Main Risks

Cautionary Notice and Risk Alert

1. Investment Risk Notice

Please be advised that the simulations provided on our site are simply indicative projections and do not carry any contractual value. These tools are meant to support decision-making but do not replace a comprehensive analysis of your personal financial situation or the technical and legal constraints of the property in question.

Investments in international properties carry inherent risks. It's crucial to understand that your capital may be at risk, and you may not achieve the expected returns. Engaging in investments with LifeInvest® using credit or borrowed funds carries an elevated level of risk. Even in cases where your investment reduces in value or is not fully repaid, your obligation to meet repayment commitments remains.

2. Variable Income Notice

The potential returns and asset appreciation we suggest are based on projections that consider two investment scenarios: pessimistic and optimistic. They should be considered in the light of your actual investment conditions and prevailing market conditions, particularly in terms of rental and banking situations. LifeInvest® does not guarantee a rate of return, and it is important to understand that external factors can have a significant impact on your investment. These factors include local markets, economic conditions, adverse national or local regulatory changes, among others.

Investing in real estate is speculative. Although LifeInvest® offers gross rental income projections based on third-party sources and, occasionally, on its own investments, these estimates are not guaranteed. Rental income may be lower than forecast, or non-existent for certain periods. Any shortfall on the part of tenants may reduce expected returns. In addition, properties may occasionally be unoccupied.

The value of your investment may fluctuate, and past performance is no guarantee of future results. Returns, whether rental or capital, depend on many factors, including economic conditions and asset specificities. A decline in the value of your investment can come from a variety of sources, such as a fall in the property's base value, or problems with the property that require financing from future rental income.

Real estate investments can exhibit cyclical behavior, with the value of real estate assets likely to rise or fall accordingly. Like other asset classes, the value of real estate can be influenced by economic, political and legal issues. A future downturn in the real estate market can have a significant negative effect on the value of your property, potentially resulting in a partial or total loss of the income generated by a real estate investment. It is therefore of the utmost importance for investors to personally assess and establish their tolerance to these risks at the outset of their investment journey.

3. Liquidity Risks

Given that real estate falls under the category of 'illiquid assets', which refers to assets that may not always be easily liquidated, you could face difficulties when trying to sell the property. At any given point, you will have the opportunity to place your investment up for sale on the market. However, you may encounter scenarios where potential buyers are not willing to purchase your investment at a price you consider fair, or perhaps show no interest in purchasing it at all. Such transactions could potentially span several months

4. Forecasts and past performance

Our projections anticipate income growth over ten years, with annual price appreciation of 3%. By way of comparison, prices per m² rose by 15% a year in Estonia and 10.1% in Latvia from 2010 to 2023, according to Eurostat data. We assume an annual rent increase of 2.25%. Historically, this growth has been significant in Estonia (+212%, or around 16.3% per year) and more modest in Latvia (+40%, or 3% per year).

Summary of Key Projections :

- Gross rental yield: Annual income expressed as a percentage of the overall budget for the operation (all costs included, including our support), adjusted for an annual increase of 2.25% in rent price, calculated over an average of ten years.

- Pre-tax net rental yield: Annual profit as a percentage of the overall operating budget, after deduction of operating costs, adjusted for a 2.25% annual increase in rent price, calculated over a ten-year average.

- Net rental yield after tax: Annual net profit after all expenses and personal taxes in Latvia, with a 2.25% annual increase in rent price calculated over a ten-year average.

- Expected annual return on capital: Calculated from net rental yield after tax, with a fixed appreciation of 3% per annum.

- Expected net gain over 10 years: Estimated total enrichment, combining rental cash flow and potential appreciation over a ten-year period.

It is essential to understand that these forecasts are based on past performance and are not a guarantee of future results. Real estate markets are likely to fluctuate as a result of numerous economic and political factors.

5. Preparation for Rent

The amount indicated for the renovations is an estimate. This amount only becomes definitive once the estimate has been sent, normally prior to the signing of the final deed of sale.

Warning

LifeInvest® and its associates are not financial investment advisors or licensed tax attorneys. All information provided by LifeInvest® is intended to help you make your own informed decisions. Before making any investment, you should exercise due diligence. In case of doubt or uncertainty, we recommend that you seek the advice of an independent financial advisor.