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.

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.

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.

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.

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.

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)

Assumptions (Sample Property)

0

Initial Appraised Value

Initial Appraised Value

Annual Appreciation (%)

Annual Appreciation (%)

Investment ($)

Investment ($)

Yield (%)

Yield (%)

% of Payment Made with Cash (%)

% of Payment Made with Cash (%)

Year of Property Sale

Year of Property Sale

Buyout Clause Used

Buyout Clause Used

Owner-caused value change

Owner-caused value change

Initial Appraised Value

Initial Appraised Value

Annual Appreciation (%)

Annual Appreciation (%)

Investment ($)

Investment ($)

Yield (%)

Yield (%)

% of Payment Made with Cash (%)

% of Payment Made with Cash (%)

Year of Property Sale

Year of Property Sale

Buyout Clause Used

Buyout Clause Used

Owner-caused value change

Owner-caused value change

1

$1,000,000

000

6

000000

100000

00

8

000

0

00

7

0000000

0

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Model (Sample Property)

Model (Sample Property)

0

Year

Year

Home Status

Home Status

Home Value

Home Value

Investor Equity Stake

Investor Equity Stake

Annual Payment Owed

Annual Payment Owed

Payment Made

Payment Made

Underpaid

Underpaid

Equity Increase

Equity Increase

Investor Proceeds from Sale

Investor Proceeds from Sale

Cumulative Payback

Cumulative Payback

Year

Year

Home Status

Home Status

Home Value

Home Value

Investor Equity Stake

Investor Equity Stake

Annual Payment Owed

Annual Payment Owed

Payment Made

Payment Made

Underpaid

Underpaid

Equity Increase

Equity Increase

Investor Proceeds from Sale

Investor Proceeds from Sale

Cumulative Payback

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)

Mortgage Terms (Input)

0

Term (Years)

Fixed interest rate

Term (Years)

Fixed interest rate

1

30

3.9%

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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)

Annual Payments (Output)

0

Mortgage

Vessel

Mortgage

Vessel

1

$5,660

$0

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Payback to [Lender/Investor] at Time of Sale (Output)

Payback to [Lender/Investor] at Time of Sale (Output)

0

Search

Mortgage

Vessel

Column 3

Mortgage

Vessel

Column 3

1

$85,860

$250,227

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Annual Percentage Rate (APR) (Output) [not including fees]

Annual Percentage Rate (APR) (Output) [not including fees]

0

Search

Mortgage

Vessel

Mortgage

Vessel

1

3.9%

14%

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Total Repaid (Output)

Total Repaid (Output)

0

Mortgage

Vessel

Mortgage

Vessel

1

$125,480

$250,227

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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:

) 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)

Annual Revenue (Output)

0

Invesment Property

Vessel Investment

Invesment Property

Vessel Investment

1

$15,000

$0

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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)

Annual Cashflow (Output)

0

Investment Property

Vessel

Investment Property

Vessel

1

-$7,916

$0

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However, annual cashflow might tell a different story, with mortgage payments making cash flow low or negative.

Proceeds from Sale (Output)

Proceeds from Sale (Output)

0

Investment Property

Vessel

Investment Property

Vessel

1

$407,577

$250,227.00

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Total Gain or Loss (Output)

Total Gain or Loss (Output)

0

Variable

Investment Property

Vessel

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.