenery everywhere. Growing up in the desert of LA, the green was almost overwhelming.
Actually, in regards to money, it blows everywhere else out of the water… and that’s what I want to share with you.
Since the 1990’s the peso has gone through quite an inflationary journey. Holding Colombian pesos over that timeframe would’ve been a disastrous investment. Obviously, the drug wars played a significant role in the annihilation of their economy, but there’s something else that has recently plagued the currency.
Commodities. Oil in particular.
Colombia has been an upside-down country for a while now. I’m not talking any financial jargon here. I mean, the country has been jacked up. Flipped upside-down. All out-of-whack.
Really, there’s lots of upside-down countries. They’re all over Latin America, some in Asia, some in Europe, and even more in Africa. But, many of these upside-down countries have lots of resources. Things like oil, gas, gold, or coal.
Colombia has a lot of all of those.
However, the recent strength in the strong US dollar has depressed oil prices. Or maybe weak oil prices have given strength to the US dollar…? (That’s a debate within itself!)
This is bad news for the Colombian economy, as their weak currency means it costs more to buy imported products.
I’ve talked about this many, many times. The power (or danger) of currency arbitrage.
The good news, if you’re holding US dollars, is that everything is on sale. Fire sale prices. Crazy, crazy cheap.
As a tourist, you can visit Colombia right now and have a European quality vacation for a fraction of the price. I don’t mean 25% less… I mean 75% less.
To put things into context, I always tell people about how much it costs to go out to dinner. The last time I was there we all went to a very nice restaurant. It would be about a four or five star restaurant in the US. It was me, my business partner and a couple of our friends – four of us in total. We ordered appetizers, main courses, desserts, beer, wine, liquor… everything. We went all out and walked out the door with a $78 USD bill.
Then we hopped in an Uber (yes, Uber is in Colombia) and got a ride to an upscale rooftop bar where we drank $2 USD beers. Not bad.
Now, those are the expenses as a tourist.
Imagine if you’re an investor.
Right now there are apartments, homes, and farmland selling for less than the cost of construction. That means that it would cost more to buy the materials to build a new home than these homes are selling for.
And the farmland lots for sale… yes, they’re selling for less than the cost of construction too. If you’re wondering how farmland can be less than the cost of construction, then you probably didn’t read my article on Colombian agriculture.
“…profitable agricultural land is being sold for only the price of the land.
“In fact, one of the properties we looked at included three homes, but the price per square meter of the land was cheaper than even surrounding farms without homes! Basically, three homes came for free on the agricultural land.”
Grossly mis-priced is the best way to describe it.
That’s why I have already invested there. I see purchasing Colombian real estate as hitting several birds with one stone.
Here is why you need to understand how great this opportunity is:
1. Appreciation. Colombian real estate is dirt cheap right now, but people are catching on. In major cities over the past several years, prices have been increasing 7%-8% per year. I expect this to continue for at least another several years.
2. Currency arbitrage. As I’ve written many times before, this may be the best opportunity in the deal. If the COP returns back to it’s 2,000 range, then you’re property will be valued 30% higher in US dollar terms. Of course, you’d only realize this profit if you sell your real estate after the currency moves. However, a 30% gain without you having to move a finger is very attractive.
3. Yield. Let’s say that the COP stays at it’s current level and let’s say that property prices don’t appreciate. Apartments still yield around 10%, while farmland is touching over 30% in some areas.
4. Diversification. This area is probably the most important and most difficult to quantify. We all know that diversifying your portfolio is important. Purchasing Colombian real estate is a perfect way to spread your assets while receiving a solid return. In addition, there are many opportunities to receive residency with a path to citizenship with certain investments.
Now, I started this article off by telling you that this was my most valuable article I have ever written. I truly mean that. To figure all of this out took a lot of time and money.
I didn’t just go online and read some articles. I visited lawyers, talked with banks, met business owners, toured farms, and probably looked at close to 100 different homes and apartments. I really put time in.
But, there is another value that I’m talking about. It’s a value that is hard to… value.
It’s the unbelievable change that the country has gone through. It’s the mind-blowing stubbornness of the Colombian people.
I have found Colombians to be some of the most sophisticated people I have ever met. Their Spanish is clear and concise and their attire is always professional. Walk into a bar and you’ll hear conversations about politics or complex social issues. These people are smart and hungry for success.
The US television show 60 Minutes just released a short special that I highly recommend watching. The story told is incredible and it teaches a lesson that everyone in the world could learn from.
Another great resource is the Netflix show Narcos. I’ve spoken with many of my Colombian friends about the show to see if it’s accurate. Overwhelmingly, they have all said that it is about 95% spot on.
The two issues they have is:
#1 Pablo Escobar character is played by a Brazilian, so his accent ruins it for many Colombians.
