• Written communication from Banco de la Republica’s international exchange department, stating that registration has been made of a foreign direct investment in the name of the alien applying for the Visa, for a minimum of USD 200,000.
• Certificate of free title, issued by the Public Records Office, and issued not more than one month before the date of the visa application. This should show that the applicant is the owner of a property whose value corresponds to that of the foreign investment registered in his name, for an amount not less than that indicated in the preceding subsection.

B) An investment in a Colombian corporation / investment vehicle for at least USD 100,000 What is required?

• Again, written communication from Banco de la Republica’s international exchange department, stating that there has been a registration of the foreign direct investment in the name of the alien applying for the Visa, for an amount not less than USD 100,000.

According to Colombia’s Decree 2080, issued in 2000, the following are considered foreign direct investments:

• Acquisition of shares or participations in Colombian companies as well as bonds mandatory convertible to shares.
• Acquisition of rights or participations in fiduciary businesses.
• Contributions of acts or contracts that do not represent the participation in a Colombian corporation.
• Capital contributions to Colombian branches.
• Investments in private capital funds.

Temporary Special Visa Due to Investment This type of visa is very similar to one described above, except for the financial requirements, which are lower. This visa is granted to foreigners that make:

• An investment in Colombian real estate for a minimum of USD 100,000.
• An investment in a Colombian corporation for at least 100 Colombian “Minimum Wages*,” which adds up to about USD 33,000. (* The current Colombian minimum wage is about USD 330 per month)

This visa will allow you to stay in Colombia – as well as to enter and exit as many times as you wish – for a period that can go from 1 to 2 years (depending on the discretionary opinion of the Visa Office). After such period, the visa must be renewed. This is not a resident visa, meaning, you will not be eligible for citizenship after having it for 5 years. Rather, foreigners who hold a temporary visa must apply for a “qualified resident visa” after 5 years in order to obtain resident category. Once you are approved for that “qualified visa”, it takes another 5 years before citizenship can be granted (meaning the minimum time you will need to spend on the ground to qualify for citizenship in this case is 10 years). “Qualified resident visas” are granted to foreigners that:

• Have held a temporary visa for at least 5 continuous and uninterrupted years.
• Have held a spouse visa for at least 3 continuous and uninterrupted years.
• Are parents of Colombian nationals.

All other conditions for Temporary Special Visa Due to Investment are the same as described in the Investment Visa above. Information supplied by Juan Dario Gutierrez of Gutiérrez Márquez Asesores S.A, who are located in Medellín and is current for 2012/2013.

The agent should ensure that the following documents are in order:
a) The property’s ownership history
b) The property’s tax history

a) The property’s ownership history
The property’s ownership history and a no-lien certificate (Certificado de tradición y libertad), which should date back no more than one month, includes the property’s real estate registration number, owner’s name, and the property’s record summary.

Requests for the ownership history and no-lien certificate can be made at the local Government’s records office (Oficina de Registro de Instrumentos Públicos) in the area where the property is located. The certificate costs about 10.000 pesos ($5 US dollars).

b) The property’s tax history
Requests for an account statement of the property can be made from the treasury office (Oficina de Catastro) of the city or district where the property is located.

What is a real estate pre-purchase agreement?
Once you have made an offer, the offer has been accepted and you are content that the property’s documentation is in order, a preliminary contract is written by your agent.

This contract forms the basis upon which the final contract is written.  For example, if you wish to negotiate the inclusion of furniture or domestic appliances into the sales price, this should be included into the pre-purchase agreement.

The pre-purchase agreement also details a timeframe within which the final contract must be signed and full payment given to the seller.  The pre-purchase agreement should also specify a penalty clause in the case that either the buyer or seller breaks the agreement.

Why do I need to pay a deposit?
Sometimes the deposit is the same amount as the penalty clause specified in the pre-purchase agreement.  Or, it might just be 2% of the property’s agreed sales price.

Clearly, if the penalty clause or deposit received is too low, there is a greater chance that either the buyer or the seller will back out of the deal before signing the final sales contract because the consequences will not be very significant.

You may face a small logistical issue when needing to pay the deposit due to restrictions on the amount of money you can withdraw from a cash point in any 24 hour period.  If all else fails, it’s simply a case of visiting the cash point over the course of 2 or 3 days.

When and how do I sign the final sales contract?
Once the pre-purchase agreement is signed and you are in a position to pay for the property (i.e. you have opened a bank account in Colombia and transferred the necessary sum of money) you can go to the notary and sign the final sales contract.

Generally, the seller, the buyer and the agent will all attend the notary together, though it is not absolutely essential.

The only documentation you need to take is your passport.

You will need to be ready to pay the seller, probably using a cheque obtained from your bank in Colombia (unless some other payment method has been agreed).  Both the seller and buyer will pay the necessary taxes and sign and fingerprint various documents.

