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SOVEREIGN MAN

Property and security in Medellin

April 14, 2010
Medellin, Colombia

In yesterday’s letter, I told you why Medellin, Colombia might just be the greatest city in the world for some people. Well, today I had to send my assistant flowers because she got bombarded with so many subscriber emails questioning my sanity–

“You must be kidding! Medellin is the heart of the Columbian [SB: yes I know it's a misspelling] drug dealing racket!”

“Isn’t Colombia the most dangerous place in the world?”

“Are you kidding me? Colombia is one the most violent places to live. Crimes and kidnapping are terrible.”

We also received a handful of emails like this one:

“Bravo! Finally another American who sings the praises of my favorite city! Medellin is a hidden gem because most Americans are scared to go there… it’s amazing what they believe about getting killed and kidnapped. Their information is outdated by 15-years.”

Naturally, my experiences on the ground here have me more aligned with the latter opinion. In 4-years of traveling to and around Colombia, I have never felt unsafe.

There are definitely problems, no doubt. Antioquia Department, where Medellin is located, is still experiencing paramilitary activity out in the jungles where a lot of the gold mines are located. Gold, drugs, and AK-47s tend to not mix well.

Back in Medellin, however, away from the guerrilla action, I’ve read conflicting reports about whether the crime rate is increasing or decreasing. One report mentioned that the murder rate is up 50% year over year, while the government’s commission (biased, clearly) says that violent crime is down.

Here’s the bottom line– don’t automatically believe all the negative publicity that you read about Colombia. Come and see for yourself.

To pain the picture more clearly, I want to tell you a quick story about a local friend of mine. I’ll call him Victor:

Victor is sharp… very sharp. You pick up on that within 10-seconds of shaking his hand. He studied hard science and engineering in the US for nearly a decade and has a full residency visa to go back whenever he wants.

Ten years ago he returned to Colombia to start an engineering firm in Medellin. The business became successful quickly, and life was good…

… until the FARC came along and kidnapped Victor’s brother. This was in 2000. They held him for over two years to the tune of $1 million, which Victor eventually paid. After releasing his brother from captivity, the FARC destroyed all of their heavy equipment out in the field, effectively bankrupting the company.

Victor had nothing left, a family to feed, and a job offer in the United States waiting for him… yet he decided to stay in Medellin.

As he explained to me yesterday, “We all knew the FARC was on the way out, and that Colombia was entering a new era of stability. The turning point was 2003, right around the time my brother was released. Given the opportunity available here, the quality of life, and cost of living, I wouldn’t be anywhere else.”

Victor now has another successful business. His story is very compelling, and if you come down here you should meet up with him.

Locals understand that the tide has turned… but for now the rest of the world is still transfixed on the ‘FARC stigma,’ drug trafficking, and conflicting reports on whether violent crime is rising or falling. (of course, the rest of the world doesn’t really know what the FARC is, or how they differ from other guerrilla groups)

Frankly, it is this negative perception of Colombia’s danger that keeps it a hidden gem… otherwise cities like Medellin and Cali would be crawling with drunk college kids on spring break, and Cartagena would be mentioned in the same sentence as Punta del Este.

I have no doubt that this will all happen someday, and probably within the next 10-years.

This is why, in my assessment, Colombia (and Medellin in particular) is definitely worthy of consideration to plant an overseas flag, particularly for real estate. For a country with such a developed infrastructure and vast amenities, real estate should be much more expensive.

In some of the best neighborhoods of Medellin, for example, existing apartments sell for roughly $750 to $1,000 per square meter. In many cases, this is less than the construction hard costs– a real indicator of value in my opinion.

In neighboring Panama, you’d be very lucky to see $1,200 to $1,500 per square meter for comparable quality, and $2,000+ is not uncommon for existing home sales. New construction is even more.

Is the perception of Colombia’s risk worth a 40% discount to Panama? When you put your boots on the ground in both places, the obvious answer is no.

Expanding the analysis a bit, I would peg Medellin’s property market in line with Tangiers, Morocco where I was just a few months ago, and slightly cheaper than Pattaya, Thailand where I spent most of March.

In the long run, despite euphoria-based ups and downs, the market always catches up with value. When that happens, I expect that prices of quality real estate assets in Medellin will double.

In the meantime, Medellin’s pro-landlord property market offers viable double-digit rental yield opportunities, especially when catering to long-stay tourists and business travelers.

Our goal is simple: To help you achieve personal liberty and financial prosperity no matter what happens.

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About the author: Simon Black is an international investor, entrepreneur, permanent traveler, free man, and founder of Sovereign Man. His free daily e-letter and crash course is about using the experiences from his life and travels to help you achieve more freedom.

