Risks to Consider

Real estate values fluctuate based on broader economic conditions, local market dynamics, and property-specific factors: Economic Downturns: Recessions can decrease property values and rental demand. During the 2008 financial crisis, some markets saw property values drop 30-50%. Interest Rate Changes: Rising interest rates typically decrease property values as financing becomes more expensive. They also increase borrowing costs for leveraged properties. Local Market Shifts: Population changes, job market shifts, or new development can significantly impact specific markets. A major employer leaving town can devastate local property values. Property-Specific Issues: Even in good markets, individual properties can underperform due to increased competition, changing neighborhood dynamics, or unforeseen problems. Mitigating Market Risk: • Diversify across multiple markets and property types • Invest in properties with stable, long-term tenants • Choose properties in markets with strong economic fundamentals • Maintain a long-term investment horizon (5+ years) • Don't invest money you'll need in the short term

While fractional real estate offers better liquidity than direct ownership, it's still significantly less liquid than stocks or bonds: Lock-Up Periods: Many platforms require you to hold shares for 6-12 months before selling. During this time, your money is completely illiquid. Limited Secondary Markets: Not all platforms have secondary markets, and those that do may have limited buyer interest. You might not be able to sell when you want to. Price Uncertainty: Secondary market prices are determined by supply and demand. During market stress or if a property has problems, you may only be able to sell at a significant discount. Platform Dependence: Your ability to sell depends on the platform continuing to operate. If a platform shuts down, selling becomes complicated. Property Sale Timeline: Even with secondary markets, the underlying property may take years to sell. If you're waiting for final liquidation, the timeline is out of your control. Practical Implications: • Only invest money you won't need for 5+ years • Don't count on secondary markets for emergency access to funds • Understand the specific liquidity options for each platform you use • Keep adequate liquid savings outside of fractional real estate

Your investment experience and safety depend heavily on the platform you choose: Platform Failure: If a platform goes bankrupt or shuts down, managing your investment becomes complicated. While you typically still own your shares legally, exercising those rights becomes difficult. Cybersecurity: Platforms hold sensitive financial and personal data. A security breach could expose your information or, in worst cases, compromise your investments. Operational Issues: Poor platform management, technology failures, or staffing problems can affect everything from distribution timing to customer service. Regulatory Changes: Platforms operate in a evolving regulatory environment. Changes in securities laws could impact how platforms operate or your ability to invest. Reducing Platform Risk: • Research platforms thoroughly before investing • Check regulatory status (SEC registration, FINRA membership, etc.) • Review the platform's track record and management team • Understand the legal structure protecting your ownership • Diversify across multiple platforms • Prefer platforms with clear investor protections and insurance • Read the fine print about what happens if the platform ceases operations

Fractional real estate exists in a complex regulatory environment that continues to evolve: Securities Regulations: Most fractional real estate offerings are securities subject to SEC regulations. Changes in how these regulations are interpreted or enforced could impact platforms and investments. Blockchain-Specific Risks: Blockchain-based fractional real estate faces additional regulatory uncertainty. The SEC's stance on crypto assets continues to evolve, potentially affecting blockchain-based property platforms. Tax Treatment: Tax laws around fractional real estate are complex. Changes in how these investments are taxed (capital gains, depreciation, passive income rules) could affect your returns. State Regulations: Different states have varying regulations for real estate syndications and securities offerings. Some investments may not be available in all states. International Considerations: If investing in properties or platforms based in other countries, you may face additional regulatory complexity and risk. Protecting Yourself: • Consult a tax professional familiar with fractional real estate • Understand the regulatory framework each platform operates under • Stay informed about regulatory developments in the space • Keep good records of all investments for tax purposes

Individual properties carry their own unique risks beyond general market conditions: Physical Property Issues: Structural problems, environmental contamination, or major system failures can significantly impact property value and require costly repairs. Tenant Risk: Problem tenants can cause property damage, stop paying rent, or require expensive eviction proceedings. Even with professional management, tenant issues occur. Vacancy: Periods without tenants mean no rental income while expenses continue. Extended vacancies can significantly impact returns, especially for properties dependent on a single tenant. Insurance Gaps: Standard insurance may not cover all potential losses. Natural disasters, liability claims, or unusual events could result in uninsured losses. Management Quality: Poor property management decisions can decrease returns and property value. Not all property managers are equally competent. Concentration Risk: Investing heavily in a single property means that property's problems significantly impact your portfolio. Due Diligence Steps: • Review property inspection reports and condition assessments • Understand the tenant situation and lease terms • Check the property's insurance coverage • Research the property manager's track record • Diversify across multiple properties rather than concentrating in one • Understand the property's competitive position in its market