General risk information:
On this website you will find information on future financial and operational developments as well as other forecasts that are based either on forward-looking statements or subjective assessments. All of these statements are based on estimates, assumptions and conjectures that appear reasonable for the company at the current time. Before making any investment decision in real estate based on the available documentation, we recommend that you familiarize yourself with the risks of such an investment.
Real estate investments are long-term capital investments. The success of the investment depends on various economic, legal and tax factors, which may change during the investment period. Forecasts of future value developments cannot fully take into account all economic, tax and legal developments, even with conservative calculations.
Real estate, like other forms of investment, is subject to considerable fluctuations in value and entails unforeseeable risks. In extreme cases, even a complete loss is possible.
It is important to consider real estate as part of a comprehensive investment strategy that takes into account your individual investment objectives such as retirement provision, long-term wealth accumulation, achievement of current income, security, liquidity and return in a comprehensive and balanced manner. This strategy can be optimized by mixing it with other forms of investment (diversification).
If necessary, we recommend that you seek advice from a trusted financial or legal expert.
The following risk factors, among others, must be carefully considered:
A. Dependence on economic developments
Investment in real estate, regardless of its form, is dependent on general economic conditions such as economic growth, inflation, changes in interest rates, and the attractiveness of the location in national and international comparison. There is always a risk that demand for residential real estate and rental space may decline due to a deterioration in economic conditions. As a result, rental income and sales proceeds could decline.
b. Valuation risk
The valuation of real estate is performed as of a specific date and entails the risk that the values determined may not be achieved in the event of a sale. The future development of the relevant valuation factors is uncertain. Although the valuation is performed according to professional standards, there is a risk that the values determined may not be realized upon sale, as the price depends on market conditions at the time of sale. These conditions are influenced by the economy, interest rates, any vacancies and general supply and demand. In addition, the valuation does not take into account potential tax effects upon a subsequent sale of the property. Taxes incurred upon sale may reduce the proceeds from the sale of a property. There is also the possibility 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 occasionally subject to cyclical fluctuations in supply and demand. For example, the completion of new construction projects may result in a sharp increase in the supply of rental space in certain locations, which may lead to an oversupply of leasable space or tradable real estate. Such oversupply can lead to a reduction in rental income, property prices and valuations, and an increase in vacancy rates. If the overall real estate market collapses, causing the value of the property held to decline, it may be necessary for investors to provide additional equity. Properties that have a higher degree of leverage may be exposed to greater risk than those that are financed with more equity.
d. Market risk with regard to rental income
The regular income consists mainly of the rental income from the respective property. There is a possibility that the rental income cannot be adjusted or cannot be fully adjusted to the interest rate level. This can have a negative impact on the financial flexibility of an investment in real estate. There is also the risk of an increased vacancy rate, and it may not be possible to continue rental agreements under the same conditions as before in the event of a change of tenant. Rental income may also decrease due to changes in tenant creditworthiness, which may result in yield distributions being lower than planned. However, Crowdhouse makes every effort to carefully select investment properties that offer high leasability and attractive rental rates. However, there can be no assurance that rental income will follow a particular pattern or develop accordingly. Rental income is subject to direct changes in the Swiss real estate market.
e. Force majeure
Unexpected events of force majeure such as natural disasters (earthquakes, storms), warlike or terrorist activities, acts of sabotage, etc. may have a negative impact on the value of the investment and thus on the business, financial position and results of operations of the property, despite the existence of insurance policies.
f. Contaminated sites
Sites that are contaminated in accordance with environmental protection laws can have a negative impact on the implementation of a construction project and on existing buildings in technical, operational and financial terms. There is always a risk that contaminated sites, which were not known at the time of purchase and assessment, may occur at a later date. Therefore, it cannot be ruled out that remediation measures will be required for which additional equity may have to be raised.
