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Property Management in Medellin

The Apartment Medellin
by

Andrew Campion

on 9 May 2014

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Transcript of Property Management in Medellin

Rental Property Management in Medellin
Who Am I?
How Did I Get Started?
Arrived in 2005 as a backpacker
Rented an apartment with 2 friends
Built a 3 page website to advertise a room
Rented / sub-let 3 more apartments
First managed property in 2007
Today we have over 40 (+40 FARM) properties
35 different owners from 9 different countries
Owner / Manager of "The Apartment Medellin"
Started business in 2006
Merged with First American Realty in 2012
Growth in Tourism (Colombia)
60% increase from 2006 to 2012
1m in 2006 to 1.6m in 2012
Most growth in last 3 years
Average of 10% growth per year
Source: Ministry of tourism
Where are they coming from?
24% of all tourists come from the US
80% of our clients are from the US
10% from Colombia, 10% Others
Business designed for westerners
What percentage come to Medellin?
In 2006 Medellin had 9.5% of all visitors to Colombia
In 2010 Medellin had 11% of all visitors comparable with Cartagena
Cartagena receives 150 cruise ships a year with 300,000 passengers
Bogota makes up nearly 50% of all visits*
When do they come?
Weather in Medellin
Events and festivals
High seasons: Medellin vs Cartagena
Visit all year round
Expected Occupancy Rates
Medellin hotel average has been 48% - 54%
Hotel growth, tax incentives

The Apartment Medellin
2009: 72.3%
2010: 72.6%
2011: 73.3%
2012: 75.2%
Why apartments?
For visitors
Price vs hotels (up to 35% cheaper)
Space / possibility of sharing
Free services: Phone calls, Internet
Cook and wash for yourself
Privacy, and the feeling of being at home
For investors
More than just a financial investment
Short term / Long term
Decreto 2590 - May 2010
Cotelco - Industry regulation
Cartagena vs Medellin
Requirements for short term
Very limited availability
From 30 apts. to 10 in 18 months
According to border entry
Rental Yields: long term vs short term
We are 75% long term / 25% short term
Long term typically around 55-60% of short term yields

1 bedroom / Studio example
Short term @ $90 per night x 22 nights = $1,980*
Long term @ $48 per night x 22 nights = $1,056*
Rental Yields: 1, 2 and 3 bedroom units
1 Bedroom / Studio example
Short term @ $90 per night x 22 nights = $1,980
Long term @ $48 per night x 22 nights = $1,056

2 Bedroom example
Short term @ $110 per night x 22 nights = $2,420
Long term @ $60 per night x 22 nights = $1,320

3 Bedroom example (can vary greatly)
Short term @ $130 per night x 22 nights = $2,860
Long term @ $70 per night x 22 nights = $1,540

30% Studio / 1 bedroom apartments
40% 2 bedroom apartments
30% 3 bedroom apartments
*Gross revenue
Expenses
Management Fee: 135,000 - ~$75 USD
Agent Commissions: 15% - 20%
Utilities: Typically low cost (no heating/air)
Property Tax: Approx 1% of declared value
HOA Fees: Varies according to building and size
Cleaning: Varies according to contract
Maintenance: Varies according to apartment
Expenses - Short Term
2 Bedroom 75m2 / 780f2 $140,000 + $10,000 furnishings
Short term @ $100 per night x 22 nights = $2,200

Management Fee: $75
Commission: $440 (20%)
Bills: $150
Property Tax: $70 (pro-rated)
HOA Fees: $80
Cleaning: $0
Maintenance: $20

Total net profit: $1,365 / $16,380 p/a (approx. 11% ROI)
Expenses - Long Term
2 Bedroom / 780f2 $150,000
Long term @ $60 per night x 25 nights = $1,500
(6 months or more and 83% occupancy)
Management Fee: $75
Commission: $225 (15%)
Bills: $150
Property Tax: $70
HOA Fees: $80
Cleaning: $0
Maintenance: $20

Total net profit: $880 / $10,560 p/a (approx. 7% ROI)
So what should I buy?
Investment or second home
Location
Furnishings / Decoration
Facilities
Pool
View / Balcony
Jacuzzi
Air conditioning
Gym
Safe, Coffee Maker, Iron etc.
Location
Location
Location
The Golden Mile
Ground Zero for tourists
The Golden Mile
Ground Zero for tourists
Parque Lleras
Top nightlife spot
Well known to tourists
Parque Lleras
Top nightlife spot
Well known to tourists
El Tesoro Mall
Great views
Residential
Fewer conveniences
El Tesoro Mall
Great views
Residential
Fewer conveniences
More long term visitors
Mining and service industries
Families returning to Medellin
Investors
Independent workers
Retirees
Medical Tourism / Internships

Trends
Full management service
90% of clients live overseas
As much or as little involvement as you like
Monthly statements
Funds transferred to anywhere in the world
Focus is on quality not quantity
Always ranked highly on search engines
No serious competitors in our market
"The Apartment Medellin/First American Realty"
Tourism is on the increase
Real estate prices are rising 5-7% per year
Still an undiscovered quantity
Right place, right time

Thank you!

To summarize...
Centrally Located (1 block from the convention)
Swimming Pool
View (No Balcony)
Good Facilities
Great Location
Available Short-Term
Old Building
Poor Furnishings
Nice New Modern Furnishings
Nice View (Now Gone)
Bad Location
Good Location
Great Facilities
Air Conditioning
Balcony
Jacuzzi / View
Very High Utilities
Full transcript