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

Suggested potential returns and asset appreciation are projections based on the most optimistic investment scenarios. 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® provides projections of gross rental income from third-party sources, 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 approach to estimating rental yields and returns utilizes actual rent data, guided by conservative estimations from our comprehensive experience. We present a range of potential outcomes for properties, categorized into two scenarios:

Optimistic : Targets the best-case market performance.
Pessimistic : Plans for the worst-case market scenario.

Key Projections:

Gross Rental Yield: Annual income as a percentage of property value.
Net Rental Yield Before Tax: Earnings after operational costs, pre-tax.
Net Rental Yield After Tax: Earnings post all expenses, including taxes.
Expected Return on Capital: Assumes a 3% property value growth and a 2.25% rental price increase annually over a decade.
Annual Net Income: Projected after operational expenses, factoring in renovation suggestions and taxes.

Our projections consider a decade of steady income and property value growth, benchmarked against historical data which indicate a significant increase in real estate prices and rents in regions like Estonia and Latvia. According to Eurostat, between 2010 and 2023, Estonia experienced an average annual price rise of 15%, while Latvia saw a 10.1% increase. Rental growth rates have historically varied, with Estonia seeing a dramatic increase of approximately 16.3% annually and Latvia a more moderate 3% per year over the same period.

It is crucial to recognize that these projections are informed by past performance, which is not a reliable indicator of future results. Market conditions are subject to change due to various factors, including economic trends and governmental policies.

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 employees 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.