Risk Disclosure

Important Investment Warning

Investing in real estate through Fractly involves significant risks, including the potential loss of your entire investment. Please read this disclosure carefully before investing. If you do not understand any aspect of this document, please seek independent financial advice.

General Investment Risks

1 Loss of Capital

You may lose some or all of your invested capital. Real estate values can decline due to market conditions, economic factors, property-specific issues, or other circumstances beyond our control. Past performance is not a guarantee of future results.

2 Illiquidity Risk

Real estate investments are inherently illiquid. Unlike stocks or bonds, you may not be able to sell your tokens quickly or at a price you find acceptable. There may be no secondary market for your tokens, and any secondary market that exists may have limited buyers.

3 No Guaranteed Returns

Projected yields and returns are estimates only and are not guaranteed. Actual rental income, occupancy rates, and property appreciation may differ materially from projections. Distributions may be reduced, delayed, or suspended entirely.

4 Long-Term Investment

These investments should be considered long-term (typically 5-10 years). You should only invest money that you can afford to have locked up for extended periods and that you can afford to lose entirely.

Real Estate-Specific Risks

Market Risk

Real estate markets are cyclical and affected by economic conditions, interest rates, supply and demand, and local factors. Property values in Dubai and other markets can experience significant volatility.

Vacancy Risk

Properties may experience periods of vacancy, reducing or eliminating rental income. Finding quality tenants can take time, and tenants may default on their lease obligations.

Property Damage

Properties may suffer damage from natural disasters, accidents, or tenant negligence. While properties are insured, insurance may not cover all losses or may have significant deductibles.

Maintenance Costs

Unexpected repairs, renovations, or capital expenditures can reduce returns. Older properties may require significant maintenance that was not anticipated at the time of investment.

Regulatory Changes

Changes in laws, regulations, zoning, or tax treatment can adversely affect property values, operating costs, or the ability to rent properties. This includes changes to short-term rental regulations.

Geographic Concentration

Properties focused in specific regions (such as Dubai) are subject to local economic conditions, political stability, and regional market dynamics.

Token and Technology Risks

Token Value Risk

Tokens may trade at a discount to the underlying property value. The market price of tokens on any secondary market may not reflect the actual value of the underlying property.

Technology Risk

Our platform relies on technology systems that may experience failures, cyberattacks, or other disruptions. Smart contract vulnerabilities could potentially be exploited.

Cryptocurrency Volatility

If you invest using cryptocurrency, the value of that cryptocurrency may fluctuate significantly between the time you send payment and when it is converted or applied to your investment.

Regulatory Uncertainty

The regulatory environment for tokenized securities is evolving. Changes in law or regulation could affect the legality, transferability, or value of your tokens.

Platform and Operational Risks

Platform Risk: Fractly is a relatively new platform. Our business may not succeed, which could affect your ability to manage or liquidate your investments.
Management Risk: Property management decisions are made by professional managers. Poor management decisions could adversely affect property performance.
Conflict of Interest: We may have conflicts of interest in selecting properties, setting fees, or making other decisions that affect your investments.
Third-Party Risk: We rely on third parties for property management, custody, legal, and other services. Their failures could affect your investments.
No Deposit Insurance: Your investments are not protected by any government deposit insurance or investor protection scheme.

Tax Risks

Tax treatment of real estate token investments varies by jurisdiction and may change over time. You are responsible for understanding and complying with tax obligations in your jurisdiction. We recommend consulting with a qualified tax advisor before investing.

Suitability

Investment in Fractly offerings may not be suitable for all investors. You should consider investing only if:

You have adequate means of providing for your current needs and contingencies
You have no need for liquidity in this investment
You can bear the economic risk of losing your entire investment
You understand the risks involved in real estate investing
You have evaluated the investment in the context of your overall portfolio

Diversification

Recommendation: We strongly recommend diversifying your investments across multiple properties and asset classes. Do not invest more in any single property than you can afford to lose entirely. A well-diversified portfolio can help reduce overall investment risk.

No Investment Advice

Nothing on the Fractly platform constitutes investment, legal, tax, or financial advice. All information is provided for informational purposes only. You should consult with qualified professionals before making any investment decisions.

Acknowledgment

By investing through Fractly, you acknowledge that you have read and understood this Risk Disclosure, that you are investing at your own risk, and that you accept the potential for loss of your entire investment.

Questions?

If you have questions about investment risks:

Email: support@fractly.io

Support Center: Contact Support