In parallel with the progress of the vote on the second withdrawal of pension funds, the real estate investment platform FocoAsset released an analysis that concludes that withdrawing 10% and investing it in a property to lease delivers up to 14 times more profitability than an AFP.
«We are aware that many of the people who will withdraw 10% will do so to meet their immediate needs. But this second withdrawal will especially benefit higher-income people who may decide to withdraw that 10% for another type of investment, such as real estate for rent,» explains Cristóbal Donoso, founder and partner of the platform that has a 500% increase in their real estate sales this second semester.
The first 10% withdrawal next to the option of this second withdrawal allows to count more quickly with the capital for the foot of a property.
«Many people see real estate investment as unattainable to obtain rents through rent, because gathering that money involves several years of savings. AFP affiliates who can withdraw as much as possible avoid that savings time and can diversify their income for future retirement by purchasing real estate that delivers 14 times more profitability than AFPs, calculated over a five-year period,» he explains.
To achieve this calculation, it took the profitability delivered by AFP funds compared to investing the money for the foot of a rental department that delivers 10% annual return, considering its lease value and sales value. These units that deliver 10% profitability are detected by the platform.
«The advantage of a real estate property is that it combines low risk and high profitability. We believe that financial education is key so that people can make the best decisions that allow them to increase their wealth,» Donoso adds.
How it was calculated
The calculation was made considering that a person maintains their 10%, with a maximum cap of $4,300.00, in Fund C of AFP, which would rent on average 2.40% per year, that is, and $541,370 in five years.
The situation is different when the maximum cap of $4,300,000 is withdrawn from the AFP and used to pay part of the foot of a new one-bedroom apartment of UF2,000 purchased with mortgage credit.
If after five years the person sells the apartment – taking into account capital gains of 1%- the price will increase to UF2,100, i.e. $60,722,884.
By discounting outstanding mortgage credit, capital pay, and a change between a $255,000 lease and a $232,000 dividend, the person will have earned UF259, or $7,489,151. This means 13.8 times more than what was obtained by keeping the fund in the AFP.
*Capital return: This is the increase in the initial amount invested by the buyer, considering that he acquired a much higher value good thanks to a mortgage credit, that the payment of it generated capital and that the property was leased.
*For this example, a 30-year mortgage loan, 20% foot payment, 4.5% annual CAE rate, 1% sale and lease capital gains, and a two-week vacation were considered. Estimated lease value: $255,000 + IPC. Estimated dividend value $232,000 + IPC. Useful area + terrace/2 x 34.5m2