| A | B | C | D | E |
| Lower Risk / Return | Higher Risk / Return |
| RATING | RISK | SCORE | INTEREST |
|---|---|---|---|
| A | Low | 75 - 100 | 5% - 6% |
| B | Moderate | 60 - 74 | 6% - 7% |
| C | Average | 45 - 59 | 7% - 8% |
| D | Increased | 35 - 44 | 8% - 10% |
| E | High | 20 - 34 | 10% - 15% |
The rating is done objectively by the Investment Committee. Points are given on various components of each investment opportunity that add up to the risk score. The risk rating is derived from the resulting score.
| COMPONENT | POINTS |
|---|---|
| Background Fundraiser | 0 - 10 |
| Solvency | 0 - 10 |
| Profitability | 0 - 10 |
| Loan To Value (LTV) | 0 - 20 |
| Total Loan Cover (TLC) | 0 - 10 |
| Marketability | 0 - 10 |
| Cashflow | 0 - 10 |
| Investment risks | 0 - 20 |
| TOTAL SCORE | 0 - 100 |
The purpose of our rating model is to allow objective comparison between various investment opportunities. The risk classification A to E is a snapshot and therefore no risks are excluded. From the information available in the pitch, investors must carefully weigh the risks that they can and are willing to accept and seek professional advice as needed. The risk classification is not considered advice and therefore no rights can be derived from it.
The Max Crowdfund Investment Committee selects investment opportunities with the greatest care and objectively identifies the risks. Only investment opportunities that meet our quality standards are eligible to raise funds via the Max Crowdfund platform.
Every form of investment includes risks. You may receive back less money than you have invested. We, therefore, advise you to invest only a responsible portion of your assets in crowdfunding projects and to spread your investment over multiple projects to reduce your risk.
Max Crowdfund performs due diligence on the fundraiser and its prior track record.
| BACKGROUND | SCORE |
|---|---|
| Years of experience | 0 - 3 |
| Number of similar deals closed successfully | 0 - 3 |
| Credit rating of fundraiser | 0 - 4 |
Solvency
Solvency is the ratio between the debt and equity of the fundraiser and is calculated as:
Equity / Debt (including this loan request) * 100%
| SOLVENCY | SCORE |
|---|---|
| < 5% | 1 |
| 5% - 10% | 2 |
| 11% - 20% | 4 |
| 21% - 30% | 7 |
| > 30% | 10 |
Profitability
Profitability means the relationship between profit and the capital of the company. The better this score is, the greater the chance that the fundraiser can meet his/her future obligations for payment of interest and repayment. The profitability of the total capital is calculated as follows:
Profit before tax / total capital * 100%
| PROFITABILITY | SCORE |
|---|---|
| < 5% | 1 |
| 5% - 7.5% | 2 |
| 7.5% - 10% | 4 |
| 10% - 15% | 7 |
| > 15% | 10 |
Loan To Value (LTV)
The coverage value of the object is determined on the basis of the valuation report of a recognized appraiser. The coverage value is expressed as the so-called Loan To Value ratio (LTV).
The LTV is calculated as follows: (loan/coverage) * 100% where coverage is the sum of all securities provided.
Notes: If the financing is provided on the basis of a second mortgage registration, the score is lowered by 5 points. Additional collateral is required in case the loan amount exceeds the foreclosure value or a second mortgage registration applies.
| LOAN TO VALUE (LTV) | SCORE |
|---|---|
| 81% - 90% | 2 |
| 71% - 80% | 4 |
| 66% - 70% | 8 |
| 61% - 65% | 12 |
| 56% - 60% | 15 |
| 50% - 55% | 18 |
| < 50% | 20 |
Total Loan Coverage
The Total Loan Cover (TLC) is the sum of the mortgage given and additional securities (personal or business guarantee) provided. Additional securities are required if the cover value of the object is less than the execution value of the property as determined in the valuation report of a recognized appraiser. The TLC value is expressed as the so-called TLC ratio.
The TLC is calculated as follows: Execution value + additional securities / loan amount * 100%
Notes: If additional securities apply these can be marked as material (5), mostly material (4), partly material (3), mostly moral (2) or moral (1). The score resulting from TLC is multiplied by the strength of additional securities provided. If no additional securities are applicable, a multiplier of 5 is used (which would require the execution value to exceed the loan amount to result in a score > 0.
| TOTAL LOAN COVERAGE | SCORE |
|---|---|
| 100% - 110% | 1 |
| > 110% | 2 |
Marketability
Marketability is determined by supply and demand in the market, the location, accessibility, and the multi-functionality of the object. Points can be scored for each part.
| MARKETABILITY | SCORE |
|---|---|
| Local demand is lower (0), equal (1), or higher (3) than supply | 0 - 3 |
| Object characteristics lower (0), average (1), or higher (2) | 0 - 2 |
| Easily accessible by public transport | +1 |
| Optional use for other functions | +1 |
| Can be rented or sold in parts | +1 |
| Located in the center of a big city | +1 |
| Available facilities nearby (restaurants, shops, schools and parks) | +1 |
Cash Flow
The Debt Service Coverage Ratio (DSCR), is expressed as the income divided by the expenditures. Income refers to the revenues from rental and/or sale minus the operating costs such as costs for insurance, taxes, and maintenance. The expenditures concerning the sum of the interest payable and repayments on the loan.
The DSCR is calculated as follows: Income / Expenditures * 100%
| DEBT SERVICE COVERAGE RATIO (DSCR) | SCORE |
|---|---|
| 105% - 120% | 1 |
| 121% - 135% | 2 |
| 136% - 155% | 3 |
| 156% - 185% | 4 |
| > 185% | 5 |
Investment Risks
The risks associated with real estate projects are diverse and specific to an object, the type, and the quality of the investment plan. These risks are identified on the basis of years of experience in the real estate sector.
Example risk identification questions: