In this article:
Colombia's real estate market has attracted significant international attention — and for good reason. Medellín and Envigado offer a combination of price appreciation, rental demand and quality of life that is increasingly difficult to find in Latin America at these entry points.
1. What is real estate co-investment?
Co-investment is a structure where two or more investors pool capital to participate in a property project — sharing costs, profits and risks in proportion to their stake. It is project-specific: you invest in a defined asset, with a defined timeline and a defined exit.
2. Legal structures available in Colombia
- Cuentas en participación: The simplest structure. One partner manages the project visibly; others participate as silent partners. No separate legal entity required. Regulated under Articles 507–514 of the Colombian Commercial Code.
- SAS (Sociedad por Acciones Simplificada): Creates a separate legal entity. More complex but provides stronger legal separation.
- Co-ownership: All investors appear directly on the title deed. Simple but creates coordination challenges.
3. How a co-investment deal works step by step
- Project presentation: Developer presents location, plan, costs, sales targets and expected ROI.
- Due diligence: Verify track record, land title, license status and financial model independently.
- Investment agreement: Contract specifying stake, capital schedule, reporting obligations and profit distribution.
- Capital calls: Investment deployed in tranches aligned with construction milestones.
- Reporting: Periodic financial and progress reports from the developer.
- Exit and distribution: Proceeds distributed when units are sold.
4. What returns to expect
18%–25% ROI
Development projects · 18–36 month cycle
6%–10% annual
Rental income · USD terms · well-located units
15%–22% ROI
Renovation flip · 6–18 month cycle
5. Risks and how to manage them
- Developer risk: Most significant. Verify track record and visit completed projects.
- Construction cost overruns: Review budget in detail and ensure contingency reserve exists.
- Sales market risk: Review comparable sales data in the specific neighborhood.
- Legal and title risk: Always verify the certificado de libertad y tradición independently.
- Currency risk: For USD investors, COP depreciation reduces USD returns.
6. Specific considerations for foreign investors
- Register incoming capital through the Colombian banking system for repatriation rights.
- Tax treatment: Foreign investors are subject to Colombian withholding tax on Colombian-source income. Consult a Colombian tax advisor.
- Power of attorney: If you cannot be physically present, a notarized power of attorney allows a local representative to act on your behalf.
7. The right questions to ask before you invest
- ✅ What is the legal structure and how is my stake documented?
- ✅ What is the total budget and contingency reserve?
- ✅ What is the status of the land title?
- ✅ What is the capital call schedule?
- ✅ How and when will I receive financial reports?
- ✅ What is the developer's stake in the project?
- ✅ Can I speak with investors from previous projects?
Interested in co-investing in Envigado?
At Inversiones OTA we work with a small group of co-investors on each project. If you are evaluating Colombian real estate, we are happy to share the details.