Comments on this entry are closed.

  • Stan

    Sounds good Simon,
    You need a partner for Columbian real estate deals? Give me a good reason to visit the place beyond being a tourist.

    • Warren

      No better reason than the most beautiful girls you could ever imagine….

  • Rexx

    Simon, any thoughts on where to meet quality women in Medellin?
    When I say quality, I do not mean the bar flies/prosty/scanalous. I see some web sites that offer tours like that but…mmm I would rather go there personally. Look forward to tomorrow!!
    rexx

  • Blair

    Many people (North Americans especially) have pre-programmed opinions and assumptions about the rest of the world. I have discovered that my ideas about places I have travelled to for the most part, were wrong. Be objective, do your homework and keep an open mind and you’ll be sure to find gems in places that the status quo have told us were “scary”.

  • d

    I’m really drawn to Medellin based on the things you’ve said and others have written about. But I like small towns and want to finally get out of big cities and live closer to land. So can you recommend a good town outside Medellin, or a mountain town in the same valley as Medellin?

    • Piz

      check out Rio Negro 40 min away from Medellin. (where the main/international airport is located) Beautiful mountains/ landscape, very tranquil, but still you can find good commodities like grocery stores/ restaurants/medical facilities etc. This is one of the places where a lot of people have their weekend homes.

    • Andrew

      Definitely, you can go to El Retiro, it’s a very quiet and relaxing place to live

  • Robert

    Simon, I’m a newcomer to your work and have been reading your letters for about a month. Its great stuff. I am a young tax attorney (about to complete my degree in tax law). Would you be able to direct me to any of the attorneys you talk to about getting started both in offshore planning and asset protection? Thanks.

  • Don

    Simon, you had me very interested in your articles until I read the latest on Colombia. the paramilitar are not just out in the jungles , they are in the towns and cities too . they are very real and very dangerous. I was in Caucasia (5 hours from Medellin)for a few nights on my way up Cartagena . 4 people were kill the first day I arrive. a few days later a restaurant owner was killed on my block .plus my friend who owns a clothing store was getting phone calls for extortion , demanding if they dont pay they will kill the staff and the customers.
    as for Medellin , well el Poblado is nice. that makes up about 5% of the city. outside of that bubble good luck. the heavy security is there for good reason , and will never go away, the minute it does the murder rate will go up.As the Colombias solve problems with bullets, and thats that.
    If your interested in the girls, they sure know how to dress right. They are as sexy as one can find anywhere. most are prepayed. But if you go to the beaches you wont see any hot girls. once they are in a bikini they loose all their curves and perfect propotions.

  • Dave in Medellin

    Simon- great read on Medellin. I’ve have been living here for 2 years about now, and I’ve also travelled to Cali, Bogota, Pereira, and Cartagena. All great places, but I rprefer medellin. its very laid back here, and safe. the locals feel the same way, thats why 3.5 million people stay here in the valley.

    I’m also do not agree with Don about the girls, that they are mostly prepago… Don I will be happy to take you out some time and show you how to romance a Colombiana.

    anyhow like you say simon, don’t judge just come see for yourself.

  • Ron

    I too live in Medellin, I also know Victor lol. It is a beautiful city, the women are unmatched and I will never deal with American girls ever again unless i want to, I live in a 2br 3bath top floor apt for 500 dollars a month. ( In los angeles it would rent for 2500 a month) I drive a mazda 2 compact which the girls here equate to a ferrari. I play waterpolo here to stay in shape, workout at a gym with a view of the mountains and enjoy a nice little life. Hell I am 43 yrs old and my beautiful girlfriend I have been with for two years is only 20. If you want to check out Medellin look me up here is my Youtube link http://www.youtube.com/panamabigcat

  • alan varalli

    please send me news letters. i could not submit from your other method. alan varalli

  • Daredevillbklyn

     You keep rolling the dice and sooner or later you loss. Been living in Medellin over 5 years and robbed and drugged a few times. You can never let your guard down here tons of scams here. You can buy love here cheap too all about the money. Relationships here with gringos run around 2 k a month. This will work to hold down a young hottie and will keep her passing your house for around 3 nights a week with full service. But trust no one here folks gringos are just seen as a pay pay in the end. Plenty of rules here and most are learned the hard way. The reason why young girls hang with gringos “must be the money” HELLO!!! Colombian men just pay 30 bucks for a hour in the Centro mid town where there are tons of cat  houses where prositution is leagal. Colombian men are the smart ones they see the big picture. Gringos are mostly living in a Disneyland mental state and think these young girls really love them, BO BO’S this means clown in Colombia and plenty of dumb gringos in Medellin with woman and I know I used to be one!

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