Medellín’s mid‑term rental market is delivering double‑digit net yields for investors who purchase well‑located apartments and partner with property‑management firms that handle leasing and upkeep.
Example transaction and performance
- Property: 106 m² apartment on the 13th floor in El Poblado, Medellín.
- Purchase price: US $150,000 (initial asking price, before negotiation).
- Final sale price: US $242,000 (including furniture), effectively US $142,000 for a turnkey, furnished unit.
- Occupancy: 92 % annual occupancy, driven by monthly rentals of at least 30 days. The only vacancy occurred in June when the owner used the unit personally.
- Revenue: Approximately US $19,000 gross rental income for the year.
Rental market dynamics
- Target tenants: North‑American and European digital nomads who earn in USD and seek medium‑term housing (30 days +).
- Demand drivers:
- Large influx of remote workers from the United States and Canada.
- The Colombian Digital Nomad Visa, which permits stays of up to one year (extendable to two), replacing the previous six‑month limit.
- Rental model: Most buildings prohibit short‑term Airbnb rentals; investors therefore focus on monthly contracts, which command higher occupancy rates (≈90 % for monthly rentals, ≈84 % for daily rentals).
Cost structure and net yield
| Item | Annual cost (USD) |
|---|---|
| Property‑management (mid‑term) | ≈ $1,200 (≈ 10 % of gross) |
| Property tax | ≈ $700 |
| HOA / community fees | ≈ $1,400 (≈ $120 / month) |
| Utilities & internet | ≈ $1,500 |
| Maintenance (inflation‑adjusted) | ≈ $700 |
| Total expenses | ≈ $5,500 |
- Net operating income: ≈ $13,500 per year.
- Net rental yield: 8.9 % (net of all expenses, before income tax).
Currency considerations
- The Colombian peso depreciated from roughly 4,000 COP/USD to about 4,800 COP/USD during the investment period, a 20 % decline.
- Sellers who price in USD tend to raise asking prices in line with the peso’s weakness, while those who price in local currency may offer more favorable terms to foreign buyers.
- Rental contracts are typically quoted in USD, providing a natural hedge for investors against further peso depreciation.
Macro‑economic and political risks
- Political climate: A recent shift to a socialist government has raised concerns about higher taxes and fiscal pressure.
- Currency outlook: Persistent current‑account deficits suggest continued peso weakness in the medium term.
- Real‑estate pricing: Prime neighborhoods such as El Poblado and Laureles tend to track USD values closely, preserving price stability for foreign investors. Peripheral areas (e.g., Envigado) are less correlated, offering potential discounts but also less USD‑denominated rental demand.
Investment criteria
- Location: Focus on high‑demand districts (El Poblado, Laureles) with strong connectivity to international flights and amenities.
- Occupancy potential: Verify that the building permits monthly rentals and that the owner does not frequently block dates for personal use.
- Seller motivation: Identify owners who price in local currency and are willing to negotiate in USD, especially those seeking quick sales.
- Management partner: Choose a firm with a proven track record of maintaining ≥90 % occupancy and handling all operational aspects (leasing, maintenance, utilities).
Outlook
The combination of a growing digital‑nomad population, limited short‑term rental supply, and competitive acquisition prices positions Medellín as a high‑yield, USD‑hedged real‑estate market. Investors comfortable with currency volatility and political uncertainty can achieve yields near 9 % net, substantially higher than many mature markets. Ongoing expansion of flight routes and continued promotion of the Digital Nomad Visa are likely to sustain demand for mid‑term rentals in the city’s premium neighborhoods.
