Private lending for RE investment in Colombia?

Question

I know the website is almost exclusively focused on US markets, but I'm currently living in Colombia and I am amazed by what I'm seeing here. There is A LOT of potential. The city where I'm staying (Medellin) has a vibe that reminds me of what Austin and San Francisco had 20+ years ago. I would regret not capitalizing on this ...

Which is why I'd like to look into private lending. I have two budgets in mind (big and small). I have enough assets (albeit illiquid) to fully collateralize a loan for my smaller budget.

I'm currently putting together a team of lawyers, folks who work for the government, and architects, I just need the financing to move quickly on some properties.

I appreciate any and all insight, suggestions, or referrals you could make. Thank you!

Mike Lambert · Answer

If you want to get a loan in the US, you'll have to give collateral in the US. I'm not sure about what you mean by illiquid collateral. Lenders don't like that for obvious reasons but, depending on the definitions, real estate can be considered as illiquid but is acceptable.

If lenders lend to you based on US collateral, they mightn't care too much about your Colombian project or whatever else you might do with the money, like banks don't care that much with a HELOC. The issue though is that private lending is generally short-term.

What you'd be looking for comes down to a loan purely based on collateral. Not sure if private lenders do that. If I was one, I'd ask you to pay me a sky-high interest rate given that I can lend on a US project at a high interest rate and on a short-term basis so I'd have no other incentive to lend to you.

Chris Seveney · Answer

Interest only with principal payback does exist, but I doubt it does in another country.

Timothy Vance · Answer

Yeah, the lending situation in Colombia is complicated. Traditional loans are unavailable to foreigners unless they have long-term permanent residency in country. Even with built in depreciation of the peso, the loans are way more expensive to service than US-based lending.

Ideally, I would be looking for a 2-3 year runway before I had to pay back principle. Does that kind of timeline exist in the private lending space?

Timothy Vance · Answer

I have illiquid personal assets in the US that I could use as collateral for US-based lenders. I think for a smaller project (under $250k) here in Colombia, I could collateralize the whole thing using just my own assets.

Mike Lambert · Answer

The collateral and the lender have to be from the same country. So, to be able to help you better, we'd need to know in which country your collateral is.

Chris Seveney · Answer

If you have assets in US, you can collateralize those, assets elsewhere will be challenging. What is the financing like from lenders in Columbia or other countries. I researched buying property in caribbean and most go 50-60% LTV max and 10 year loans at rates about 2x the US rate.

Private lending for RE investment in Colombia?

Private lending for RE investment in Colombia?

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