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Equity Sharing

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Overview⁠

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Equity Sharing⁠

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Equity Sharing Percentage

Definition

Equity sharing is one of the two main features of home investments through Vessel. When we refer to “buying" or "sharing" equity of a property, what we really mean is buying contractual rights to a percentage of the eventual gross sale price of the property. The initial Equity Sharing Percentage is determined as such:

⁠

For example, a $100k investment into a property appraised at $400k would produce an initial Equity Sharing Percentage of 25%.

Demonstration

Try it out for yourself by adjusting the sliders below to see how the equity sharing percentage is calculated:

Appraised Home Value

0000000

400000

⁠

Investment Amount

000000

100000

⁠

Equity Sharing Percentage:

100000

⁠

400000

⁠

25

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Proceeds from Sale

Definition

To calculate the amount the investors are owed at the time of sale (or

buyout⁠

), multiply the equity sharing percentage and the gross sale price of the property. Closing costs are paid entirely by the property owner.

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Demonstration

If the property, originally appraised at

400000

⁠

, sells for:

0000000

500000

⁠

then, given the

25

⁠

% Equity Sharing Percentage assumed in the previous section, the investor is entitled to:

25

⁠

% x $

500000

⁠

= $

125000

⁠

at the time of the property's sale.

Notes:

The Equity Sharing Percentage can increase during the life of the investment through

conversion of income to equity⁠

at the property owner's discretions

This is not an actual purchase of equity; however, it uses

legal structure⁠

to simulate something similar.

If this amount is greater than the sale price minus the balance due to any mortgage lenders in first position, then this amount would be the balance remaining after all mortgage payments are made. This is unlikely, because we only work with properties that are free & clear or have low mortgage balances.

Next topic:

Yield Percentage & Income Payments⁠

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