The English version of our risk notice is a courtesy translation.
General Risk Notice
This website contains statements regarding future financial and operational developments and results as well as other forecasts, all of which are forward-looking or contain subjective assessments. All such statements are made on the basis of estimates, assumptions and presumptions that the Company believes are reasonable at the present time. Before deciding to invest in a property on the basis of the available documentation, we recommend that you familiarise yourself with the risks of a property investment.
Real estate investments are long-term oriented capital investments. The investment success depends on several economic, legal and tax factors that can change during the investment period. Forecasts of future value developments cannot fully capture all economic, tax and legal developments, even with conservative calculations.
Like all other forms of investment, real estate can be subject to considerable fluctuations in value and harbour unforeseeable risks. In extreme cases, even a total loss cannot be ruled out.
The real estate investment should always be seen as a component of a holistic investment strategy that takes into account the overriding individual investment goals such as old-age provision, long-term asset accumulation, realisation of current income as well as security, liquidity and return in a comprehensive and balanced manner and can only be optimised through the mix with other forms of investment (diversification).
If necessary, seek advice from a trusted financial or legal professional.
The following risk factors, among others, must be carefully considered:
a. Dependence on economic developments
Investing in real estate, in whatever form, is, like any investment, subject to general economic conditions such as economic growth, inflation, changes in interest rates and the attractiveness of the location in national and international comparison. Due to a deterioration in the general economic conditions, it is possible at any time that the demand for residential property and rental space could decline. This could lead to a decline in rental income and sales proceeds.
b. Valuation risk
The valuation of real estate is based on the balance sheet date and is associated with the risk that the values determined cannot be realised in the event of a sale. The future development of the relevant valuation factors is subject to uncertainty. Although the valuation is carried out according to professional guidelines, it is associated with the risk that the values determined cannot be realised in the event of a sale, as the price depends on the market conditions at the time of realisation. This is influenced by the economy, interest rates, vacancies at that time and supply and demand in general. In addition, the valuation does not take into account possible tax consequences in the event of a later sale of the property. However, the taxes due on the sale can reduce the proceeds from the sale of a property. Furthermore, it cannot be ruled out that a later valuation will result in a lower value than previously determined.
c. Changes in the Swiss real estate market
The real estate market is sometimes subject to cyclical fluctuations in supply and demand. For example, the realisation of new construction projects may result in a sharp increase in the supply of rental space in certain locations, and an oversupply of rental space or tradable real estate may arise. Excess supply of residential and commercial properties can lead to a reduction in rental income and property prices or valuations, as well as to an increase in the vacancy rate. In the event of a possible collapse of the entire real estate market and the associated reduction in the value of the property owned, it might become necessary for investors to inject fresh equity capital immediately. Due to a higher level of leverage, a property may be more exposed to this risk than properties backed by more equity.
d.) Market risk with respect to rental income
The recurring income consists largely of the rental income from the respective property. It is possible that the rental income cannot be adjusted to the interest rate level, or not to the full extent. This can have a negative impact on the liquidity of an investment in real estate. There is also the risk that the vacancy rate will increase and that rental agreements can no longer be continued on the same terms as before in the event of a change of tenant. Rental income may also decrease due to changes in the creditworthiness of tenants. As a result, there is a risk that yield distributions will be lower than planned. However, when selecting investment properties, Crowdhouse makes every effort to select properties that offer very good lettability and attractive rents. However, no guarantee can be given for any property that the rental income will behave and develop according to a specific pattern. Rental income is directly exposed to changes in the Swiss real estate market.
e.) Force Majeure
The impact of force majeure events (e.g. natural phenomena such as earthquakes, storms, acts of war or terrorism, acts of sabotage, etc.) may have a negative impact on the value of the investment property and thus on the business, financial and earnings position of the property, despite appropriate insurance policies.
f.) Contaminated Sites
Polluted sites within the meaning of environmental protection legislation can have a negative technical, operational and financial impact on the execution of a construction project as well as on existing buildings. Contaminated sites that are unknown at the time of purchase and valuation and may occur later can never be ruled out. Therefore, it cannot be ruled out that remediation may become necessary and that new equity capital may have to be contributed for this purpose.
g.) Tax risks
If, in the future, tax legislation, case law, the practice of the tax authorities, agreements with tax authorities (tax rulings) change or the applicable practice is revoked, this may have adverse consequences for the business, financial and earnings situation of the respective real estate investment. This may also affect past financial years that have not yet been definitively assessed.
h.) Location-related influencing factors
The real estate market is subject to location-related influencing factors, so that the value development of real estate can vary greatly depending on the location. The location factors in a region can deteriorate significantly over time, for example, due to a crisis in an industry that is heavily concentrated in a region, and thus have a negative impact on the performance of a property.