Approximately two weeks later you will need to go back to the notary to collect the updated deeds on the property.

The most important thing to keep in mind is that, if you have done your homework and looked at enough properties, you should be clear about what you want and what you expect to get for your money.  So, in many ways, it’s irrelevant what people are asking for.

Given that many people in Colombia will need to sell their property or finalise their mortgage before they can buy, you should try offering a little less if you are a cash buyer, as this removes a lot of waiting time for everyone involved.

2. Should I register less than the full value of the property? 
It’s common practice in Colombia to register a much lower price than the real value of a property when finalising the deeds. This is so that the seller incurs fewer taxes upon sale of the property.  If this makes you a little nervous, insist on registering the real value, but be prepared to offer a little more, maybe $1,000 US dollars.

1. How can I open a bank account in Colombia?

There are several ways of opening a bank account in Colombia. If you entered Colombia on a Visa then you can obtain a ‘Cedula de Extranjeria’ from local DAS office with your passport, but this will take few weeks. With a Cedula de Extranjeria, then you can get a bank account.

What we offer – Best Option

Another easier way to open a bank account is with your passport. We have the right contacts and lawyers who can expedite the process of opening an account and begin transferring the money into Colombia within days. With our service we can guarantee you the best possible exchange rate.

If you have your own bank account you can transfer money before or when you make an offer.

If you are unable to open your own bank account (with our service you are guaranteed to have an account), you can transfer the money directly to the seller’s account. In this instance, it is common practice in Colombia for the seller to reimburse you, if after the exchange rate, the funds amount to more than the agreed sales price.

2. How can I transfer money to a bank account in Colombia?

Transferring or ‘wiring’ money to Colombia is surprisingly simple, but don’t assume the bank in Colombia or your own bank outside Colombia know what they are doing.

You will need to provide your foreign bank with:

1. Details of an ‘Intermediary’ bank that will facilitate the transaction between the bank in Colombia and your foreign bank
2. Details of the bank in Colombia where the money will be received
3. Details of an individual account at the bank in Colombia

The potential problem is that the bank in Colombia doesn’t know about the need for an ‘intermediary’ bank and insists that this information is not necessary. However, both the foreign bank and the bank in Colombia should be able to find out the ‘intermediary’ bank details.

Example of the information you will need to give to your foreign bank:

Intermediary bank
Name / Country / Swift / ABA

Destination Bank
Name / City, Country / Bank’s account no. / Swift

Client
Name / Passport number / Account no. / Bank / Branch / City / Country

We can guide you through the entire process so your transfer goes smoothly.

Should I transfer US dollars or Colombian Pesos?

You have to denominate all currency in US dollars. For example, if you have British pounds you will have to change them to US dollars and then, when the money arrives in Colombia, it will be changed to Colombian pesos. In other words, don’t change your money to pesos, as it would simply be changed back to US dollars while going through the US ‘intermediary’ bank.

How much does it cost to transfer money to Colombia?

Your foreign bank will almost certainly charge you a small fee to transfer money to Colombia. This fee will be in the region of $30 to $60 US dollars irrespective of the amount you are transferring.

You will also be charged by the bank in Colombia to receive the money. This depends on what exchange rate that will be provided. With our bank contacts we can get the best possible exchange rate in-turn saving you a lot of money.

How long does it take to transfer money to Colombia?

Most foreign banks will guarantee that your money arrives within 5 business working days.

How can LUHO help with the process?

With our extensive experience within the Colombia and the banking system, we have great contacts and attorneys, who can make the entire process of opening and transferring money into Colombia very easy. We will register the money with the right channels; fill out the right forms, and within the laws of Colombia. So when you sell the property you will be able to take the money out without any problems.

With our service you can be confident that your buying process will be trouble-free and smooth.

1. Why should I buy a property in Medellin?

Recent poll showed that “99% foreign visitors to Medellin ‘highly satisfied”.

Medellin is emerging as an appealing overseas retirement haven, with its pleasant climate, scenery; cultural and recreational diversions, friendly people and highly educated workforce are drawing individuals from all over the world to the Eternal Spring City. Tourism has been up every year and expected to increase year over year.

With a continuous decline of US dollar value having money outside the US dollar in another currency provides a great hedge against market instability.

All three major rating agencies have raised Colombia’s Credit Rating to Investment-Grade and Billionaire investor Sam Zell has selected Colombia for real-estate investments as the “next best” in Latin American market as economic growth prospects look very bright.

House prices in Colombia rose strongly in last few years and expected to continue rising due to the economic growth prospects.

Medellin offers a low cost of living and the real-estate prices are still affordable. Therefore it is a great time to buy a property here, rather than wait for 5-10 more years.

