Every investment comes with a degree of risk. The same can be said about real estate investments. There is no 100% guarantee that a project will be successful, or that it will generate the expected returns. This is a fact that all investors must face while choosing their investments.
Compared to investing in equities or venture capital, in real estate investing the risk of 100% loss is diminished because investments are made into physical assets (the properties). Real estate will always retain some level of value even if it is nothing more than a plot of land. This does not eliminate all risks but makes it more likely that an investor can recoup some or all of their investment. However, with the right knowledge and the right opportunity, there is a higher chance for success!
Risk in financial terms is the probability that an investment will not generate its expected return. Without risk, however, there can be no rewards! Minimizing risk while maximizing rewards is a delicate balance for any investor. Due diligence and truly understanding an investment before making it is crucial for managing a portfolio. As with any investment, the real estate opportunities offered at BrikkApp have risks. BrikkApp seeks to present those risks clearly to investors using an objective and unbiased approach.
The BrikkApp risk model examines every real estate investment before it is presented to investors. Projects are reviewed on a number of metrics, which include:
- Capital positions of senior and junior financing
- Loan-to-Value
- An in-depth analysis of the project location
- Development risks and the steps that are taken to mitigate them
- Developer’s track record
- Security provided on the investment
- Development timeline and planning
- Potential and current cashflow of the real estate
Unsure of some of these metrics? View our investment glossary to familiarize yourself!
Once the project has been graded on these measures, a score is generated and matched to a credit grade very similar to the format used for bond ratings: Starting at AAA and ending with C, with AAA implying little to no risk, and C implying very high risk, with varying risk levels in between.
These scores are presented on every project listed on BrikkApp in the description.
Investors can be assured in the risk assessment for projects on BrikkApp thanks to our thorough due diligence and risk model that is applied to every investment opportunity. Additionally, investors on BrikkApp have an added layer of assurance because each project is sourced from a partner platform. BrikkApp only partners with platforms that have strict risk assessment criteria and conduct thorough due diligence. This means that each project presented on BrikkApp has essentially been assessed twice!
BrikkApp presents these investment projects to investors with full transparency on the potential risks. No investment is guaranteed. It is up to the potential investor to decide whether the risk is worth the reward -- and with the right knowledge, investors can make the best decisions for themselves.
View our available investment opportunities on the BrikkApp Marketplace and get started building your real estate portfolio today!