Technology Democratizes Access to Real Estate InvestmentBy Gabriela Mastache | Mon, 04/06/2020 - 16:04
Q: What makes Mexico an ideal market for 100 Ladrillos?
A: The main advantages are the country’s population and its income level. We are a very digital economy, where more than 80 percent of the population has a smartphone, and we are among the first nations to have a robust Fintech Law. Also, Mexico has a significant deficiency in access to financial services among certain segments of the population, which makes technology a necessary tool to close this gap. All this makes Mexico a perfect breeding ground for initiatives that involve better solutions and financial experiences for the population.
Q: How can investors build wealth through 100 Ladrillos?
A: Real estate is one of the best types of assets to invest in to create, to grow and to protect wealth. But we also know that access to these types of assets has been restricted to those who have more money. Our dream is to be able to democratize access to this type of investment so people can invest easily in real estate with smaller amounts.
We look for real estate opportunities that can generate capital gains for our investors in commercial, industrial warehouses or office buildings. We try to generate annual gains for our investors that range between 16 and 29 percent, coming from four sources. The first is the annual rent the property generates, the second is the annual rent increase, the third element is the capital gain of the property over time and the fourth is the pre-sale discount investors get. At 100 Ladrillos, we want our investors to have the possibility to invest not only in real estate but also in projects that are still in construction and that are still not being sold at their full price.
Q: What is relationship or agreement you establish with real estate developers?
A: For us, developers become applicants. We act as a marketplace where there are clients and also applicants. Within the Fintech Law, we are a fintech company that aims to participate in crowdfunding activities for real estate co-property, which is why we are asking for a license for crowdfunding in the co-property vertical. Also, we are looking for real estate developers to sell properties that are finished piecemeal.
We are a solution for investors and for real estate developers looking to sell their properties. These must go through four validation processes before entering the platform. The most important is the commercial validation, which means aligning the offer to potential investor needs and making sure that the location and price make sense according to the market average. Once we have the commercial validation, we make the financial validation to delimitate at what price properties should be offered to investors and to make a proposal to the developer. If the numbers make sense, then we order a legal valuation. After all these steps, investors can make their contributions digitally.
We are looking for properties in specific areas of Jalisco, Mexico City, Monterrey, Tijuana and very soon Queretaro. These are the areas where we see the most growth and we are looking for projects we believe can generate higher rent and capital gains. However, we are not looking at a specific sector. Our main focus is location and the overall opportunity of the real estate project.
Q: What are the most common questions about this business model?
A: Developers understand the product because they see it as just an additional option for selling their product. With investors, the idea has become increasingly appealing. The notion of having real estate for rent is easy to understand, so the product itself is not hard to sell. The greater challenge is to explain the technology and the innovation, especially when investors ask about the legal foundations. Having a user-friendly platform that can explain the model in a simple way and being one of the few companies in the country that has asked the CNBV for a license to operate has helped us a great deal in generating certainty among investors.
Q: What is your view regarding the flexibility and innovation needed in the Fintech Act?
A: We worked alongside regulators to design the capabilities of the Fintech Act. While we thought that the final product would be less strict, with time we have come to see how thorough the law is. The law limits innovation because not everyone will have the capability and solidity to file for a license of this type; the number of requirements puts us almost at the same regulatory level as banks. That being said, the limits apply only for fintech companies that want to manage people’s money.
Q: What is your midterm vision for the company?
A: In 2020, we want to get our license from the CNBV. Once this happens, our second objective is to increase our investor base and the available projects in the platform to crowdfund at least 15 real estate projects. Another objective is to put in operation four of the projects that have already been funded through the platform. The last objective is to have MX$1 billion (US$53.6 million) in assets under management by the end of 2021.