Inmsa’s real estate investment model: higher return and security in shorter periods of time

10 Feb '20

Traditionally, real estate operations have been seen as long-term business deals when it comes to measuring profitability. This is such a long period of time that, more often than not, this low percentage practically fades away because of depreciation, expenses and inflation. However, INMSA´s real estate investment model has proved to be effective to obtain unusual returns in real estate.
As explained by Mariano J. Capellino, CEO at INMSA, “An individual who acquires a property and keeps it for a long time, as a traditional investor, can aspire to nothing more than a rent as the actual long-term appreciation rate is 0. But, when we understand that the real estate business is dominated by the cycles of the markets, we can see that the key thing is to assess the different markets and types and classes of assets and take advantage of those cycles, as this would enable us to obtain high and sustainable annual returns of more than 2 digits in hard currency.
If we compare INMSA´s real estate investment model to the traditional real estate investment process, Capellino emphasizes that it has been globally evidenced that properties kept for a long period of time tend to achieve zero profitability as the appreciation rate is absorbed by the inflation rate. This is a reality that repeatedly applies to any economy. Instead, INMSA´s model can aspire to obtain 10% and 20% annual net returns, depending on the investor´s risk profile, by taking advantage of the market cycles which last between 4 and 5 years.
INMSA´s Real Estate Investment Model
INMSA´s real estate investment model starts by analyzing the markets to detect the phases of the cycle of those markets: recovery, expansion, contraction or recession. It is of fundamental importance to access the markets that have faced a strong crisis and which are in the recovery cycle so that we can acquire distressed assets through auctions or banks, as big discounts are obtained compared to the market value, therefore obtaining high recovery rates during the subsequent 4 or 5 years, which is usually more than 10% net amount annually. Once the real estate´s value has increased, we need to determine the right moment to exit the market during the expansion phase, thus allowing us to achieve higher returns.
“We invest in markets and assets which offer the highest benefits at the moment of the acquisition, during the possession of the property, and their subsequent sale. With INMSA´s model, we acquire a volume of properties with discounts of at least 20%, which generate high rental incomes and an increment of the portfolio value during the recovery process of the market. The efficient management with the best players of the market enables us to obtain annual rents ranging between 10% and 20%, according to the risk profile involved”.
In this sense, Capellino pointed out two markets that are currently in the recovery and growth process after hitting rock bottom such as the city of Detroit in USA, and in Spain cities such as Valencia, Alicante, Malaga, Costa del Sol, among others.
Another Option: Global Real Estate Funds
INMSA’s real estate investment model can be conducted through global real estate funds. Carlos Rincón, Account Manager at INMSA in the USA, explained to us that the global real estate funds model adapts to the model presented by INMSA. The profile involved in this investment is a moderate/prudent risk profile, seeking protection and capital increase, with a strategic exit of the assets in the short/medium term and expecting a total return of the investment.
In this sense, Rincón pointed out that the experience of FlexFunds in structuring taylor-made investment instruments which are managed with the versatility of an investment fund, convinced INMSA to jointly work with them on the variable rent structure to invest in the Spanish market. Rincón explained that the Spanish residential market is experiencing a recovery phase after the crisis faced in 2008, after an 8-year decline that ended in 2016.
“The recovery is due to several factors. In addition to the economic recovery, the absorption of distressed properties between 2014 and 2018 must be considered, as well as the reduction in the excess of real estate market supply, the evidence of the partial recovery of value, high rental incomes, and the access to mortgage loans by buyers”.
The securitization of the investment offered by FlexFunds is in a 48-month period, for an initial amount of 20 million US dollars, with a minimum investment of 50 thousand dollars, and a 14% projected annual net return for the investor.
About INMSA
This company has been managing investments for 18 years by using INMSA´s real estate investment model, which has allowed them to maintain and increase their invested capital obtaining 14.7% annual profitability. INMSA´s offices are located in Buenos Aires, Miami, Detroit and Madrid; where they offer market research services, financial advice and efficient management of real estate investment funds and products for specific and institutional investors in Latin America, jointly working with 30 executives and more than 50 strategic partners. https://www.e-inmsa.com/

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Source: Prensa Real Estate 

 

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