Risk Information

Understanding the risks of real estate crowdfunding investments

Important Risk Warning

Capital at Risk: Investing in real estate crowdfunding involves significant risks, including the potential loss of your entire investment. Past performance is not indicative of future results. Only invest money you can afford to lose.

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Capital Risk
Market Risk
Liquidity Risk
Project Risk
Developer Risk
Platform Risk
Regulatory Risk
Currency Risk
Risk Mitigation

Capital Risk

Risk Level: High

You may lose some or all of your invested capital. Unlike bank deposits, investments made through PropertyInvest are not protected by any deposit guarantee scheme.

Key Points:
  • No Guarantee of Returns: The projected interest rates are estimates based on project parameters. Actual returns may be lower or non-existent.
  • Total Loss Possible: In worst-case scenarios (project failure, developer bankruptcy, market collapse), you may lose 100% of your investment.
  • No Deposit Protection: Your investment is not covered by the Deposit Guarantee Scheme or any government protection program.
  • Subordinated Position: In case of project default, secured creditors (banks, primary lenders) are paid first. Crowdfunding investors typically have subordinated or unsecured claims.
Investment Guideline

Only invest money you can afford to lose entirely. We recommend limiting crowdfunding investments to no more than 10% of your total investment portfolio.

Market Risk

Risk Level: Medium to High

Real estate markets are cyclical and subject to fluctuations based on economic conditions, interest rates, and local factors.

Factors Affecting Market Risk:
Economic Conditions
  • Recession can reduce property demand
  • Rising unemployment affects rental income
  • Inflation impacts construction costs
  • GDP growth correlates with property values
Interest Rates
  • Rising rates increase financing costs
  • Higher rates reduce property affordability
  • Rate changes affect investment yields
  • Central bank policies impact markets
Supply & Demand
  • Oversupply can crash prices
  • New construction competition
  • Demographic changes affect demand
  • Migration patterns impact local markets
Location Factors
  • Neighborhood changes
  • Infrastructure developments
  • Local employment opportunities
  • Environmental risks
Baltic vs Emirates Markets

Baltic States: EU-regulated markets with stable growth. Subject to European economic cycles. Strong legal protections for investors.

UAE/Emirates: Higher growth potential but more volatile. Dependent on oil prices and expat population. Different legal system.

Liquidity Risk

Risk Level: High

Your investment is illiquid. Unlike stocks or bonds, you cannot easily sell your crowdfunding investment on a secondary market.

Understanding Liquidity Constraints:
Aspect Details
Lock-in Period Your investment is locked until project maturity (typically 12-24 months)
Early Exit Early exit may be possible but subject to:
  • Platform approval
  • Exit fees (0.5% - 3% depending on holding period)
  • Available liquidity
No Secondary Market Currently, there is no secondary market to trade your investment positions
Project Delays Construction or sale delays may extend your investment period beyond original maturity
Early Exit Fee Schedule:
0-3 months: 3% fee | 3-6 months: 2% fee | 6-12 months: 1% fee | 12+ months: 0.5% fee

Project-Specific Risk

Risk Level: Varies by Project

Each project has unique risks based on its type, location, stage, and complexity.

Construction Risks
  • Cost Overruns: Materials, labor, or regulatory costs may exceed budget
  • Delays: Weather, permits, or supply chain issues can delay completion
  • Quality Issues: Construction defects may require costly remediation
  • Contractor Default: Main contractor or subcontractors may fail
Operational Risks
  • Vacancy: Properties may remain vacant longer than projected
  • Rental Income: Actual rents may be lower than projections
  • Tenant Default: Tenants may fail to pay rent
  • Maintenance: Unexpected repairs and maintenance costs
Legal & Permits
  • Permit Delays: Building permits may be delayed or denied
  • Zoning Changes: Local regulations may change
  • Title Issues: Property ownership disputes
  • Environmental: Contamination or protected species
Exit Risks
  • Sale Price: Property may sell for less than projected
  • Sale Timeline: Sale may take longer than expected
  • Refinancing: Refinancing may not be available or affordable
  • Market Timing: Exit may coincide with market downturn

Developer Risk

Risk Level: Medium

The success of your investment depends significantly on the developer's ability to execute the project successfully.

