Investors seek to mitigate risks and take advantage of opportunities

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The balance between stability, risk and profitability is perhaps the most representative challenge for investors. The choice between so many alternatives in sight always involves the timely evaluation of these factors.

In that sense, the inclination of Colombians to bet on the real estate market in the United States has grown, specifically in cities in Florida. This is because they are occasionally attracted to better conditions, circumstances and prospects.

For Juan Sebastián Betancur, director of the financial manager of real estate projects in the United States Century Asset Management — CAM —, several reasons reinforce the interest in this type of assets, the first and fundamental being the diversification of the portfolio, pointing out that business assets , family or personal, reduce the risk of country location and the risk of currency devaluation. “What we have seen and has been strengthened after covid-19 is that people seek to invest abroad with this portfolio diversification in order to mitigate risks, basically country risk related to trust in the government and devaluation of the peso against the dollar,” he emphasizes.

In particular, there is an attraction for the dynamism that the real estate market is showing in the south of the state of Florida, specifically in Miami, by the way, due to the proximity to Colombia, both due to the distance and the growing number of Spanish speakers and the fact that several Colombian financial entities have operations in that North American region, as well as other companies in sectors related to real estate. “People see in Miami a market that is growing, that has good macro indicators, the arrival of the population and migration from Latin America and the north of the United States, and it is also a three-hour flight from Colombia,” summarizes Juan Sebastián Betancur.

For her part, Stefany Niño Díaz, director of Investor Relations at CAM, adds that, precisely in the current macroeconomic environment, the expected drop in interest rates also favors decisions: “The investor begins to look for other options, which “They can generate returns, especially for Colombians who in many cases are looking to invest abroad but do not know how to do it and have no ally there, it is not easy for them to travel constantly and they want to find a return different from the classic investment.”

Miami Realtors reported that South Florida is participating with 11% of the total home sales in the US. And foreign buyers made 18% of the total volume negotiated in that American region.

The document in question revealed that the investment of foreigners in housing in Miami was US$5.1 billion in the period from August 2022 to July 2023, and 15% of that amount corresponded to Colombian investors, 14% to Argentinians and 7% to Brazilians.

Investment funds, a reliable vehicle

Traditionally, the majority of Colombians have had the conviction that having a home is essential in the formation of wealth. Even when you have surpluses or have observed the opportunity to generate income complementary to your income, you purchase a second home and more properties if feasible.

But in more recent years, investment vehicles have been consolidating that facilitate access to real estate assets in other geographies and with different characteristics.

These are real estate investment funds, which Stefany Niño Díaz defines as structures established to achieve, through people who put in capital, generate a joint result superior to that which can be obtained in other investment alternatives. That is, these funds managed by specialized managers channel resources to develop an initiative and generate a projected return.

[Learn more benefits about this type of investment at this link]

Investors, who have the same interest (betting on the home to rent or sell) will be able to achieve the objective by transferring risks, since an administrator will lead the project and will have a builder to develop it. And, as agreed, the respective return will be transferred to the investors, proportional to the capital deposited.

When it comes to the real estate market in the south of the United States, Stefany Niño Díaz comments that the funds are the best investment because for the Colombian who has liked real estate it is an opportunity to be in the safest market in the world, where they can receive a good return. “It is the best option, but don’t do it yourself, since you are not dedicated to that business, hand over the administration to a professional, with knowledge, who is in charge of managing the investment and achieving the result in exchange for a commission,” he summarizes.

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An opportunity in sight

The manager Century Asset Management, established in 2021 by the American developer Century Homebuilders and the construction company Conconcreto, in Colombia, is currently developing several projects and mobilizing resources through real estate funds. Juan Sebastián Betancur, its director, emphasized that due to the experience of the builder and the manager, the geographical focus is southern Florida.

One of the projects underway is scheduled to close on February 16. This is the Century Real State Fund, a fund focused on housing development for rental with future sale. Stefany Niño explains that the investment horizon is eight years and the target profitability is between 13 and 15% effective annually. “Investors can have a total return of between 2.6 to 2.7 times, meaning that if you invest $100,000 in the end you may be receiving $260,000 to $270,000, so the complete profit will be $160,000 to $170,000.”

Of the 45 million dollars required to close the project, so far CAM has obtained 44.2 million, from just over 50 Latin American and American investors. However, the capacity it can reach is 55 million dollars. Niño noted that recruitment began in 2021 and that those who enter at this time will have an advantage: the construction phase is almost completed and the income collection phase will soon begin, so the risk assumed is not comparable to that of those who entered. at the beginning of marketing.

He pointed out that entry is easy for both natural and legal persons, always considering the options that best suit them for tax purposes as recommended by their respective accounting advisor. The minimum investment is 100,000 dollars, about 400 million pesos.

Among the advantages of investing in this fund, Juan Sebastián Betancur highlights, is the capacity of the partners who support the fund, since for example they generate efficiency in the construction process, which is transmitted directly to investors. “Other funds subcontract a builder, a designer; and the fund, in addition to collecting the commission, must pay those other outsourced costs. This vertically integrated structure allows for efficiency in construction and design,” he says. And another advantage is that other funds do not have the structure to receive capital in Colombia, which complicates the process and implies that the investor needs an advisor in the United States. That is, if you have the money in Colombia, they transfer it through the Bank of the Republic and if you have it in the United States, of course they receive it there directly.

To learn more about this interesting alternative to invest your money, you can contact Century Asset Management by clicking here.


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