#2 The terror and fear that the Colombian people lived in was worse than the show makes it seem – that’s hard to believe, if you’ve seen the series.
There are only two seasons of Narcos currently out on Netflix, with the end of the season climaxing with Pablo Escobar’s death.
Don’t worry, I’m not spoiling anything here – it’s a well known fact that he’s dead.
But, season 3 is supposed to pick up where Pablo left off. And that’s a story that is not as well known.
Most people think that the drug war was all about Pablo Escobar. His death made major news throughout the world. People thought that the war on drugs was over when he died.
News of Escobar’s death made the front pages around the world. Source: PRI
That couldn’t be further from the truth.
After Escobar died, the Cali Cartel picked up the slack. And when I say they picked up the slack… they did that… and more.
The Cali Cartel has been called “the most powerful crime syndicate in history” and at one time controlled 90% of the world’s cocaine industry. Several of the cartel members were multi-billionaires – yes, billionaires.
The reason I bring all of this up is so you can understand what the perception is of Colombia and of the individual cities.
Medellin was Pablo Escobar’s hometown. During his reign, he ruled the city. But, when he was killed, the center of power passed to Cali. This has allowed Medellin a bit more time to recover.
Today, the Cali Cartel is gone and Cali is going through it’s own recovery process, which is a bit behind Medellin’s.
And that is where our opportunity is.
(By the way, if you’re concerned about the Cali Cartel’s history… let me give you a sobering fact: One of the main cartel’s leaders was arrested in Florida for trafficking cocaine in 1990. At the time he was worth $3.7 billion USD and is considered one of the wealthiest criminals in history. But, guess what? He is out of jail and currently lives in Bronx, NY. So, if you’re afraid about Colombia, just know that one of the most dangerous people to have ever existed in Colombia is living free in the United States. Think about that the next time you’re worried about visiting a country that is “dangerous.”)
Although I first visited Colombia in 2005, I did not get to Cali until 2014.
I’ll be honest, Cali has a horrible reputation. But that’s why I like it. I know that everyone hates it because the common thought is that it’s dangerous and you’re going to get killed.
Well, I’ve been there plenty of times and I’m still here today.
One of my best friends lives there full time with his wife and two beautiful daughters – they’re just fine too.
My point is that reputation is often far from reality. Cali is a perfect example.
And that’s why I have invested there. I’ve done my due-diligence and I’ve put in the work to figure out that Cali is one of the best value real estate investments that I’ve ever seen.
And you can join me. What I’m about to lay out is completely accessible to anyone who wants to take the leap. I’ve already done it and I’ve even encouraged some of my US based friends to join me.
Of course, you’re going to have to buy your own place – I already have mine!
But, if you are seriously interested in 10% annual returns with capital appreciation from improving markets and currency arbitrage, then you should look hard at this opportunity.
If you want to diversify your wealth and own foreign real estate, you need to take action.
Now, I understand that this all seems easier than done. But, that’s why I’m sharing this particular opportunity with you. There is no need to actually travel to Colombia to take advantage. You can do all of this from your home.
There is a minimum investment amount of $25,000 USD. But, really, this is a small amount to invest in foreign real estate.
Again, you do not have to physically travel to Colombia to get involved. Additionally, your investment will give you personal ownership. That means that you own the property in your name (or whatever entity you have). You’re not buying it in someone else’s name, like many other countries require you to do.
Also, management is completely taken care of. You don’t have to worry about finding tenants, cleaning, maintenance, or any of the frustrating duties that come with real estate ownership – it’s all taken care of.
And yes, the 10% returns are after the management fee.
The location is great too. It’s right around the corner from a brand new 5-star hotel that is being built and many restaurants and cafes are within a short walk.
But, Cali is not the secret it once was only a couple of years ago. Major companies are starting to take notice and you can see this by all the new construction. Upscale restaurants are popping up everywhere and even big US companies like Marriott are starting to build.
Still, prices are unbelievable cheap. I don’t see this opportunity lasting forever, as I’ve seen this exact same thing happen in many other parts of the world.
Cali is also a relatively short flight from the US and has direct flights. This will make the eventual migration of tourists and retirees inevitable.
Going back to the bigger picture, this is a perfect example of how a place can do a complete turn-around. Colombia in general has been a no-go country for many years. But all of that is changing. Simply, it’s due to human resilience.
It may sound cheesy, but I’m serious. I find it simply incredible. How humans can go from the worst conditions imaginable and then change the story completely.
Right now, Colombia is the poster child for this situation. There have been many more places throughout the world that have demonstrated the same thing. It just goes to show that we, as humans, really do move forward. We make things happen and we generally all want the best for others.
I keep this in mind when I am investing. It’s why I have been successful. I have faith that people in general are good and that the future will be even better than today.
If you’re interested in investing in Cali, reach out to us.