Developer-Related Risks:
  • Financial Stability: Developer may face cash flow problems or bankruptcy
  • Experience: Insufficient track record in similar projects
  • Management Capacity: Unable to manage project complexity
  • Fraud: Misrepresentation or misuse of funds (rare but possible)
  • Key Person Risk: Dependence on specific individuals
Our Developer Vetting Process
  • Minimum 3-year track record required
  • Financial statements review
  • Background checks on principals
  • Reference checks with previous partners
  • Minimum 20% developer contribution ("skin in the game")
  • Personal guarantees where applicable
  • Regular reporting requirements
  • Fund disbursement controls

Platform Risk

Risk Level: Low to Medium

Risks associated with PropertyInvest as the platform operator.

Platform-Related Risks:
Potential Risks
  • Platform business failure
  • Cybersecurity breaches
  • Operational failures
  • Regulatory actions against platform
  • Technology failures
Our Safeguards
  • Segregated client accounts
  • Regular third-party audits
  • Business continuity plans
  • Data encryption & security
  • Regulatory compliance monitoring

Note: Even if PropertyInvest were to cease operations, your investment contracts with project SPVs (Special Purpose Vehicles) would remain valid. A backup servicer arrangement ensures continued loan administration.

Regulatory Risk

Risk Level: Low to Medium

Changes in laws and regulations may affect your investment or the platform's operations.

Regulatory Considerations:
  • Crowdfunding Regulations: EU and local regulations may change, affecting platform operations
  • Tax Laws: Changes in tax treatment of crowdfunding returns
  • Property Laws: Changes to property ownership, rental, or development laws
  • Cross-Border: Different regulations apply in Baltic states vs UAE
  • AML/KYC: Anti-money laundering requirements may change
Baltic States (EU)
  • EU Crowdfunding Regulation (ECSP)
  • MiFID II requirements
  • GDPR data protection
  • Local financial authority oversight
UAE
  • DFSA/ADGM regulations (free zones)
  • Central Bank UAE requirements
  • RERA real estate regulations
  • Different investor protections

Currency Risk

Risk Level: Low (EUR) / Medium (AED)

Currency fluctuations may affect your returns, particularly for UAE investments.

Baltic Investments (EUR)

All Baltic investments are denominated in EUR. If EUR is your home currency, there is no currency risk.

For non-EUR investors: EUR/USD and other pairs may fluctuate, affecting the value of your investment when converted back to your currency.

UAE Investments (AED/USD)

UAE investments may involve AED (pegged to USD). EUR investors face EUR/USD exchange rate risk.

Note: The AED is pegged to USD at a fixed rate, so the main exposure is EUR/USD fluctuation.

How We Mitigate Risks

While we cannot eliminate investment risks, PropertyInvest employs multiple safeguards to protect investors.

1
Rigorous Due Diligence

Every project undergoes comprehensive vetting including financial analysis, legal review, technical assessment, and market evaluation.

2
Developer Skin-in-the-Game

We require minimum 20% developer contribution, ensuring their interests are aligned with investors.

3
Secured Structures

Where possible, investments are secured by property mortgages, corporate guarantees, or other collateral.

4
Diversification Options

Low minimum investments allow you to spread risk across multiple projects, markets, and property types.

5
Transparent Reporting

Regular project updates, financial reports, and milestone tracking keep you informed throughout the investment period.

6
Segregated Funds

Investor funds are held in segregated accounts, separate from platform operating funds.

Investor Suitability

Real estate crowdfunding is NOT suitable for everyone. Consider carefully whether this type of investment is appropriate for you.

May Be Suitable If You:
  • Have a diversified investment portfolio
  • Can afford to lose your entire investment
  • Have a medium to long-term investment horizon
  • Understand real estate markets
  • Don't need immediate access to your funds
  • Are comfortable with illiquid investments
NOT Suitable If You:
  • Need guaranteed returns
  • Cannot afford to lose money
  • Need access to your funds at short notice
  • Don't understand the risks involved
  • Are risk-averse
  • Are investing your emergency fund

Final Risk Acknowledgement

By investing through PropertyInvest, you acknowledge that you have read and understood the risks described on this page. You confirm that you are investing money you can afford to lose and that you understand your capital is at risk.

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Have Questions About Risks?

Our investor relations team is here to help you understand investment risks.

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