Crypto and Blockchain Real Estate Investment Risks

By Teodor | Circular Economy Projects | 27 May 2020

In order to avoid later headaches, let's start our crowdinvestment journey with investment risks, it's good to remember them always!

Being a real estate developer and crypto enthusiast, I will insist on the related risks, and mainly in the region I live and work, the European Union, but they are the same globally.

I strongly recommend that each online crowdinvestor review the risk disclosures in detail before investing in any cryptocurrencies, tokens, or real estate blockchain platforms. On all investment platforms the crowdinvestor should be required to acknowledge the risks and the terms and conditions of investing. 

Risk Factors Relating to Legal and Regulatory Framework

In Europe the issuers are required to comply with the applicable laws and regulations of European Union and other countries too, so they may become subject to such laws and regulations in some jurisdictions. As now is just the beginning of blockchain era, even if lawyers make efforts to conform with all jurisdictions involved, the issuer of a token cannot guarantee that the internal policies and procedures will be sufficient to prevent or detect any inappropriate practices, fraud or violations of law by third parties, which could have a material adverse effect on that business and financial condition, so implicitly in your investment.  

Risk Factors Relating to Token Issuance 

Regulation of blockchain assets, digital tokens and token offerings is undeveloped in some jurisdictions and is likely to evolve quickly, with potentially unfavourable consequences for token holders, aka crowdinvestors. In addition, developments in regulation may change the nature of the issuer´s business or restrict the use of blockchain assets or the operation of a blockchain network upon which the issuer will rely. Before investing do your research very well. 

Risk Factors Relating to European Macroeconomic Scenario

Not too often but sometimes European governments intervene in the economy and occasionally make changes in policies and regulations. This fact could have an impact on inflation rates, interest rates, tax policies, wage and price controls, currency devaluations, and exchange controls. Any uncertainty may affect the fiat money and also cryptographic tokens and their price. 

Risk Factors Relating to Real Estate Investments

Sometimes, investments in the real estate market may be illiquid and this can make the purchase and sale of properties more difficult, adversely impacting the prices of such properties in the event of a purchase or sale under pressure. The Issuer of a token will usually make the best efforts to accomplish due diligence, contractual guarantees or indemnifications to prevent, protect against, or compensate for contingencies that may arise from the acquisition of Assets. Considering the limitations of the scope of a due diligence investigation, the debts of previous property owners may continue to encumber the property, and disputes over the clearance of a property that had not been previously identified or resolved may also exist. This may delay the property purchase time and affect the entire investment, including from online crowdinvestors. 

Risk Factors Relating to Business

Legal structure of the Issuer:

The constitution of a token issuer is contained in the document named Articles of Association, which provides that there must be at least one director and the management of the company is the responsibility of, and is carried out by, its board of directors. As a holder of tokens, you are not entitled to any shares of the issuer nor to any other right or interest in or to issuer (including any debt or equity interest therein) and will have no rights to appoint or remove the board of directors or operators of issuer. 

Possible timeline delays:

In the real estate, the issuer considers the acquisition of real estate properties to be essential to the consolidation and expansion of its portfolio, but is unable to guarantee that its projects and portfolio expansion strategies will be successful in the future. The Issuer may be unable to make new real estate acquisitions with the same frequency, or at the same favourable prices and conditions anticipated in its business strategy. 

Related-party Transactions:

Be aware about the fact that in the ordinary course of a business, the issuer of a token may enter into related party transactions on an arm’s length basis and on market terms, pursuant to our related party transactions and conflicts of interest policy.

Other Risks

In the quite new field of blockchain plus real estate, the crowdinvestor should have a functional understanding of storage and transmission mechanisms associated with cryptographic tokens. Usually these platform are made so the issuer is not be responsible in any way for loss of tokens resulting from actions taken by, or omitted by the crowdinvestors. If you do not have such experience or expertise, then you should not purchase tokens or participate in the sale of tokens until you learn about them VERY well!

In addition to the risks included above, there are other risks associated with your purchase, possession and use of cryptocurrencies and tokens, including unanticipated risks, so my advice is, specially for newbies in the crypto world, do your research very well before investing! 

Diversified Investment Portfolio (DIP)

And, do not put your eggs in just one basket! Below is MyDip strategy of investment, you can create yours, of course:
25% Passive income on real estate blockchain platforms;
25% Passive income on Nexo platform;
20% Crypto HODL (10 coins from top 100 on CMC); 
20% Passive income on traditional crowdfunding platforms;
10% Gold on Bullion Vault and some jewelry.
- This isn't an investment advice; do your own research before investing.



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Strong Family man and Christian believer, entrepreneur involved in AI, Web3.0 apps development, and in crypto investment.

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