Why the numbers matter more than glossy presentations
High returns do not automatically make a project profitable. You should start with the financial model and check whether every figure has a clear rationale. If the model balances, that is the first sign the investment may be justified.
Pictures, attractive visualisations and presentations help sell an idea. They do not replace verified calculations and do not prove occupancy or actual operating costs.
Table comparing key indicators — before and after
| Before | After |
|---|---|
| Relied on promises of fixed returns without explaining where the funds come from | Requires a financial model explaining income sources and the allocation of expenses |
| Presentations and photos served as the main evidence of profitability | The primary evidence should be numerical calculations and realistic occupancy figures |
| Guarantees of investment return were offered without a structure to protect capital | Look for mechanisms to protect capital and the earmarking of funds for each property |
| Information about taxes, operating expenses and occupancy was fragmentary | The modern approach involves a full calculation of operating costs, taxes and occupancy rates |
| Part of the market seemed closed off and unavailable for independent verification | An investor should either know the market well or commission a detailed study from experts |
| Investor funds could be redirected from one project to another without transparency | Seek transparency in the use of funds and separation of financing between properties |
| Completed properties were valued based on promises of high returns | A completed property should demonstrate a real 6−8% per annum through actual operational activity |
| New developments often promised large profits without explaining the sources of growth | For new developments, real returns can be in the 8−12% range without accounting for capitalisation and assumptions need to be verified |
How to spot a model that operates like a pyramid
Pay special attention when a fixed annual return is offered. If an investor is guaranteed 8%, 10% or 12% without detailed calculations, that can be a warning sign. A guarantee in itself does not prove fraud, but it requires further scrutiny.
According to developer Viktor Zabojenko in a video for Finance.ua, a project can operate for a long time thanks to a steady inflow of new investors. Problems begin when that inflow stops and it turns out funds were being used to support earlier-launched projects.
What exactly to check in the financial model
Start with income sources and the cost structure. An investor needs to understand what drives the rental rate, which taxes are included and which operating costs affect net profitability. Every figure must be supported by data or market comparables.
Check occupancy and market rates for your region and housing type. Some markets are well documented, others are not. If the data are public, you can compare the model’s assumptions with reality yourself or hire experts to verify them.
What returns to consider realistic for different types of properties
According to Zabojenko, a completed property can yield around 6−8% per annum. He adds that 8% is already a very good result for a finished property. If you are offered 10% on a completed property, that warrants special attention and a thorough review of the calculations.
For the new-build market the developer gives a benchmark of 8−12% without taking capitalisation into account. Such returns can rise in the future if rental rates increase, but the initial assumptions must be verified for realism.
Practical steps before committing funds
Check the financial model line by line from revenues to taxes and reserves. Find out whether margins or reserves for payouts are included in the model, and whether there are mechanisms to protect capital. If any figures are not backed by data, ask for explanations or documentation.
Choose reliable banks for deposits and use available verification tools. The catalogue from Finance.ua can help with this. Engage experts to check complex assumptions and do not accept guarantees without transparent investor-protection mechanisms.
