Colombian Real Estate Derivatives........

rocinante says on Sep 11, 2008, 20:59:

Loid, if it exists it's rather thin. Colombia is not exactly a leveraged realestate mortgage play - most residential is paid in cash. As far as commercial/construction it's mostly financed prefunded by preconstruction sales or privately backed. Rates are high and stable. If you find something let me know.

"World economic indicators point to a democrat winning 2008. It will surely be Obama. Not that the US president actually runs the US." Feb 5, 2008

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OneHappyBoy says on Sep 11, 2008, 21:23:

Is it right that it is customary to have at least 50% down on residential real estate, and relatively short terms, like 10 years on a contract?

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Buongone says on Sep 11, 2008, 21:54:

I hear most want cash. All of it. Up Front to close the deal. Why pay a very large interest rate if you could get it.

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JT. says on Sep 11, 2008, 22:06:

I was in Santa Marta in August and I was told the banks wanted 30% and it was a 15 year mortgage.

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larryrn says on Sep 12, 2008, 04:41:

In Medellin residential real estate the typical is 30% down and a 18 percent mortgage for 15 years. By contrast en Panama mortages are made based on your FICO score on US credit agenecies and they are going at 8 percent for 20 years however your mortgage can't continue when you are above age 65 (your property needs to be paid off by then). You also need life insurance to protect the bank in case you die and assets in the states to cover the amount of the loan.

Legally I've been told you cant write off interest on mortgages on your residence in Colombia (or Panama). You can of course use the Foreign Earned Tax Credit where the first $87K is tax deductible assuming you reside in the residence outside the US for the majority of the year.

Larry

--- Larry Snyder - http://www.rn.org - Your Source for Online Nursing Education!

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gringoloid says on Sep 12, 2008, 07:18:

This is heading into a residential type real estate thread and I was wondering about commercial.

I was walking through El Tesoro mall yesterday and I noticed that SONY was moving out. Except for FotoJapan and the restaurants, I don't see the cash registers being operated in most of the other stores. The sales help is just sitting there, even on weekends.

With the new mall at Los Balsos and Ave Poblado opening some day, I'm wondering what the impact will be of the increased retail space on the retail environment as a whole.

(I will not debate the economic slowdown until after the new President takes office.)

I'm going to post some ratios as well as colombian retail market news so maybe the spanish speakers at pbh, like rocinante and joelg, that understand american business can help put this research into my perspective.

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gringoloid says on Sep 12, 2008, 07:32:

roci........i think you're right........so far i've found that it's so thin that it's transparent.

i'm going to post some information in spanish and see if you can find what i'm looking for.

Commercial REITs within the states may in fact do well as the price of gasoline would make inner city real estate more valuable. Too tough to call right now.

But there may be a big shift in colombian commercial next year.

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gringoloid says on Sep 12, 2008, 07:41:

btw...I've noticed my Terpel gas station is now charging 7849 per gallon. doesn't that seem a little high? I haven't been watching the price of gas in colombia for quite sometime.

i'd like to find a way to count the cars entering commercial establishments. do those parking garages publish seasonally adjusted revenue figures?

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viajero123 says on Sep 12, 2008, 07:49:

gas in Colombia will continue to go up since it is still subsidised. I think the correct level will be around 10.000 per gallon, since it is highly taxed unlike gasoline in the US.

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rocinante says on Sep 12, 2008, 07:49:

Loid you don't want to get stuck with an unsellable profitable investment because there is no open interest.

You are a big leverage guy and you see a downward trend in Colombian realestate and I do as well. However being able to take advantage of that foresight is not as easy as it sounds. You basically want to buy puts on a Colombian Relestate index. This index does not exist or if it did you would have to trade it directly and lay out big cash in a local account. If for some miracle the deriviative did exist there would be little to no open interest and you would be stuck.

ALthough the angle exists I personally don't see a play here except an equity buying opportunity at the end if that suits your portfolio. But for some reason I see you coming back with a post like "How do I short sell a centro comercial?"

"World economic indicators point to a democrat winning 2008. It will surely be Obama. Not that the US president actually runs the US." Feb 5, 2008

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gringoloid says on Sep 12, 2008, 08:57:

jaja.......i'm not that bad..........i'm sure that there is not an index in colombia as this play is relatively new in the usa.

it could be an individual stock.........even an ADR on the nyse.

let me present my evidence and then you provide the challenges. i would think commercial properties, unlike residential, are mostly financed, so it may be able to be played indirectly.

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rocinante says on Sep 12, 2008, 09:13:

I don't have to provide the challenges. You already have.

Don't present evidence. Present the commercial delevopment companies and then their financiers - or better yet produce the ADR. Do you want to go bear on the developers or the financing behind or both? If the financing is legit what makes you think that that bank only finances commercial development? If commercial takes a hit these banks have an interest rate spread bigger than your grandma to keep them in the big black. You think CIB is going to take a hit if commercial goes flat? I don't see a default issue like in the US.

I'm telling you the money compaines behind a lot of these developers are mostly private investors (guess where the $ comes from) and will sit back and ride it out without affecting any stock or index. I really don't see an available leveraged play. Time to short Oviedo bro.

"World economic indicators point to a democrat winning 2008. It will surely be Obama. Not that the US president actually runs the US." Feb 5, 2008

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gringoloid says on Sep 12, 2008, 10:36:

No, I don't see any kind of a default issue either........there is too much cash in these colombian deals from you know where ...and a whole lot less of derivatives like debt-equity swaps that are going to collapse someday in the usa. I'm only trying to make a quick and easy 50% any way that I can.

It's not only money companies......there are other sectors involved........stay tuned, let me present my case.

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gringoloid says on Sep 12, 2008, 11:53:

Alright, take this company for instance, Cemargos..........it's been flying pretty high for a long time with no end in site.

Also, does the spanish word 'derivado' translate exactly into 'option contract', in english?

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JumboBond007 says on Sep 12, 2008, 12:03:

It is not worth to mortgage when it is 18% interest rate. It is best to save as much money you have and then pay for it, leaving small amount of money for mortgage.

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rocinante says on Sep 12, 2008, 12:04:

Nice 3 month chart.

No it does not. Derivado means generic derivative. (Opciones are options and "call" and "put" are used in the spanish). You will find in the Finance Dictionaries that there is a 1-1 between english and Spanish.

Warren Buffet will tell you anything that is not straight purchase of equity (stocks) or debt (bonds) is a derivative and that even something as basic as short selling against the box is considered a derivative. I agree - convertable bonds and warrants not included. Also Buffet thinks all derivatives should be outlawed.

"World economic indicators point to a democrat winning 2008. It will surely be Obama. Not that the US president actually runs the US." Feb 5, 2008

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