i.) Financing and interest rate development
In some cases, the purchase of real estate from Crowdhouse relies on a very high level of debt financing compared to other sectors in order to optimise the return on equity. The financing costs of individual real estate investments therefore depend in part on interest rate conditions. It cannot be ruled out that financial institutions will change their lending policies, which could have a negative impact on refinancing. Changes in interest rates, especially changes in the mortgage interest rate, can have a negative impact on the cost structure as well as negatively affect the financial and earnings situation. An unhedged increase in mortgage interest rates can massively worsen the earnings situation of a property. There is a risk that rental income will no longer be sufficient to cover all expenses and that further capital requirements in the form of fresh equity will be necessary. Should such a capital increase or capital procurement not come about due to a real estate crisis or other factors, or should it be severely impeded, there is a risk of a total loss for the investors. The properties shown on Crowdhouse are generally financed by mortgages with a fixed term of at least five years with a fixed interest rate for the entire term or by money market mortgages with a long-term hedge of the interest rate risk. This is intended to minimise the interest rate risk as far as possible. An increase in the mortgage interest rate can increase the costs of an investment property, which can lead to a change in the gross yield. However, according to current tenancy law, rents are linked to the development of the mortgage or reference interest rate. An increase in the mortgage or reference interest rate generally results in the possibility of an increase in the rent (for residential premises). A change in the interest rate level can, however, affect the demand for investment properties. In a worst-case scenario, ownership rights can be lost (auction of the property or self-entry of the financing bank).
j.) Construction, maintenance and upkeep of properties
Unforeseen maintenance and renovation costs may arise despite careful preliminary examination. The maintenance and upkeep of existing properties may require considerable investment which, if at all, will only generate income after a certain period of time and may require further fresh equity capital. If renovations or repairs are necessary, there is a risk in extreme cases that no return can be distributed. In the case of higher costs, it can happen that no return can be distributed during the entire term of the investment and even further fresh equity capital must be contributed.
k.) Economic devaluation
Environmental and infrastructural factors as well as regulatory factors in the immediate or wider vicinity of the investment property – such as urban and road planning measures or, for example, the determination of flight routes – can lead to the yield of such properties falling because the properties can no longer be rented out or can no longer be rented out on the same terms or a considerable investment must be made in order to ensure that they can be rented out.
l.) Property risks
Depending on the age of the properties, the quality of the building and the type of use, there is a risk of hazards emanating from the building that could cause personal injury or property damage. Although such risks are usually covered by appropriate insurance policies, it cannot be ruled out that certain damages may nevertheless have financial consequences for the investors.
m.) Cluster risk
In the case of investments in individual properties, there is a cluster risk in the event of one or more of the risks described above occurring, which can have a negative impact on the income and financial situation of the respective property and can make it necessary to inject new equity capital and reduce the distribution of returns or even make it impossible. Accordingly, it is advisable, where possible, to optimise the risk by investing in several properties.
n.) Limited liquidity in the real estate market
The Swiss real estate market is characterised by limited liquidity, both in the acquisition and in the sale of real estate or shares in real estate, especially for properties located in certain regions. This can have a negative impact on real estate prices. Depending on the market situation, the short-term purchase or sale of real estate or shares in real estate may be impossible or only possible with large price concessions and, in extreme cases, may lead to a total loss for investors.
o.) Abhängigkeit von Entwicklungen in der Gesetzgebung
Zukünftige Änderungen von kommunalen, kantonalen, nationalen und internationalen Gesetzen und sonstigen Vorschriften können einen Einfluss auf Immobilienpreise, Kosten und Erträge und damit auf das Geschäftsergebnis und den Wert der jeweiligen Immobilie haben. In der Schweiz ist die Investition in Immobilien insbesondere von eidgenössischen, kantonalen und kommunalen Regelungen in Gesetzen und Verordnungen in den Bereichen Steuer-, Miet-, Raumplanungs-, Bau- und Umweltschutzrecht sowie Grundstückerwerb durch Personen im Ausland abhängig. Es kann nicht ausgeschlossen werden, dass Änderungen im regulatorischen Umfeld die Entwicklung einer Immobilieninvestition negativ beeinflussen können. Es besteht das Risiko, dass die Investoren keine Genehmigung erhalten, das Investitionsobjekt erwerben zu dürfen oder dass das Bewilligungsverfahren weitere Zeit in Anspruch nimmt. Dies kann insbesondere dann passieren, wenn nicht genug detailliert darüber Auskunft gegeben werden kann, dass keine Personen im Ausland gem. Bundesgesetz BeWG, SR 211.412.41 und Verordnung BewV, SR 211.412.411 an einer Immobilie beteiligt sind. Obwohl crowdhouse jederzeit bemüht ist, sämtliche zum Erwerb der Liegenschaft notwendigen Unterlagen den zuständigen Behörden detailliert offen zu legen, besteht trotzdem keine Garantie für den reibungslosen Ablauf des Gesuches und/- oder einer allfälligen Bewilligung. In diesem Fall würde der Kauf der Immobilie nicht durchgeführt werden können und die Investoren würden Ihr auf das Sperrkonto (Escrow) einbezahltes Kapital vollumfänglich zurück erhalten.
Diese Liste ist nicht abschliessend.