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Updated on
4/8/2024

Analyzing the Risks and Rewards of Using Real Estate Investment Apps

Written by: 
Landa Team

The allure of real estate investment has always been strong, promising not just substantial returns but also the potential for building lasting wealth through property appreciation and rental income. In recent years, this allure has been magnified by the advent of real estate investment apps, which promise to simplify the investment process and make it accessible to a wider audience. However, as with any investment opportunity, there are both risks and rewards involved. Understanding these can help investors make informed decisions and navigate the complexities of the real estate market effectively.

Rewards of Real Estate Investment Apps

Tax Benefits: One of the significant advantages of real estate investments is the array of tax incentives it offers. These include lower capital gains taxes for long-term holdings and various programs aimed at deferring taxes, making real estate a tax-efficient investment choice​​.

Diversification: Adding real estate to your investment portfolio can provide a hedge against inflation and market volatility, enhancing the portfolio's overall resilience​​.

Passive Income Potential: Rental properties offer a continuous source of passive income, which can be an attractive prospect for investors looking to generate regular cash flow​​.

Risks of Using Real Estate Investment Apps

Financing Complexities: The dynamics of mortgage rates and loan structures can significantly influence the affordability and viability of real estate investments, making careful financial planning essential​​.

Management Responsibilities: Real estate is not just about investing and waiting for returns. It involves active management, including maintenance and tenant relations, which can be both time-consuming and costly​​.

Market Dependence: The success of a real estate investment heavily relies on market conditions and location, making some investments inherently riskier than others​​.

Liquidity Issues: Unlike stocks or bonds, real estate is a relatively illiquid asset, which can complicate the process of quickly selling a property without incurring losses​​.

Mitigating the Risks

Diversification: Spreading investments across different property types, locations, and tenant bases can help mitigate risks. Real estate investment trusts (REITs), crowdfunding platforms, and private placements offer opportunities for diversification with relatively lower capital requirements​​.

Insurance and Contracts: Shifting or mitigating specific risks through insurance contracts and well-drafted agreements can protect investors from unforeseen events​​.

Choosing the Right Ownership Structure: Limiting personal liability through the careful selection of investment entities, such as LLCs or Limited Partnerships, can protect personal assets from investment-related liabilities​​.

Hedging Strategies: Employing techniques like setting up reserve funds or engaging in contractual arrangements that limit liability can further protect against potential losses​​.

Conclusion

Real estate investment apps offer a promising pathway to entering the real estate market, lowering the barriers that have traditionally made these investments challenging for many. However, the complexities and inherent risks of real estate investment necessitate a cautious and informed approach. By understanding both the risks and rewards and employing strategic risk management techniques, investors can navigate the real estate investment landscape more successfully, maximizing their potential for returns while minimizing exposure to losses. As the real estate market continues to evolve, especially with technological advancements, staying informed and adaptable will be key to achieving long-term investment success.

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Landa Holdings, Inc. ("Landa Holdings") operates the www.landa.app website (the "Site") and the Landa mobile application (the "App")(collectively, the “Platform”). Landa Holdings manages Landa App LLC, Landa App 2 LLC, Landa App 3 LLC (“Landa Issuers”), and raises funds and facilitates the issuance of shares for the Landa Issuers entities through the Platform pursuant to Regulation A under the Securities Act of 1933 (“Regulation A”).

Neither Landa Holdings nor any of its affiliates is a registered broker-dealer or investment advisor. All securities-related activity for the Landa Entities is conducted through Dalmore Group LLC (“Dalmore”), a registered broker-dealer and member of FINRA/SIPC, You can review Dalmore's brokercheck for Dalmore.

Landa is not a bank.

Further, Landa Management LLC, a wholly-owned subsidiary of Landa Holdings, manages Landa Financing LLC (“Landa Financing”), and raises funds and facilitates the issuance of shares for Landa Financing through the Platform pursuant to Regulation A. All securities-related activity for Landa Financing is conducted through Dalmore Group LLC (“Dalmore”), a registered broker-dealer and member of FINRA/SIPC (for more information on Dalmore, review Dalmore’s brokercheck.

‍You should speak with your financial advisor, accountant, and/or attorney when evaluating any offering of securities. Neither Landa Holdings, Landa App, nor Dalmore makes any recommendations or provides advice about investments, and no communication, through this website or in any other medium, should be construed as a recommendation for any security offered on or off this investment platform. Nothing in this material should be construed as investment or tax advice, or a solicitation or offer, or a recommendation to buy or sell any securities. The Site and/or the App may make forward-looking statements. You should not rely on these statements but should carefully evaluate the offering materials in assessing any investment opportunity, including the complete set of risk factors that are provided as part of the offering circular for your consideration.  We urge you to review the applicable offering circular, available here.


All securities offered by the Landa Entities and Landa Financing are deemed “Shares”. Investing in Shares involves risks, and there is always the potential of losing money when you invest in Shares. Past performance is no guarantee of future results. Investments in Shares are speculative and involve substantial risks to consider before investing, outlined in the respective offering materials and including, but not limited to, illiquidity, lack of diversification, and complete loss of capital. An investment in Shares constitutes only an investment in a particular offering and not in Landa Holdings, Landa App, or any of the underlying asset(s). Investors should carefully review the risks located in the respective offering materials for a more comprehensive discussion of risks.

‍
No money or other consideration will be solicited (and if sent, will not be accepted), and no offer to buy Shares of a particular offering can be accepted, and no part of the purchase price can be received until an offering statement filed with the Securities and Exchange Commission (the "SEC") relating to those Shares has been qualified by the SEC. Any such offer may be withdrawn or revoked, without obligation or commitment of any kind, at any time before notice of acceptance given after the date of qualification by the SEC. An indication of interest involves no obligation or commitment of any kind.


Investment overviews on the Platform contain summaries intended for informational purposes only and are not complete. For detailed information, we urge you to refer to the applicable offering circular filed with the SEC. Neither Landa Holdings nor any of its affiliates offers refunds after an investment has been made.

You should speak with your financial advisor, accountant, and/or attorney when evaluating any Shares. None of Landa Holdings or its affiliates, Dalmore makes any recommendations or provides advice about Shares, and no communication, through this website or in any other medium, should be construed as a recommendation or investment advice. Nothing on the Platform should be construed as investment or tax advice, or a solicitation or offer, or a recommendation to buy or sell any securities.The Platform may make forward-looking statements. You should not rely on these statements but should carefully evaluate the offering materials in assessing any investment opportunity, including the complete set of risk factors that are provided as part of the offering circular for your consideration. We urge you to review the applicable offering circulars, available here.

All Shares will be issued in electronic form only and will not be listed or quoted on any securities exchange. After a Series’ offering has concluded, we expect that the Public Private Execution Network Alternative Trading System, or PPEX ATS (the “Secondary Trading Platform”), which is registered with the SEC and operated by North Capital Private Securities Corporation (“North Capital”), will be the only venue available for the resale of Shares. Resales of Shares will be conducted by Dalmore, as a broker-dealer member of the Secondary Trading Platform; provided, however, any such resale of Shares will be subject to federal and state securities laws and the restrictions in the Series’ Operating Agreement, and there can be no assurance that an active market for any Shares will develop on the Secondary Trading Platform, that the Secondary Trading Platform will be available to allow resales of Shares to residents of all states, or that the Secondary Trading Platform will be available at all. For these reasons, investors must be prepared to hold their Shares indefinitely.

All images and figures shown are for illustrative purposes only and are not actual customer or model returns. Landa is not a cryptocurrency app, all monetary values are in U.S dollars and available only to U.S. investors.


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