Preliminary remark – general risks
The purchase of a co-ownership share in a property presents, on the one hand, risk components similar to those of an individual investment in a property and, on the other hand, - together with advantages – particular risks associated with the purchase in co-ownership.
This disclosure provides some non-exhaustive information on the risks of property investments. In any case, it is advisable to make a careful evaluation of the same with the assistance of your trusted professional.
Joint ownership purchase
Joint ownership poses particular risks, such as the need to achieve a certain majority in order to make a certain decision or the need to accept the majority's decision even in the event of disagreement. In addition, there may be changes in the structure of the joint owners.
Appropriateness of certain evaluations
This website www.yeldo.com (hereinafter referred to as the "Yeldo website") contains information on future forecasts. These are indications based on assumptions and estimates that are now considered appropriate but which, due to various factors of uncertainty, may differ, even significantly, from the actual results.
Economic and territorial risks
Every real estate investment is subject to general economic conditions, such as economic growth, inflation, territorial attractiveness, which may have an impact on the profitability and value of the investment.
The valuation of real estate always presents the risk that the assumed value will not be achieved in the event of a sale. The assessment is made on the basis of parameters that may vary over time.
Risks of changes in the real estate market
Like every market, the real estate market responds to the logic of supply and demand. Contraction in demand or an increase in supply can lead to a loss of profitability and value of the investment.
Risks associated with rental income
The profitability of the property is mainly determined by rental income. These may vary over time, be subject to vacancy or collection risks and, in general, not be aligned with changes in interest rates. All these factors can have an influence on the profitability and value of your investment.
Force majeure events
Events of force majeure (fire, flood, war, etc.) – though insurable – have an influence on the profitability and value of the investment.
The return on investment and the value of the investment may be affected by legislative changes. In particular, the laws and regulations governing taxation, planning, construction, the environment, rental law and the purchase of funds by persons abroad shall apply.
Financial and interest rate risks
The financing costs depend predominantly on interest rates. Changes in interest rates can have an impact on financing costs as well as on the profitability and value of investments.
In extreme cases, the revenues may not cover the financing costs, which would require the co-owners to refinance the investment from their own resources in order to avoid a forced realization by the financing bank with a potential total loss of the investment.
It cannot be ruled out that damage or wear and tear may occur to the property which may lead to repair, maintenance or renovation costs and may therefore impact on the profitability and value of the investment.
When investing in individual real estate items, there is a concentration risk due to the fact that the occurrence of one or more of the risks described above, although statistically unlikely, can occur and therefore have a significant impact on the profitability and value of the investment.
The real estate market is characterised by a generally reduced liquidity, which can have an impact on the valuation of real estate and on the possibility of selling or buying real estate in the short term.