2. What costs do I incur when buying real estate in Colombia?

As a real estate buyer, you will need to pay the following:

• Notary costs (Gastos de notaria): Notaries charge between 0.30% and 0.35%. The price difference depends on the notary in question. This cost is split 50/50 between the buyer and the seller. So, as a buyer, you will pay about 0.15%.
• Government taxes (Impuestos a renta): Government real estate taxes are 1.05%. The cost is split 50/50 between the buyer and seller. So, as a buyer, you will pay 0.525%.
• Registration taxes (Impuestos a registrar): In order to have the sale registered in the government offices, you will pay 0.5%. The buyer is responsible for paying all of this tax.

So, for example, if you buy real estate for 200,000,000 pesos, your total costs will be:

3. What costs do I incur when selling real estate in Colombia?

As a seller you will be liable to pay half of the notary costs and government taxes as described above.

You will also need to pay the following:

• Agent commission: As a real estate seller you will pay the agent 3% of the value at which the real estate is sold. If you are selling land instead of property, or property which includes a significant plot of land, i.e. a farm, the fee is likely to be 4%.
• Sales taxes (Retencion en la fuente): As a real estate seller, you have to pay an additional 1% sales tax.

So, for example, if you sell real estate for 200,000,000 pesos, your total costs will be:

4. What costs do I incur as an owner of real estate in Colombia?

As an owner of real estate, you are liable to pay the following:

• Government taxes (Predial): Taxes are based on the value of your real estate. Compared to USA, the taxes are very low here. For example, real estate valued at 200,000,000 pesos will cost approximately 100,000 pesos per month in taxes. Property taxes are paid tri-monthly.
• Administration: If real estate that is part of a complex, for example, an apartment block or gated community, may incur an administration fee. This fee covers the cost of security, maintenance and usually basic home insurance. This fee varies on the building from 0.1 to 0.2 percent, so it’s worth keeping track of when comparing properties for sale. For example, an apartment valued at 200,000,000 pesos might cost 200,000 pesos per month in administration.
• Utility bills: Utility bills vary according to the ‘strata’ rating given to the property. Strata ratings range from 1 (low end) to 6 (high
  end). For example, most real estate in Poblado will be strata 6. As a rough estimate, energy bills (water, gas, electricity) and
  communication bills (telephone, cable and broadband) will cost about 200,000 pesos per month.

So, for example, the total costs for owning real estate in Colombia, valued at 200,000,000 pesos, are approximately 500,000 pesos per month (approximately $250 US dollars).

5. Can I get a mortgage in the US to buy real estate in Colombia?

As things stand, it is not possible to get a mortgage in the US for buying real estate in Colombia, unless you are a Colombian citizen.

If you are considering getting a mortgage inside Colombia, you should note that the rates are considerably higher than those in the US or Europe and you would need to put down a very sizeable deposit (minimum 30%).

6. How do I know which real estate agent to work with?

You should demand the following from your agent:

• Your real estate agent should understand how much time you have and therefore work at a pace that is appropriate for you. There is no point standing around drinking coffee, talking about the wonderful climate in Medellin, if the buyer has 2 weeks to close the deal
• Your real estate agent should understand exactly what you are looking for. They should be proactive and not rigidly stick to the short number of properties for sale on his or her books
• Your real estate agent should understand that a buyer is more inclined to take the plunge if they are not pressured. An agent that insists after viewing 3 properties for sale that there is no better deal in town than the one on the table is definitely not worth dealing with
• Of course, if you do not speak Spanish, it’s important that the agent speaks English or works with somebody who does
• Most importantly your agent should know the rules and regulations, and have a very good understanding of the market conditions

When you work with LUHO, you can be assured that our agents provide you with the best service and knowhow in the industry, and you can be worry-free!

7. Do I need a lawyer who is familiar with real estate in Colombia?

While it’s common practice in the US to use a solicitor when buying real estate, in Colombia it depends on the complexity of the sales terms. For a straightforward purchase it’s easy enough to check the papers and sales contracts in a public notary and remove the cost of hiring a private lawyer or solicitor.

As a foreign investor we recommend that you work with a lawyer, who can make sure all laws and regulations are complied with, so when you sell property you can take your investment back with no issues.

8. How do I know if real estate in Colombia is good or bad value?

It’s good practice to keep track of each property’s value per squared metre so that when you find two properties of the same size and specification you can decipher which is better value.

That said, sometimes real estate varies significantly in terms of its age, the ‘prestige’ value of its street, the architect’s use of space or the quality of materials used for flooring, doors and walls. For an apartment, the price will also increase the closer it is to the top floor and the more spectacular its views from windows or balconies.

If you are planning on entering the rental market, you’ll find that some types of property and neighborhoods are better than others, though this won’t necessarily be represented in the value of the property.

We will guide you through the entire process, if you are buying a property as an investment and would like rental income, our sister company can help you with this, TheApartmentMedellin.com. We are the premier provider of luxury rentals in Medellin market.