re: Best Location for Vacation Rental outside the US

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Are you talking about in Columbia? Or elsewhere?

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Colombia. I thought I heard something where the government wanted to reduce the supply of short term rentals in order to keep housing affordable for locals.But I Just ran a quick internet search and only saw something about a new registration and tax scheme for AiraBnB that went into effect at the beginning of the year. Possibly I misremembered.

I just need to point out that historically speaking, investing in real estate located in a nation that is heading down a hard socialist path is a really, really bad idea.

Even absent those issues if the global economic situation continues to decline there are going to be very strong head winds to support current property valuations in late 2022-early 2023.

If you keep your powder dry you can probably pick something up in 12-18 months at a strong discount to current valuations and would have a much better sense of where things are headed with the political future down there.

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90% of expats should AVOID buying real estate in Colombia as an INVESTMENT. I worked in wealth management and commercial banking and have a lot of experience dealing with the financing and the RISK management side of real estate. There’s many reasons why expats should avoid investing in real estate in Colombia as an INVESTMENT.

1) The COP. “The peso weakened 3.7% to a record low of 4,561 per dollar on Monday, the biggest drop among more than 140 currencies tracked by Bloomberg. Since Petro won the election last month, it has lost 16% of its value against the dollar, the biggest fall of any currency over that period.” I’m not anti or pro Petro, but, there is simply no confidence in the COP, it’s literally one of the worst performing currencies. These are just facts.

2) Interest rates. It’s very difficult to borrow money as a foreigner but if you’re able to, they’re going to require 30-40% down and average interest rates of around 12%.I honestly don’t know any sophisticated investor who would EVER pay that for an investment property.

3) Liquidity. Good luck selling your property or trying to borrow against it in USD. The average time a Colombian property sits on the market is around 270 days and it’s only going to increase.

4) Taxes. Colombia charges taxes when you sell your property and an additional 3.63% - 4.79% in additional fees. The US offers very generous tax benefits if you own real estate in the US, and you can accelerate your depreciation and get a REFUND from the government.

5) Opportunity cost. Prices of real estate have gone up just about everywhere. The biggest differences are, your property is in the US, Can put a little as 0% down, it’s in USD, a lot of tax benefits, and homes sell rather quickly.

6) VISA - You don’t need to purchase property to get a Colombian Visa. There’s many other ways.

I would only INVEST in Colombian real estate if

1) You plan on living in the property long term, absolutely love it, the purchase price represents less than 5% of your investment strategy, you hedge, and you’re okay with potentially losing it all.

I have capital investments in Colombia and will continue investing in Colombia, just not in real estate.

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This was recently posted somewhere else.

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One good thing about Aruba is they are out of the hurricane band

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Indeed. It's summer all year and virtually no mosquitoes. Always windy, but that keeps the temperature nice.

Love Croatia. Dubrovnik and Split are magical.

Croatia was the only European country open during the Covid madness. My girl and I were practically the only tourists there.

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I just started visiting Croatia recently. The flight sucks for sure, but I usually go for 6 weeks at a time. No vaxx mandates now. Beautiful beaches. Inexpensive living, ie food, drink, entertainment. And it's easy to travel to the rest of Europe by rail if you are vaxxed.

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Slovenia is a super cheap and yet incredible location where properties can be purchased for a song.

Have you looked at Belize? USD, English speaking, growing tourism and good flights through southwest and others.

We had a condo on Caye Caulker that did pretty well. I just didn’t trust the property management company, and the sales price had gone up so much that we sold after 3 years.

They are developing the other side of Caye caulker right now, and It looks like it could be a great spot in a few years.

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Have you looked into Cartagena as well?

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I'm here now, actually. Does not seem like a bad option, I just don't really like the vibe here.

They are doing some massive beach projects now that should result in the area being much much prettier in the next few years though.