I’ve been asked several times about how my first furnished rental is doing in Cali. The short answer is: really good! But could it have done better? Yes, and here is why…
My unit has been on the market since mid-May of this year. For the year, it will be 229 days. I now have it booked way into the 2017 and am therefore able to calculate my total occupation for the period:
54 days empty.
175 days occupied.
Total occupancy: 76%
The numbers look great, right? But here’s the catch. In order to keep neighbors happy and comply with the Colombian law, the minimum contract has to be 30 days or longer. That is unless 70% your neighbors in the homeowners association agree to allow rentals of less than 30 days, which very of them do. Some building codes even demand minimum contracts of 3 and 6 months. In our building, we are only 2 out of 13 who voted for the short-term rentals. I’ll admit that I haven’t been a saint and on a few occasions allowed for weekly rentals, but our administrator isn’t exactly thrilled. So, what’s my point?
On longer rentals, you have to lower your daily rate. I was hoping to get $60 dollars a night, which I consider cheap for a nice, newly remodeled apartment in the best area of town with the capacity to host up to 4 people at a time, but the reality is that I’ve gotten closer to $30 a night and on some occasions even less. Of course, there are less hassle on longer contracts, but if I could double my rate and my return, I’d be more than happy to change the extra bed sheets and clean a little more.
The sweet spot of the market are the short-term rentals. The three days, the one week. But how can you get away with doing this legally and without upsetting your neighbors?
The only answer I have been able to find is that you have to own the entire building or at least be able to control the homeowners association. For most people, this isn’t easy. But my partners and I have come up with a solution…
Introducing the TIP – Turn-Key Investment Property
We’ve thought a lot about how to perfect this business model. In order to comply with regulations and maximizing return on investment, the best way is to own the entire building. And that’s exactly what we’ve done. We’ve found an amazing property with 4 apartments in what I consider to be the best location in Cali – El Peñon – right behind the new 5-star hotel project, La Sagrada Familia. It’s two blocks from the park. One block from a strip full of nice restaurants and bars, including the new Bogotá Beer Company brewpub. It is within walking distance to the historic neighborhood of San Antonio, Cali’s downtown, the Tertulia Museum, the river, The Cat Park, supermarkets, pharmacies, banks, etc. The streets are full of gorgeous trees providing shade on a hot day. Honestly, I can’t think of a better place to be. And since our investors will own the entire building, we can make the rules.
We call it a turn-key investment property (TIP) because the price you pay includes everything: the apartment, legal costs, closing costs, a complete remodeling managed directly by our in-house architect including new plumbing, electrical grid, appliances, (TVs and A/C in all bedrooms, fridge, stove, etc) and top-of-the-line furnishing overseen by a professional interior decorator. To give you an idea about the end result, make sure to check out some of our previous projects here.
Remember that our property management team will administrate this property for you. You do not need to live in Cali in order for this to be an attractive investment. In fact, our budgets are based on this investment being completely hands-off for you. That being said, you’re welcome to live in the unit yourself either full or part time. The rest of the time, you can rent it out to generate a passive stream of income.
So, what makes me believe so much in Cali? I honestly feel that Cali is one of the best-kept secrets in Colombia. Both from an investment point of view as well as from a tourism point of view. Tourism in Cali is up 20% compared to previous year. I have 9 short term rental requests for the next couple of weeks that I can not fill due to an insufficient inventory of short-term rentals. Big chain hotels like the Marriot, Hampton by Hilton, the Hyatt and Ibis have just arrived or are currently undergoing construction. And best of all, Cali still has the cheapest real estate of any big city in Colombia. The timing is perfect…
To read more about this very special opportunity and view the details of each apartment, please see the complete investment package for Brisas del Peñon.
(The top picture is the view from the penthouse unit in the Brisas del Peñon with the new hotel Sagrada Familia that is undergoing construction in the background.)