Case Study – Buying an apartment for rent on a possible housing bubble
I (Pedro) have been married with the wife Cristina (Cris ;), for 3 years. Living in Bogota, Colombia since. I work in retail (ugh!)
Income:
Pete: 118,800,000 COP Yr + intereses de censantias 650,000 COP
2,700,000 x 2 (June – December) direct payment to bank account
5,400,000 a yr “Cesantias” unemployment severance pay: Can be used to buy new or used housing or education.
9,000,000 COP MONTHLY *GROSS INCOME**
*2,400,000 COP Saved automatically as a programmed savings called (Pension Voluntaria): Condition to be used on housing (buy new or used) or education).
Tax cuts: Salud, Pension, Fondo Solidario, Retencion en la Fuente: 775,000
Take home income: 5,825,000
First half of month: 3,084,000
Second Half of month: 2,741,000
Monthly Expenses:
Property tax: we rent (moving into our own new payed for apartment in September 2015)
Rent: 1,122,000
Building Administration: 202,000
Electricity
Gas
Phone/Internet:
CellPhone: Work pays for both our cellphones
Groceries
Credit Card: We don’t enslave our finances
Restaurants:
Transport (Taxi, Bus, Bike parking):
Assets:
Apartment: bought for: 292,000,000 COP Estimated at: 315-330MM COP. **A large number of people are talking about a housing bubble…
Oversees Investment: 20,000$ possible return end of 2016 for about 35,000
Checking Accouny in United States: 15,000 (zero interest gain).
**PROJECT:
1. Retire by 40!
2. Thinking of buying a 90Mts apartment for 270,000,000COP which is composed of in 3 small studiosLofts that could rent at 1,800,000 (all three together.. or closer to 2,000,000 through airBnB). *This could imply a 7-8% Year return on investment (not sure the apartment can have an increase in value **Its over 15yrs old.
3. Learn about bonds and stock investment and Fx trade.
Cris might be starting a job soon (1,500,000 – 2,000,000COP). This could change our home arrangements in that we might have to hire someone to help with hose duties and a place to keep our dog during the day (we might find a workaround as I have “flexible” working hours).
It could also imply a large rate of savings (hopefully Cris will be willing to put away around 1,000,000 a month)