Frequently Asked Questions: Risks

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Risk: Oversupply

We only work in high growth markets with low vacancy rates. The financial entity also carries out an extensive financial analysis to ensure that the investment has a low-risk profile.

Risk: Lack of execution of construction in expected timing

The construction budgets put in place by the developer include a 3% provision for overrun costs.

How is my investment backed?

Infinity is a Limited Partner in the joint venture that owns each project including both the building and the land. The investment is backed by the real asset itself.

In the contractual documents for subscription of the investment, you can find more information regarding investment guarantees and risks.

Does my investment have any risks?

All investments come with some form of risk. Investment risk can be defined as the probability or likelihood that the investment does not generate the expected return or even the occurrence of losses relative to the expected return on any particular investment. 

Risk and return are tied: the greater the expected return of a product, the more risk we assume. Some investments have a directly proportional relationship between risk and return (1:1). This symmetric relationship means that for every percentage point of risk, there is the same percentage point of return. 

Generally quality real estate investment does not have a symmetric relationship between risk and return because the investment is backed by a tangible asset, in a growing market, making it a more attractive and lower risk investment. 

We consider Infinity’s projects as low risk investments because aside from being backed by the real estate asset, we only invest in projects in selected areas within high-growth US cities.

The following are some examples of risk:

  • Price risk: Variation in the price of the asset over the life of the investment
  • Construction risk: Variation in construction costs making the development less profitable
  • Stabilization risk: Possibility that the time to rent the units will take longer than expected
  • Liquidity risk: Possibility of converting your investment to cash at market value
  • Currency risk: The value of the investments may be affected by changes in exchange rates

A full breakdown and explanation of these risks can be found in the underwriting document as they vary by project.

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