Vessel Tutorial
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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.
Video demonstration of financial model:

Definitions (click arrow to view)

The is the initial value of the property, as determined by an independent appraiser. Investors "buy in" at this value.
The 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.
The 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 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.
The 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 $3,000. This model assumes a constant percent, but in practice this percent may vary year-to-year. The underpaid amounts get converted to rights to additional sale proceeds for investors.
The assumes the anniversary on which the property is sold. If this is year 1, for example, it assume a sale 365 days after the investment.
Buyout Clause Used refers to whether the owner chooses to buy out investors instead of selling the property in a market sale. In this case, a new appraisal is ordered, and we would use the greater of the initial appraised value, and the new appraised value to determine the property value.
Assumptions (Sample Property)
0
Initial Appraised Value
Annual Appreciation (%)
Investment ($)
Yield (%)
% of Payment Made with Cash (%)
Year of Property Sale
Buyout Clause Used
Owner-caused value change
1
$1,000,000
000
6
000000
100000
00
8
000
0
00
7
0000000
0
There are no rows in this table
Model (Sample Property)
0
Year
Home Status
Home Value
Investor Equity Stake
Annual Payment Owed
Payment Made
Underpaid
Equity Increase
Investor Proceeds from Sale
Cumulative Payback
1
0
Owned
$1,000,000
10.00%
$0
2
1
Owned
$1,060,000
10.00%
$8,000
$0
$8,000
0.755%
$0
3
2
Owned
$1,123,600
10.75%
$9,120
$0
$9,120
0.812%
$0
4
3
Owned
$1,191,016
11.57%
$10,397
$0
$10,397
0.873%
$0
5
4
Owned
$1,262,477
12.44%
$11,852
$0
$11,852
0.939%
$0
6
5
Owned
$1,338,226
13.38%
$13,512
$0
$13,512
1.010%
$0
7
6
Owned
$1,418,519
14.39%
$15,403
$0
$15,403
1.086%
$0
8
7
Sold
$1,503,630
15.47%
$17,560
$0
$17,560
1.168%
$250,226.88
$250,227
No results from filter

Summary statistics

Internal Rate of Return (IRR):
14
% | Total cash returned to investor from original $
100000
:
$250,226.88
| Total return on investment over
7 years
:
150.2
% | Avg. annual payment owed:
$12,263
| Avg. annual payment received:
$0

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 $
Vessel investment.
Mortgage Terms (Input)
0
Term (Years)
Fixed interest rate
1
30
3.9%
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)
0
Mortgage
Vessel
1
$5,660
$0
There are no rows in this table
Payback to [Lender/Investor] at Time of Sale (Output)
0
Mortgage
Vessel
Column 3
1
$85,860
$250,227
There are no rows in this table
Annual Percentage Rate (APR) (Output) [not including fees]
0
Mortgage
Vessel
1
3.9%
14%
There are no rows in this table
Total Repaid (Output)
0
Mortgage
Vessel
1
$125,480
$250,227
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)
0
Downpayment (%)
Fixed Interest Rate (%)
Mortgage Term
Cap Rate (%)
1
20%
4%
30
3%
There are no rows in this table
The cap rate () 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
6
%/year), the property will sell for $
751815
in
7
years, at which point, you'll pay back $
344238
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)
0
Invesment Property
Vessel Investment
1
$15,000
$0
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)
0
Investment Property
Vessel
1
-$7,916
$0
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)
0
Investment Property
Vessel
1
$407,577
$250,227.00
There are no rows in this table
Total Gain or Loss (Output)
0
Variable
Investment Property
Vessel
1
Total Gain (Loss)
$252,165
$150,227
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.

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