g. Tax risks
If tax legislation, case law, the practice of the tax authorities or agreements reached with the tax authorities (tax rulings) change in the future, or if the applicable practice is revoked, this could have an adverse effect on the business, financial position and results of operations of the respective real estate investment. This could also affect past fiscal years that have not yet been finally closed.
h. Location-specific influencing factors
The real estate market is influenced by factors that are tied to location, which means that the performance of real estate can vary greatly depending on the location. The factors that make up the location of a region can change over time, for example due to a crisis in an industry that is strongly represented in the region. These changes can have a negative impact on the performance of a property.
i. Financing and interest rate development
In some cases, crowdhouse real estate purchases require a relatively high level of debt financing compared to other industries in order to maximize the return on equity. Therefore, the cost of financing individual real estate investments depends in part on interest rates. There is a possibility that financial institutions will change their lending policies, which could have a negative impact on refinancing opportunities. Changes in interest rates, particularly mortgage rates, may have a negative impact on the cost structure and financial situation of a property. An unsecured increase in mortgage interest rates may have a material adverse effect on the profitability of a property. There is a risk that rental income will not be sufficient to cover all expenses and additional equity will be required. If such an increase in equity is not feasible or is severely hampered due to a real estate crisis or other factors, there is a risk of total loss for investors. The properties presented on crowdhouse are usually financed by mortgages with a fixed term of at least five years and a fixed interest rate throughout the term, or by money market mortgages with long-term interest rate hedging. This minimizes the interest rate risk as much as possible. However, an increase in mortgage rates may increase the cost of an income property and result in a change in the gross yield. It should be noted, however, that under current rental laws, rental rates are linked to changes in the mortgage rate or reference rate. An increase in the mortgage or reference interest rate may, in principle, allow for an increase in the rent (for residential premises). However, a change in the interest rate level may affect the demand for income properties. In the worst case, this can lead to a loss of ownership, for example through the auction of the property or the intervention of the financing bank.
j. Construction, repair and maintenance of properties
There is a possibility that unforeseen maintenance and renovation costs may arise despite careful upfront assessment. The maintenance and repair of existing properties may require significant investments that may only generate returns after a certain period of time and may require additional equity. In extreme cases, there is a risk that no return can be paid on pending renovation or repair work. In the case of higher costs, it may not be possible to distribute a return during the entire investment period and additional equity may have to be contributed.
k. Economic devaluation
Environmental and infrastructure factors as well as legal framework conditions in the immediate or wider environment of the investment property can have an influence on the profitability of such properties. This may include, for example, urban development measures or the determination of flight paths. As a result, the leasing of the properties may be impaired or substantial investments may be required to ensure leasability. As a result, the return on the properties in question could be reduced or leasing could no longer take place under the same conditions.
l. Property risks
Depending on the age, quality and use of real estate, there is a potential risk of hazards emanating from the buildings that could cause both personal injury and property damage. Although such risks are usually covered by appropriate insurance policies, it cannot be entirely ruled out that certain damages could nevertheless have a financial impact on investors. It is important to note that we at Crowdhouse strive to take appropriate safety precautions and take out the necessary insurances to minimize the risks for our investors.
m. Cluster risk
Investing in individual properties entails the potential risk of concentration risk if one or more of the risks described above materialize, which may have a negative impact on the earnings and financial position of the respective property. In such cases, it may be necessary to contribute additional equity and reduce the distribution of returns or even make it impossible. Therefore, it is advisable to optimize risk by spreading the investment over several properties, if possible. Broader diversification makes the portfolio more resilient to individual risks and increases the chances of long-term success.
n. Limited liquidity in the real estate market
Both when acquiring and selling real estate or interests in real estate, the Swiss real estate market, especially properties located in certain regions, is characterized by limited liquidity. This limited liquidity may have a negative impact on real estate prices. It may be difficult to buy or sell real estate or shares in real estate on short notice, depending on the market situation. In such cases, transactions could only be possible at substantial discounts or, in the worst case, could even result in a total loss for investors.
This list is not exhaustive.