Why Foreigners Don’t Get Local Prices on Apartments in Medellin, Colombia? 

At Moola Financial Group we focus on helping borderless company entrepreneurs discover the best tax jurisdictions for their global companies. We also strive to help those same entrepreneurs find favorable jurisdictions for personal residency. Over the next few days we’ll explore what it’s like to live in beautiful Medellin, Colombia. Today, we’ll look into the cost of living in Medellin as it relates to apartment rental (or purchase) prices. Specifically, we’ll look at why foreigners have a difficult time getting access to local deals, and we’ll look at the logic behind what appears to be a two tiered pricing system. If you like what you read in this blog post contact us. One of our support staff can help you find local deals on apartments (as well as help you with the visa application process).

Cost of living Colombia

Two Tiered System to Pricing Apartments in Medellin, Colombia. 1: Local Prices and 2: Foreigner Prices. 

In our previous blog post and video we talked about the cost of a local apartment in Medellin. In that blog post, we looked at an apartment that cost between $450 to $570 USD / month to rent or around $100,000 USD to buy.

In that blog post, we mentioned that it was difficult for foreigners to rent properties in Colombia. In this blog post we’re going to go to explain, in more detail, why this is the case. 

So why can’t foreigners easily get access to properties like the ones featured in our previous post? The main problem is that if you’re not a resident of Colombia it will be virtually impossible for you to rent an affordable unfurnished apartment like this for 4 main reasons:

1: Residency requirements: First, you need to be a resident of Colombia with a cedula number to be able to sign a lease. So the first step to getting access to apartments like this is to get your residency in Colombia. At Moola Financial we can help people get their residencies in Colombia. Simply contact us for more details. It’s not difficult or expensive to get a visa in Colombia. 

2: Conservative agents: Next, virtually all apartments are rented out through real estate agents (inmobiliaria). Almost never, are apartments rented out directly through the owner. There is virtually no incentive for them to rent their property directly to tenants. The risks far outweigh the benefits. Agents, assume most of the risk when renting out homes and apartments. Therefore, agents will require that the person seeking to rent an apartment show a strong financial history within Colombia. Your income and assets from other countries will not be taken into consideration. This puts most foreigners into a difficult situation, because most foreigners who are new the country need an apartment right away and don’t want to wait a year to build up financial history with a local bank here.

3: CDT: Next, if an agent is willing to work with you, they will require you put around 12 months worth of rent into a CDT (Certificado de Depósito a Término). A CDT is a local banking instrument that is used as collateral if you don’t pay your rent. Therefore, you’ll need to put around 12 months of rent into a CDT as well as pay your rent month to month.

The CDT process is also quite a pain, It’s not a fast process and sometimes foreigners have troubles sending the international transfers required to satisfy the CDT deposit amount. Most local banks have monthly maximums that you can bring into the country. If you exceed this maximum, you need to go the bank for an interview about the source of your foreign income and other financial matters. While it’s not impossible to do, it does take time as banks here are notoriously slow.

4: Fiadores (Co-Signers): Lastly, with no history, you’ll likely also be asked for a local property owning co-signer (fiador) who will be on the line to pay your rent if you default. Again, as a new arrival you likely don’t have these close local connections with wealthy individuals willing to put their name on a contract for you. This makes it even harder for foreigners to get access to these local unfurnished rentals.

What most foreigners get stuck doing is renting furnished apartment at ridiculous premiums, or staying at hotels. However, both options get very expensive quickly (usually 2X to 4X local prices). And the thought of having to tie up a large sum of money into a CDT is also undesired for most foreigners.

A Better Way

This is the reason why we began offering a service which helps foreigners more easily move into the unfurnished apartment world without having to pay 12 months in advance and without any of the other banking hassles.

We only require 3 months in advance and you don’t have to work through a bank. We can usually get your moved into your apartment within a few days. So for example, if you wanted to move into the 1 bedroom apartment featured in this video you’d need to pay 3 months rent (450 x 3 = $1350) and then you’d need to pay your rent month to month. It’s a very simple straight forward process. That’s the beauty of working with Moola Financial Group is that you can always be sure you’ll be paying local prices,

so if you’re looking to get your residency visa in Colombia or get access to local deals on unfurnished rentals properties, please contact us. We offer a free 30 minute phone consultation and we’d be more than happy to look at your specific case.

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