Real Estate in Medellin – a vast evolution
Today, we are pleased to present Brad Hinkelman, leading real estate broker in Medellin, who will talk a little bit about his journey to Colombia and real estate in Medellin.
HalloCasa: “Good afternoon, Mr Hinkelman. Thank you for taking the time and to talk with HalloCasa. Why don´t you introduce yourself quickly to our audience and describe quickly your business?”
Brad Hinkelman:“Casacol SAS is a company that I founded in 2013 to help foreigners invest in Medellin real estate assets. I started as an investor myself in Medellin in 2008 and realized over the years that there was a lack of high quality investment and legal advice for foreigners looking to invest here so I decided to create that myself. Three years later and we are 15 staff and manage over 150 apartments rentals in Medellin with 2 buildings and another 150 units under construction.”
HalloCasa:“What´s your business about?
Brad Hinkelman:“Casacol’s focus is threefold 1) Development and Sales, 2) Property management and 3) Legal services.” All three focus areas form 3 legs of stool. The foreign investor is looking for high quality investment, management expertise and legal experience to help him or her navigate the local market. That’s what we do best.”
HalloCasa:“Why do investors want to invest in Medellin? Are you having only international clients or also locals?”
Brad Hinkelman:“Actually about 70% of our clients are local. Many foreigners take their time when investing internationally, for locals they tend to make decisions more quickly. Regardless the investors are looking for monthly income properties that are easy to rent and easy to manage and provide consistent returns year round.”
HalloCasa:“What do you regard as being the biggest obstacles when investing in Colombia real estate?”
Brad Hinkelman:“The international perception of Colombia is still quite negative for many investors, it is not until they actually travel here that they realize the country has changed so much. If you only rely on American news agencies you would never invest in Colombia. Now that we are on the verge of a peace deal with the FARC I think you’re going to see the next major wave of foreign investment begin here.”
HalloCasa:“Tell us a little bit about your life in Medellin”
Brad Hinkelman:“The quality of life in Medellin is world class. I used to live in New York City which is another city I would define as world class, but living in Medellin comes at a fraction of the cost on all levels. Plus the year round Springtime weather for me as a Canadian expat can’t be beat. I’m really not interested in seeing another Canadian Winter.”
Medellin as a world-class destination
HalloCasa: Can you elaborate on that a little bit? What does it make “world class” for those who have never been to Medellin or Colombia in general?”
Brad Hinkelman:“To me world class is 1) transport infrastructure, 2) quality of health care, 3) arts/culture, 4) restaurants/nightlife. Medellin either has or is investing heavily in all of these areas. The investment opportunities are also certainly some of the best in the world or else we wouldn’t have so much interest from our foreign clients.”
HalloCasa: “How did you end up to become an entrepreneur in Colombia?”
Brad Hinkelman:“I think it was out of necessity at the beginning. I was accumulating real estate assets in Medellin but they weren’t well managed and there weren’t good options for property management. Any real estate investor knows that a property manager can make or break your investment. So I decided that I was going to manage my own portfolio myself and offer my expertise to others as well.
At that point I saw the development potential for investors, hired an in house legal team and the rest is history. I have some of the finest rental buildings in Medellin under construction at the moment and am planning the next project now.”
HalloCasa:“Which have been your biggest challenges launching your own business in Medellin? Do you have any tips for others?”
Brad Hinkelman:“Dealing with Colombian banks is one of the biggest challenges any entrepreneur will have in Colombia. But you don’t have a choice, you must play by their rules or do business elsewhere. Plus you have to have a lot of patience and perseverance in dealing with Colombians in business, you are the outsider and you need to prove that you have something to offer more than a Colombian business person who may have an established reputation. A very strong handle on Spanish is also critical, don’t plan to do business here with a translator.”
The development of the real estate market in Medellin
HalloCasa:“How has the real estate market developed in recent years in Medellin?”
Brad Hinkelman:“It’s been incredible. Back in 2007 when I first visited Colombia I saw the potential. I figured it would be at least 10 years for my investment strategy to plan out but it was really more like 3-4 years. And for a foreigner I think it’s still very early for investing in Medellin, the big demand from American and European investors is still yet to come.
HalloCasa: “Which trend do you see for the real estate market in Medellin for the next years?”
Brad Hinkelman:“People ask me this all the time. The Real Estate Association of Medellin has been tracking prices for the last 15-20 years and the market has been up very consistently of price appreciation of about 5-10% per year averaging something like 7-8%. I can only expect that trend to continue and potentially exceed the average in years to come. New construction in Medellin is also becoming hard to find which means less supply coming to market in future years. Combined with a growing economy, peace with FARC, and foreign interest I think that is a recipe for strong price increases in future years.”
HalloCasa:“What do you think is missing in the Colombian real estate industry in general?”
Brad Hinkelman: “There are some technical things like MLS adoption and lack of transparency in registration of sales prices at a national level that would be very helpful to providing investors with price comparison. I think the government does a huge disservice to the industry by allowing the practice of writing title values less than commercial values. It’s basically a legalized tax loophole but it prevents transparency in the market.”
HalloCasa:“Do you have some interesting investment opportunities at hand which you would like to present?”
Brad Hinkelman:“On my website at en.casacol.co we list all of our projects and at listings.casaco.co we list high quality resale opportunities. Readers can subscribe to our mailing list to receive all the latest listings and investment opportunities there.”
HalloCasa:“If you could chose one thing from Colombia and implement it in another country, what would it be?”
Brad Hinkelman:“Many people are surprised to hear that minimum down payments in Colombia are 30% by law. The conservative nature of the mortgage market here keeps price stability in the market. Yes I could probably double my sales to small investors if the banks here acted like they do in America but we would also be asking for a market crash in the future. I’d rather have market stability and Colombia affords us that by being a little more strict with credit.”
HalloCasa:“If you could change one thing in Colombia what would be be?”
Brad Hinkelman: “Colombians are far too emotional about their real estate purchases and sales. It’s because they usually put their entire life savings into real estate (vs. stocks, bonds, etc.) so I understand that, but emotions and ego add a variable to real estate in Colombia that can be difficult for foreigners to accept. I’ve seen a lot of good deals fall through for bad reasons and they can usually be tied back to be people being unreasonable on the small details in a real estate negotiation, something that an American or European wouldn’t let break a deal.
HalloCasa: “Mr Hinkelman, we know that your time is limited. We would like to thank you for this informative and insightful interview. Would it be possible for interested readers to contact you if they have some follow-up questions? Thank you for the interview.”
Brad Hinkelman: “Yes, of course. Investors may contact me via HalloCasa oder via (+57) 3005471031 and en.casacol.co. Thank you.”
HalloCasa, the marketplace for international real estate properties, is being founded by a German in Bogotá. HalloCasa´s mission is to build trust for vendors and investors with respect to cross-border real estate transactions. In case you are interested in more interviews, you can read them here.