Medellin Real Estate Question

rocinante says on Oct 3, 2008, 17:46:

The most important thing is this residential long term? Or long term investment? Primary residence that you will own forever and ever? Income property that you will rent out? Are you going to finance at 18% or buy this cash?

It's important to know all this befforehand.

"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

0 funny, 0 helpful.

antiguru says on Oct 3, 2008, 17:48:

below you'll find an old post that is excellent. i just closed on a house and have a team of people you can use and the whole process (title search, contracts, deed registration, transfers with proper forms, etc.) is going to cost me a fraction of what some of the lawyers recommended on this site charge. my attorney, broker, and accountant fees are going to be less than a million pesos! anyway, if you speak Spanish I have a team of people for you. If not, I'll interpret no charge as long as I have as much free time as I have had lately (i'm leaving town Oct 10 and back Nov 5 for 3 months). happy to talk on the phone too if you want.

Investment Visa: Summary

I thought i'd post this summary of my experience to help anyone who intends to buy property in Colombia in order to get the investment visa. It's not bullet proof, but it all helps.

DECIDE WHAT YOU WANT TO BUY
Find a good agent. Personally, I used a guy called Mauricio Uribe in Medellín. He was able to show me lots of properties in a short space of time. I thoroughly recommend him, though his English is still at basic level. Contact me for his details.

After a while, you will start to think about things that may not be a big issue abroad. For example, new developments are comparatively very expensive or do you really want to live in a building with 3 towers and 3 million inhabitants.

Finally, don’t put yourself under pressure to make a decision. Most agents probably only have to make 1 sale a month to make their money and you’re not their only client.

DECIDE HOW TO TRANSFER MONEY
Personally, I managed to open a bank account without a Cedular de Extranjero on the promise that I would deposit $100,000 US. Thereafter, I was able to write a cheque, which I gave to the seller when we signed the final contract. The only slight complication here was that my bank thought I couldn’t sign Form 4 as a result, as apparently, to use form 4 you are supposed to transfer the money directly to the seller. However, as you will read, throughout this entire process, what Colombians tell you to do and what you should do, are entirely different.

So… if you don’t have your own bank account, you will need to transfer the money directly to the seller’s account and make sure that he/she registers form 4 and not form 5 when the money comes in.

Transferring money is surprisingly simple, but don’t assume the bank in Colombia knows what it is doing. You will need to give your foreign bank, details of the seller’s bank in Colombia AND details of an ‘intermediary’ bank. The potential problem is that the Colombian bank doesn’t know this and insists that this additional information is not necessary. In my case, I was lucky, as my European bank managed to find out the ‘intermediary’ bank details without the help of the Colombian bank.

There is little or no charge transferring money... maybe 100 dollars. You should be more concerned of a sudden change in the exchange rate, though it’s basically out of your control.

Transferring money should take about 3 days.

Finally, despite a few rumours, I was never asked to produce any kind of paperwork to illustrate if the money was ‘clean’ or not.

If, like me, you transfer, $100,000 and this is going to be slightly different to the agreed sales price, apparently its common place in Colombia to trust the seller to reimburse you the change. Strange but true.

Note: if you are a little tight for money, you can pay a little less than the required $100,000 for the apartment and get a contract drawn up for work to be ‘carried out’ on the apartment. Regardless, you still need to transfer the full $100,000. If you do this, remember that you will need to send this contract when you send form 11 to Banco de Republica.

MAKE AN OFFER
Consider the following:

Most properties are over-valued so try to offer at least 10% below the asking price. If paying cash – lower your offer even more. That said, new developments will be harder to negotiate with. It’s like anything, who knows how desperate the seller is to sell.

If the seller is half-intelligent, he/she will probably tell you that your offer is lower than another he has received, and you need to raise it a bit. This happened to me, it was probably a lie, but I didn’t want to lose the apartment, so I paid up.

It’s common place in Colombia to register a much lower price than the real value of your property. This is mainly so that the seller incurs fewer taxes upon the sale. If like me, this makes you a little nervous, insist on registering the real value, but be prepared to pay a little more, maybe $1,000 US.

CHECK THE PAPERS
Basically, check the property belongs to the seller and that all taxes have been paid.

I don’t have a lot of information on this. For me, you either know what you are doing or at this point you put your trust in the agent. I did the latter.

SIGN PRE-PURCHASE AGREEMENT
Again, a good agent should ensure that an appropriate contract is drawn up. You will need to pay a deposit. This is slightly annoying. I had to go to the cash point over 3 days in order to cough up 3.5m pesos. Of course, if the deposit you pay is too small, and the seller receives a much better offer, you can lose the property.

