Marked Rates of Return

Marketed Rates of Return

Tangible is marketing various rates of return in an effort to accurately represent the investment opportunity, as well as the expected annual return of USDC to the TNFT holders.

Gross Returns are calculated using only the selling price of the house, paired with either an estimate of the capital appreciation, an estimate of annual rental income, or both.

Net Returns are calculated using the selling price of the house plus all additional closing costs, fees, and reserve budgets, as detailed in these docs. We’re referring to this total, all-in sales price as the Total Tokenized Selling Price. As a result, Net Returns are lower than Gross Returns.

The Total Tokenized Selling Price includes, but is not limited to: Property Cost, the Management Fee, the Vacancy Reserve, the Maintenance Reserve, and all legal costs, insurance, and taxes.

Below is a summary of the various rates of return. These figures assume the property is leased, the rent is paid on time, capital appreciation maintains past performance, and maintenance fees are negligible.

Capital Appreciation

Yield estimates include Capital Appreciation, the portion of the investment where the gains in the property’s market price exceed the original investment's purchase price. This figure is an estimate, based on the local average over the last five years.

Gross Capital Appreciation:

The average annual capital appreciation, calculated using valuation data from the previous five years. Example using a home value of $57,500 in 2022, and $42,500 in 2018, a five year stretch:

((57,500 - 42,500)/42,500 in 2018)/5 = 7.1%

Gross Rental Yield:

The annual rent collected from the tenant, divided by the property cost. Example using an annual rent of $5,820, and a property selling price of $60,625:

5,820/60,625 = 9.6%

Expected Total Gross Yield:

The total of the gross capital appreciation and gross rental yield, assuming capital appreciation continues along its five-year historical trend, property is leased, and rent is paid monthly, with no maintenance costs incurred.

Net Rental Yield:

The expected amount of cash to be returned to the tokenized real estate holder as a percentage of the real estate value. It’s calculated using the annual rent collected from the tenants, divided by the TNFT or Basket value. Example using an annual rent figure of $5,820, and a total tokenized selling price of $72,061 ($60,625 property selling price + legal costs, fees and reserves of $11,436):

5,820/72,061 = 8.1%

Expected Total Annual Net Yield:

This is the expected total return on the buyer’s investment, accounting for the total tokenized selling price, annual collected rent, and expected one-year capital appreciation. Example using a tokenized selling price of $72,061, annual collected rent of $5,820, and expected one-year capital appreciation of $4,280:

(5,820 + 4,280)/72,061 = 14%