This Investment In Colombia Offers Up to 16% Returns
Unique Opportunity To Earn Up To 16% From Colombia's Recovery
If I had a quarter for every time someone has written in to tell me I’m out of my mind for suggesting people move to or invest in Colombia, I’d have a whole lot more money to invest in Colombia.
Even at last week’s Global Property Summit, some of the attendees raised their eyebrows when we spoke of real estate investment opportunities in this country. One guy approached me to say, “Name your favorite investments among all those being presented at the conference this week.”
“I think Medellín, Colombia, is one of the best places in the world to buy a rental apartment today,” I began…
“No, no,” he interrupted. “I want to hear about everything except Colombia. Colombia’s too scary for me.”
Colombia continues to suffer the stigma of its troubled past. As I tried to remind all those in the room with me during last week’s real estate conference, however, this isn’t all bad, for it means world-class opportunities remain on the table for us forward-thinking investors.
And they’re not all to do with real estate.
One unique investment in Colombia I like right now stems largely from the troubles that created the stigma the country continues to work to overcome.
Some Colombians who have been affected in one way or another by their country’s past troubles have sued their government. In some cases, it’s families that have been displaced or have lost family members as a result of FARC actions. In other cases, it’s Colombians who have been affected adversely by other actions or inactions of the Colombian government. For the investor, the reason for the suit doesn’t really matter.
Investing In Colombia
The point for the investor is that it can take years for these suits to process through the courts. It takes five to eight years on average before a judgment is passed down. Once a judgment has been made, it can take another 12 to 24 months for the government to pay out. Many of the families can’t or don’t want to wait this additional year or two before getting their money.
That’s where we investors come in. The firm that I know in Medellín offers the families cash today in exchange for their judgment money due from the government. It’s called factoring, and it’s common around the world.
The benefit to the family is that they get some money today. However, taking the payment early means they don’t receive the full payment. That’s the trade-off… and the opportunity for the investor. The investor pays out the family at a discount and then collects the future cash payment from the government in full. In addition, the government is required to pay interest on the amount owed from the date the payout is stipulated by the court until the date the payment is made.
If the government takes longer than 10 months to pay off a judgment, then the statutory interest rate increases, and investors make a bit more money each month. The current average payoff date is more than a year, meaning investors can expect to earn that higher level of interest for at least a few months.
The group in Medellín I’ve been working with finds and vets the cases. Then they package the judgments for investors who receive 13% annualized interest for the first 10 months and then 16% annualized interest after the penalty rate kicks in.
It’s an established industry in Colombia, with close to US$1 billion worth of these judgments being handed down each year. Only the best, surest cases are processed by my colleagues for factoring. The timing is important. This is the kind of thing where you need to be in the room with the right people at the right time and ready to take action once the due diligence has been completed and a new round of judgments is offered.
If you’d like more information and to be in the room for the next offer, you can get in touch here.
The minimum investment is US$25,000.
Lief Simon