SIGN FORMS 4 & 11
Having more-or-less secured the purchase its time to pay. Once your money arrives in Colombia you will need to sign both forms 4 and 11 at the bank.

REGISTER DEEDS
Go to the Notaria with your agent and the seller.. Pay taxes, sign contracts, etc. Again, a good agent should ensure this runs smoothly.

GET FORM 11 STAMPED AT BANCO DE REPUBLICA
Take form 11 to Banco de Republica and get it stamped. I also got a photocopy stamped just in case the lost the original.

A few weeks later you should receive the same form, with some kind of ID number in the top right hand corner.

REQUEST ‘CERTIFICATION’ FROM BANCO DE REPUBLICA
Now you have to write a letter to BdR requesting ‘certification’. Quite why they just don’t do this when you send them form 11 is beyond me. The letter should look something like this…

Jefe registro y procesos cambiarios
Banco de la Republica
Carrera 7 # 14 – 78 Piso 2
Cambios Internacionales
Bogotá D.C.

Asunto: Solicitud de Certificación.

Mi nombre es ***** ***** de nacionalidad ****** y tengo un registro de inversión extranjera radicada el 5 de octubre de 2007 con el # ********, amablemente le solicito sea expedida una certificación por parte del banco donde conste que en la base de datos aparece el registro de la inversión extranjera directa a mi nombre, por un valor de USD100.000 de los Estados Unidos de América. Esta certificación es con el fin de presentarla ante el Ministerio de Relaciones Exteriores para el trámite de una visa.

Agradezco la valiosa ayuda a mi solicitud.

Cordialmente,


NAME ******* *********
Pasaporte # *** ******
Tel. ********
Cel. ********


GO TO MINISTRY OF FOREIGN AFFAIRS
You should receive a letter from Banco de Republic within 15 days. Once you have that letter, go to the Ministry of Foreign Affairs in Bogotá.

You will need the following:
Certification letter from Banco de Republica
Passport photocopies
5 colour photos 3x3
Forms 4 & 11
Approximately $750,000 pesos
Cedular de Extranjero photocopies or if you’re still on a tourist visa, i.e. you don’t have a Cedular de Extranjero – you will probably also need a salvoconducto del DAS. I have no idea what this is.

GO TO DAS
Register your Resident Visa with DAS within 15 days.

You will need the following:

Passport seemingly lots of photocopies
Residency Visa 2 photocopies
2 photocopies of your blood type certificate
3 or 6 photos 3x3 (blue background)

HORAAY.. YOU'RE DONE!

0 funny, 0 helpful.

nueva york bombero says on Oct 3, 2008, 18:00:

Damn that's a lengthy process!!!!
Thank you for that prompt and informative answer!
I'm going to save this and contact you in the near future.
Your help is greatly appreciated.

0 funny, 0 helpful.

Gringo Spy says on Oct 3, 2008, 18:20:

The company you are inquiring about is a solid and long established builder. Now to address your comments about a "plan" for buying a place I will assume you are contemplating purchasing either from plan or new construction. With that assumption I will say do not pay their listed/asking price. Know they will pay a real estate agent up to 3% if that agent was to bring you to their development. That being said don't be shy to offer up to 10% less than their asking price. You, most likely, won't be successful with that first offer but it will establish a starting point from your side. Be sure to consider to include any upgrades in your offer as they, the developer, can negotiate better with upgrades as opposed to a big price cut. Another thing to consider if you are purchasing from plan is to have a completion date clearly defined in your purchase contract. Depending upon how much cash you put up front you can include a significant penalty clause in your purchase contract if the unit is not completing by the agreed date. That being said they will most likely give you one completion date when you first visit the project but when it comes to putting that date in the purchase contract count on them adding a substantial amount of time (up to 120 days) to what they originally quoted in the initial sales office visit. Know this also... They will most likely fight you should it come to them paying any penalty for the building not being completed when promised and they will most likely fight you and use the legal system to exhaust you and wear you down. They will typically offer to return your money at the end of the fight and you are left with nothing more than your money and no apartment. They will in turn take back the unit and sell it for more than they sold it to you months/years earlier. Okay now what? I would recommend when you negotiate a penalty clause for late delivery of the unit but rather than include a 10% monetary penalty you negotiate for upgrades in your apartment. My experience?? Been there done that!

0 funny, 0 helpful.

nueva york bombero says on Oct 3, 2008, 18:27:

This sounds like the way I would naturally negotiate, but I wasn't aware you can "push" the company there like you can here (in the states). Great ideas and practical info!
It sounds like you've done this before. I'll pay attention to the more experienced....
Thanks Spy!

0 funny, 0 helpful.