The ABC to invest in real estate in Mexico • Money • Forbes Mexico

From the creators of the series "The truth behind the myths about investing", now comes the series "The ABC to invest and not just remain Chinese"... And today we will start explaining with sticks and apples how to invest in real estate. But do not think that we are talking about just renting a flat and living on that rent, noo! We are talking about becoming the owner of several real estate and earning very interesting returns with a level of risk that you will surely be willing to endure because, in addition, you will not have to wait many years to dispose of your capital.

If you are interested in increasing your wealth because you are convinced that this is not only a privilege of the rich, but a decision that you also have the right to make and exercise for your personal well-being, you are in the right place. I invite you to read until the end.

By the way, to see the articles in the series “The truth behind the myths about investing”, click on the one you want to read:

From the origin of investment in real estate

At Forbes Mexico we once again had the great pleasure of chatting with Gerardo Aparicio, director of the Escuela Bolsa Mexicana, to learn all the details of what an investment in real estate implies.

On a historical level, it all started in the United States in the post-war years, around 1960, the country needed to revive its economy and the possibility was perceived that people would begin to acquire real estate through the stock market and could generate returns on the rents charged by buildings to their tenants.

The administrator of the property distributed the accumulated income to each of the holders. The business model was very simple, but it required formality so that citizens would have greater confidence. The most reliable mechanism was through the implementation of a trust.

In this way, Real Estate Investment Trusts (REITs) were created in which large investors could participate, even those less experienced in this matter. This mechanism was adopted in many countries and arrived in Mexico in 2011 in the form of FIBRAS (infrastructure and real estate trusts).

A FIBRA is a stock market instrument that replicates the rental real estate business, allowing investors to participate in the real estate market. This investment instrument focuses on different segments of the real estate sector such as offices, industrial, hotels, commercial and storage.

“Since 2011 we have seen in several cities the development of large skyscrapers, shopping malls and impressive warehouses. Today there are FIBRAS that rent telecommunication towers, school campuses and what gives you support as an investor is that the administrator knows what he is doing. To date, FIBRAS have raised close to 200 billion pesos in the Mexican stock market and have become the star instrument because they are very easy to access,” says Gerardo Aparicio.

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How do I invest in a FIBRA?

To be able to buy any instrument in the stock market, you must first make a stopover with a financial intermediary. In Mexico we have 35 brokerage firms, 49 banks and more than 600 investment funds, some of which specialize in FIBRAS.

“Through the network you can access several: Citibanamex, BBVA, Finamex, GBM, Punto Casa de Bolsa, among many others. You can find all of them on the internet, you just have to go in and look for the 'open contract' option. You will need to identify the minimum amount necessary to open that contract, today it can be from $1,000 pesos. They will ask you for identification, a key account number of a debit card, proof of address and to fill out a form (where you will indicate your data and beneficiaries). Today's technology allows you to receive a response in a matter of minutes, you can deposit to your account and start investing”, says the director of the Escuela Bolsa Mexicana.

IMPORTANT POINT: As a new investor you can instruct the platform to buy and, automatically, the amount will be taken from your debit account. That money you invest will go to your own investment account, not to an account in the name of your financial intermediary. Your money will always be yours.

It may also happen that your financial intermediary provides you with a more traditional service and you have to call him by phone to indicate the FIBRA and the amount you want to invest.

What options can you choose from?

There is Fibra Uno, which is one of the most important in the market, with more than 650 real estate properties in the country and whose price is approximately $24.34 pesos per title.

Let's say that if you deposit $24.34 pesos per title, you would own 650 properties in the country proportionally, that is, you would only be buying a small part, but isn't it cool to discover that you don't need millions to become a real estate investor? ? This is a good start, in the end you will decide how far you want to go, how much capital you want to invest.

There is also Fibra Danhos, which has about 15 real estate properties and whose price per title is around $23.71 pesos.

Or how about investing in the fiber of the Federal Electricity Commission that is worth approximately $29.02 pesos per title?

You can choose between 16 fibers that exist on the market today.

A case study

Suppose you have $10,000 pesos saved and you are going to encourage yourself to invest in a FIBRA.

If you decided to invest in Fibra Uno, whose price per share is approximately $24.34 pesos, you could buy 410 shares (which would cost you $9,979.40 pesos and you would have a balance of $20.6 pesos). You decide if you complete to buy one more title or keep the remainder.

“Those titles that you bought tomorrow will cost $24 pesos —so you would have a capital gain— but the day after tomorrow they could cost $25 pesos and thus you will have a capital gain. It is advisable to think in the medium and long term (this is more than a year)”, explains Gerardo Aparicio.

His recommendation is to have a specific evaluation period (and avoid doing it every day, as this can be addictive) and, every time your account statement arrives, do an analysis of how the FIBRA has behaved, but be very calm. because your investment goals are not short-term. The more you postpone the withdrawal of your resources from the stock market, the more time you will have to be able to withstand the losses that an equity instrument can offer you.

Many investors who have experience in this type of investment see it as a good business that generates income periodically and are aware that their investments will be profitable in 5, 10 or 15 years, so they could withstand future crises with the certainty that certain handicaps will recover over time and with more force.

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And what level of returns can a FIBRA give me?

The director of the Escuela Bolsa Mexicana indicates that Fibra Uno in the first quarter of 2021 compared to the first quarter of 2020 earned 8.7%, which could seem very good, although said FIBRA is used to offering returns above 20% or 25 Annual %, something that definitely did not happen given the context of the COVID-19 pandemic.

Likewise, he warns that Fibra Mcquarie, which specializes in industrial real estate, had a contraction of 15.5% due to the fact that a good part of its activities were not considered essential in the initial months of the pandemic.

Does that mean that it is a bad idea to invest in FIBERS?

“On the contrary, it is a great opportunity because having a Fibra Mcquarie —which has dropped 15.5% in one year and is now worth $23.79 pesos per title— what can represent the future when the economy is fully active is to recover what lost from last year plus the additional points that this reactivation means”, highlights Gerardo Aparicio.

In addition, he considers that those who were already in the FIBRA before suffered this drop of 15%, but those who are about to arrive will buy at cheap prices.

“Now, if, as we said, you bought 410 titles (for $9,979.40 pesos) at a rate of 10% per year, we would have that after three years those titles could cost $30 pesos. At that time they would be generating $2,300 pesos only from capital gains. When comparing that same investment in CETES, we see that a FIBRA can triple the yield”, details the director of the Escuela Bolsa Mexicana.

And can I make capital withdrawals?

The FIBRAS charge the tenant their monthly rent and are obliged to distribute this rent at least once a year, although there are FIBRAS, such as FIBRA EDUCA, that distribute rent two or three times a year.

Let's imagine that for some reason of force majeure you need to have your money, let's say $5,000 pesos. All you have to do is place a sell order for what is equivalent to $5,000 pesos at that time; You give the order to the system, it sells those instruments in the market and the proceeds are deposited to your debit card.

If during that sale you made a capital gain and receive $5,500 pesos as a deposit, you should know that of those additional $500 pesos you will only receive $450, since $50 (10%) will be withheld as income tax (ISR). ).

The FIBRAS have transformed our country from various points of view, architectural, technological and have also expanded the possibility of investing in real estate on a large scale with amounts that do not have to be as large. If you ever wondered what it would feel like to invest in hotels, shopping malls and more… now you know that you can do it if you decide to save a little and put that money to work. You dare? Because I've definitely put it on my list of things to do this year.

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