What is capitalization in real estate

capitalization

Would you like your money to double over the years? Do you know why in some financial schemes your capital increases? Do you know how to grow your capital without having a savings account?

Currently it is unthinkable to live without having a bank account.

However, not everyone knows the advantages that this involves, missing incredible opportunities for your capital to increase. Why?

Until a few decades ago, people used to keep their money under the mattress. It seems incredible, right?

If we take into account how difficult it is to earn money and save it, as well as the absence of a financial culture, independent workers and entrepreneurs prefer to safeguard their money themselves.

Today all that is in the past and the myths about the mishandling of money by banks have been overcome.

In fact, today there are advantages to saving the capital in a financial institution and not only that, there are also other ways to capitalize on a life’s savings. This is what interests us.

To begin with, what is compounding? According to the site economiasimple.net, capitalization “refers to the evolution of a capital over a period of time” and there are two types:

  1. Simple compounding where interest depends on the initial capital
  2. Compound capitalization where the interests obtained are added each year to the capital.

If you have an SME you need to capitalize to grow your company. Now how do you do it?

The site specialized in business issues, Entrepreneur , lists different ways of capitalizing, among which “effective savings” stands out, the main characteristic of which is to save an amount of money in a savings account.

Entrepreneur’s article “Know 4 ways to capitalize outside the bank” states that a savings account generates between 12% and 18% annual interest.

Perhaps the rate is low compared to other forms of capitalization, however, it is money that is safe by not having important variables in the stock market.

A very important characteristic of savings accounts is that the protection of the money is established under a short or medium term period in which the capital cannot be withdrawn.

This can cause a bigger problem since by not having immediate liquidity, people can ask for a loan from the bank, which in the long run is counterproductive.

According to the National Survey on Productivity and Competitiveness of Micro, Small and Medium Enterprises (Enaproce), 66.8% of the surveyed entrepreneurs would not accept a bank loan because “long-term interests would put the structure of the company at risk” .

Following Entrepeneur’s recommendations, there are other ways to capitalize such as Money Market Funds, Short-Term Bond Funds and the Forex Market.

These modalities are under a more elaborate scheme that requires a greater knowledge of finance and the stock market.

For independent entrepreneurs these last forms of capitalizing do not seem to be ideal since they put their capital at stake.

So if savings accounts don’t seem like a good option to compound either because of the small interest rate, what is the ideal way to invest and add money effectively?

Invest in a property to capitalize

The answer is very simple: Invest in real estate! If we stop to think about it, the answer is obvious.

A house or apartment does not devalue over the years, if it is maintained and kept in optimal condition, over time its value will increase as well as its capital gain.

The rise in the prices of houses already built occurs because new houses are not being built at the pace that demand requires it. This occurs mainly in cities such as Querétaro, Puebla and CDMX.

According to Leonardo González, Real Estate analyst at Propiedades.com, an annual increase in house prices of between 5% and 7% is forecast.

This percentage may be higher if the home is located in areas with higher capital gains in the CDMX, for example in neighborhoods such as Condesa, Roma or Bosques de las Lomas.

Increasing prices can be used to your advantage and become a great way to capitalize.

Even if there is inflation, such as the one that happened in 2016 where some homes in the country tripled in value, the owner of the property does not suffer losses, on the contrary, it has a better percentage of capitalization.

“Much of the housing that is rising is in the middle segment, because indeed the loans right now are much more attractive and the demand for this type of products has increased,” explained Ricardo Marentes, director of the MarHe housing consultancy.

Following the scheme previously presented, if a property is obtained that has a cost of $ 800 thousand pesos and the annual increase in its value is 7%, in the following year it will be worth 857 thousand pesos in the market.

In 10 years it will be worth 70% more, that is, one million 360 thousand pesos.

That is why there is no more efficient and secure way to capitalize than by investing in a property, which will continue to increase in value over the years and will even generate monthly income if it is rented.

In this way, if you want to capitalize, it is good to buy a property as soon as possible, since time passes and no type of profit is generated.

This is why for investors the most important factor on their mind is time. If you don’t act today, maybe tomorrow will be too late and you will have lost thousands of pesos.

If you are already convinced of choosing a real estate to capitalize, but you still do not have a plan to take the first step, then you can see the credit schemes offered by ION Financiera.

What are the advantages of ION Financiera over other institutions that grant Credits?

The main characteristic of ION is to support independent workers and entrepreneurs who do not comply with the extensive list of requirements that banking institutions ask for to offer a mortgage loan, especially when it comes to proving expenses.

Being the first SOFOM regulated by the National Banking and Securities Commission (CNBV) on a voluntary basis, at ION Financiera they study cases in a particular way and facilitate the verification of income and speed up obtaining a loan.

Said verification is carried out by evaluating the credit capacity through its own method which is adapted to the economic activities of the client. After initiating the request, a response is offered within 5 business days.

The coverage Financial ION reaches the main municipalities of Queretaro, Guanajuato, Jalisco, Puebla, Hidalgo, while the metropolitan area CDMX and can use the credit in all delegations.

ION Finaciera offers financing of up to 10 million pesos that can be paid in a maximum period of 20 years, with a down payment of 10% of the value of the property.

Don’t let more time and profit go by. Start your capitalization plan today by taking the first step and obtaining a mortgage loan with ION Financiera.