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Financial Model

This interactive document demonstrates how a property owner and potential investors would fare in an investment, and compares it to second mortgages and investment properties.

1. Assumptions

Adjust the values in the three sections below to simulate a scenario relevant to you.
a. Property Value
Appraised Value ($)
Annual Appreciation (%)
1
$1,000,000
000
4
There are no rows in this table
⁠

Definitions

The
Appraised Value ($)
⁠
is the initial value of the property, as determined by an independent appraiser. Investors "buy in" at this value.
The
Annual Appreciation (%)
⁠
produces a constant positive or negative growth rate on the home value in this model. In reality, obviously, home values may increase one year and decrease another year. Try both positive and negative annual appreciation to see what would happen in different scenarios.
b. Investment
Investment ($)
Yield (%)
1
000000
100000
00
5
There are no rows in this table
⁠

Definitions

The
Investment ($)
⁠
amount can be thought of as either [the amount the property owner accepts as an investment] or [the amount an investor invests into a particular property].
The
Yield (%)
⁠
is determined by auction such that, in theory, the more appealing a property is to investors, the less yield will be required. Use this field to see what the most you'd accept as a property owner would be, or what the least you'd require as an investor would be.
Owner Discretion
Percent of Annual Payment Made (%)
Year of Property Sale
1
000
100
00
10
There are no rows in this table
⁠

Definitions

The
Percent of Annual Payment Made (%)
⁠
represents what percent of the amount owed the property owner chooses to pay. For example, if the percent is 75%, and the amount owed is $4,000, this model would assume the property owner chooses to pay $3,000. This model assumes a constant percent, but in practice this percent may vary year-to-year. The underpaid amounts get converted to rights to additional sale proceeds for investors.
The
Year of Property Sale
⁠
assumes the anniversary on which the property is sold. If this is year 1, for example, it assume a sale 365 days after the investment.

2. Results

This section can not be edited; it is the results of the inputs in the section above.
a. Financial Model
Year
Home Status
Home Value
Investor Equity Stake
Annual Payment Owed
Payment Made
Underpaid
Equity Increase
Investor Proceeds from sale
1
0
Owned
$1,000,000
10.00%
$5,000
$5,000
$0
0.0000%
​
2
1
Owned
$1,040,000
10.00%
$5,200
$5,200
$0
0.0000%
​
3
2
Owned
$1,081,600
10.00%
$5,408
$5,408
$0
0.0000%
​
4
3
Owned
$1,124,864
10.00%
$5,624
$5,624
$0
0.0000%
​
5
4
Owned
$1,169,859
10.00%
$5,849
$5,849
$0
0.0000%
​
6
5
Owned
$1,216,653
10.00%
$6,083
$6,083
$0
0.0000%
​
7
6
Owned
$1,265,319
10.00%
$6,327
$6,327
$0
0.0000%
​
8
7
Owned
$1,315,932
10.00%
$6,580
$6,580
$0
0.0000%
​
9
8
Owned
$1,368,569
10.00%
$6,843
$6,843
$0
0.0000%
​
10
9
Owned
$1,423,312
10.00%
$7,117
$7,117
$0
0.0000%
​
11
10
Sold
$1,480,244
10.00%
$7,401
$7,401
$0
0.0000%
$148,024
12
11
​
​
​
​
​
​
​
​
13
12
​
​
​
​
​
​
​
​
There are no rows in this table
6
Average
⁠

⁠
$6,130
⁠
⁠

b. Summary Statistics

Internal Rate of Return (IRR) (Investor), Effective Interest Rate (APR) (Property Owner)
⁠
9
⁠
%
Total cash returned to investor
⁠
$215,456
⁠
⁠

3. Comparison to Mortgages (for Property Owners)

Getting cash from Vessel investments can be compared to second mortgages for property owners. Enter the terms of the $
100000
⁠
second mortgage to which you would like to compare the $
100000
⁠
Vessel investment.
Mortgage Terms (Input)
Term (Years)
Fixed interest rate
1
15
5%
There are no rows in this table
⁠
This produces the comparisons below. Remember to try positive and negative appreciation assumptions in the first section of this document, as that will produce big differences in these outcomes.
Annual Payments (Output)
Mortgage
Vessel
1
$9,490
$6,743
There are no rows in this table
⁠
Payback to [Lender/Investor] at Time of Sale (Output)
Mortgage
Vessel
1
$41,905
$148,024
There are no rows in this table
⁠
Annual Percentage Rate (APR) (Output) [not including fees]
Mortgage
Vessel
1
5%
9%
There are no rows in this table
⁠
Total Repaid (Output)
Mortgage
Vessel
1
$136,800
$215,456
There are no rows in this table
⁠

4. Comparison to Buying Investment Property (for Investors)

Investing in properties through Vessel can be compared to buying an investment property with a mortgage.
We assuming a $
100000
⁠
downpayment (same as Vessel investment) and the following mortgage terms and rental income capitalization rate:
Investment Property (Input)
Downpayment (%)
Fixed Interest Rate (%)
Mortgage Term
Cap Rate (%)
1
20%
4%
30
3%
There are no rows in this table
⁠
The cap rate (
definition
⁠
) is the property's net operating income (rental revenue minus all operating costs, including taxes, maintenance, and the value of your time, and not including mortgage payments) divided by the estimated resale value of the property.
Given these assumptions, you can buy a $
500000
⁠
house, with a $
400000
⁠
mortgage, paying $
22916
⁠
/year in mortgage payments. Assuming the same rate of annual appreciation as the Vessel property (assumed as
4
⁠
%/year), the property will sell for $
740122
⁠
in
10
⁠
years, at which point, you'll pay back $
315136
⁠
to the mortgage lender.
We will compare this to making a $
100000
⁠
investment into a property with the assumption made in the first section o this document.
Annual Revenue (Output)
Invesment Property
Vessel Investment
1
$15,000
$6,743
There are no rows in this table
⁠
The annual revenue is likely to be higher buying a property because of leverage: with an investment property, you collect rental income on a higher-value asset.
Annual Cashflow (Output)
Investment Property
Vessel
1
-$7,916
$6,743
There are no rows in this table
⁠
However, annual cashflow might tell a different story, with mortgage payments making cash flow low or negative.
Proceeds from Sale (Output)
Investment Property
Vessel
1
$424,986
$148,024.43
There are no rows in this table
⁠
Total Gain or Loss (Output)
Variable
Investment Property
Vessel
1
Total Gain (Loss)
$245,826
$115,456
There are no rows in this table
⁠
Buying an investment property with a mortgage will produce more extreme gains and losses, in a similar manner as buying stocks on margin.
Try
⁠
high appreciation and high depreciation scenarios to simulate this.

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