Investment risks
The Investor acknowledges that he/she fully understands and assumes the risks associated with investing in the linen projects he/she chooses to invest in through the Open Property platform, some of which are summarized below, in a non-exhaustive manner.
Investing in real estate projects involves risks, including the risk of partial or total loss of the money invested.
An investment in a real estate project includes the risk of losing the entire invested capital.
There is a risk that the investor will not obtain the expected return or will not be able to sell or rent at the time he wants or may not obtain the sale price or rent at the value he wants or expects. At the same time, there is a risk that the developer will not complete the project and will not acquire the ownership of the apartment or that there will be delays in its delivery, which could generate financial losses.
Real estate investments are not a guaranteed investment, and Open Property recommends the investor not to invest more than 10%-15% of his net income in real estate projects under construction.
The investor may not be able to sell/rent the apartment when he wants. Even if the Investor is able to sell/rent it, it may still be subject to losses. At the same time, the Investor may not be able to assign the pre-contract concluded with the developer when he/she wishes and even if he/she can assign/transfer it, the Investor may still be subject to losses because he/she may not be able to assign them at a price equal to or higher than the amount he/she has paid in the form of an advance.
Given the nature of the companies, there may be limited information – financial, operational or otherwise – regarding the Project Developer. There is a risk that: (i) there may be facts or circumstances relating to the Project Developer that the Investor is not aware of and (ii) the publicly available information and information on the Platform regarding the Project Developer may prove to be inaccurate and as a result, the Investor may suffer a total or partial loss of its investment.
Open Property does not independently verify the information relating to the Project Developer, except for legal verifications, and does not approve any commencement of investments. Open Property does not recommend direct or indirect investments. Although Open Property assesses the potential of real estate projects and the potential of Project Developers to determine which real estate projects will be available as potential investments to members of the platform, this assessment does not constitute an endorsement or recommendation for the investor to invest in a particular real estate project and does not establish a relationship regarding advisory services between Open Property and the investor.
Open Property shall not be liable for the Project Developer’s performance or non-performance in the past, present, or future. In particular, Open Property is not responsible for the information in the KIIS (Key Investment Information Sheet) of the Project Developer.
IThe investor should consult its own legal, tax, investment and financial advisors as to the appropriateness, suitability and appropriateness of participating in the investment in a project. Open Property does not advise the Investor on the value of his investment and does not offer any other advisory services to the Investor.
Investments in real estate projects involve significant risks and are only suitable for investors who are able to assess and bear these risks, who have a limited need for liquidity in their investments and who can afford to lose their investment completely. Investments in real estate projects have a high risk of failure. In exchange for his investment, the Investor may eventually receive cash, in the foreclosure or bankruptcy proceedings of the Project Developer, or may receive nothing.
Open Property does not guarantee the future performance or financial results of the Project Developer. Therefore, the investor must bear the economic risk of the investment.
The Investor will receive whenever necessary only information about the real estate project (this information may include the progress of the works, if the real estate project has not yet been handed over, financial statements, the most important actions taken, communication with the Project Developer, loan default rates, as the case may be). The Investor will not receive ongoing information about the value or valuation of the Real Estate, and the Investor understands and agrees that any such valuation information would in any event be of limited reliability and use.
The Investor will not hold the ownership right over the properties until the date on which it concludes a sale-purchase agreement with the Developer, but will have a right of claim against the Project Developer arising from the pre-contract concluded with the Project Developer. Therefore, the Investor will not be able to sell the real estate/buildings related to the real estate project in which he invests until the completion of the project and the conclusion of a sale-purchase contract. However, the Investor will be able to assign the pre-contract that he will conclude with the Developer.
The fundraising, the information in the Project Developer’s KIIS or any other documents related to the Investor’s participation in the fundraising have been neither verified nor approved by Romanian or European authorities.
The Investor’s education and knowledge have not necessarily been assessed before the Investor was granted access to investments through the platform. By making this investment, regardless of the input knowledge tests or simulation of the ability to bear losses that may be available on the Platform, the Investor assumes a high risk of making this investment, including the risk of partial or total loss of the money invested.
Below you can find a detailed list of the main risks associated with these types of investments:
- Market risks
Market volatility: Real estate prices can fluctuate for a variety of reasons, including economic changes, changes in supply and demand, and global financial conditions.
Market oversaturation: An excessive increase in the number of new projects can lead to high competition and lower sales or rental prices.
- Economic risks
Economic recession: A declining economy can reduce demand for real estate, affecting rental income and property values.
Inflation: Rising construction costs and interest rates can erode anticipated profits.
- Financial risks
Insufficient funding: Problems in securing the necessary funding for project completion can lead to delays or even abandonment of projects.
Unexpected costs: Unforeseen costs related to materials, labor, or other expenses can affect your planned budget.
- Legal and regulatory risks
Legislative changes: Changes in urban planning regulations, construction legislation or other laws may impose additional costs or delay projects.
Litigation: Legal disputes over property, contracts, or environmental issues can result in legal expenses and significant delays.
- Operational risks
Construction delays: Problems with suppliers, adverse weather conditions, or other unforeseen delays can affect completion deadlines.
Build quality: Construction issues or structural defects can lead to remediation costs and affect the value of the property.
- Location-related risks
Unattractive location: Investments in areas that are not attractive to tenants or buyers may have a low return.
Environmental risks: Areas prone to natural disasters, such as floods, earthquakes, or landslides, pose additional risks.
- Management risks
Ineffective management: Poor property management can lead to financial losses, improper maintenance, and loss of tenants.
Loss of tenants: High vacancy rate or loss of quality tenants can affect income and investment value.
- Social and demographic risks
Demographic changes: Changes in demographic structure, such as population migration or changes in housing preferences, can affect demand for certain types of properties.
Crime and security: An increase in the crime rate in a particular area can reduce its attractiveness and lower real estate values.
- Design and Architecture Risks
Improper design: A real estate project that does not meet market requirements or has functional deficiencies can lead to difficulties in selling or renting.
Compliance issues: Failure to comply with construction and safety standards can result in penalties and additional costs for remediation.
Investors must carefully assess these risks and implement risk management strategies to minimize the negative impact on their investments.