Risk Information
Estimated reading time: 2 min
Due to the potential for losses, the Financial Conduct Authority (FCA) considers this investment to be high risk.
What are the key risks?
- You could lose all the money you invest
- You are buying shares in a company (the SPV) that owns a buy-to-let residential property. You do not own the property directly.
- The value of your shares depends on the value and financial performance of the SPV and its property. Property prices and rental income can fall and the SPV will have costs and liabilities.
- Having a property, or an existing tenant, does not protect your capital. If the SPV becomes insolvent or its assets are insufficient to meet its liabilities, your shares could become worthless and you could lose all the money you invested.
- Cahootz reviews information about the property, its acquisition costs, estimated rental yield and budgets for ongoing and unexpected costs. These checks do not guarantee the value or condition of the property, future rental income or the performance of your investment. You should review the investment information carefully before investing.
- You may not be able to get your money back when you want
- There is no established market for your shares and no guarantee that someone will want to buy them.
- You may be able to sell your shares privately, subject to the applicable transfer arrangements, but you may be unable to find a buyer or may have to accept less than you invested.
- You should therefore be prepared to hold this investment for several years.
- Don’t put all your eggs in one basket
- Investing a large proportion of your money in one property, or one type of investment, increases the impact if that investment performs badly.
- Spreading your money across different investments can reduce your dependence on any single investment.
- As a general guide, retail investors should not invest more than 10% of their net assets in high-risk investments.
- Rental income and property values can fall
- Any advertised rental yield is an estimate, not a guaranteed return.
- Rental income can be affected by vacant periods, tenants failing to pay rent and changes in market rents.
- The SPV must also meet costs such as repairs, maintenance, insurance, management costs and other property expenses. These can reduce the amount available to pay dividends to shareholders.
- Property prices can fall. When the property is eventually sold, the proceeds available to shareholders could be less than the amount originally invested.
- You are unlikely to be protected if the investment performs badly
- ShareIn is FCA authorised and Cahootz is its appointed representative. This does not mean that the FCA has approved the property or the SPV shares, or that your investment is guaranteed.
- FSCS protection does not compensate investors for poor investment performance or a fall in the value of the property or SPV shares. FSCS protection may apply to certain eligible claims against a failed regulated firm depending on the circumstances.
- FOS does not compensate investors for poor investment performance. It may be able to consider certain complaints about regulated financial services provided in connection with the investment.
You should make sure you understand the investment and its risks before investing.