The Math of Rental Income on Binaryx Marketplace
We’ll do some math here, but that won’t be long and complicated.
Binaryx Platform offers passive income of up to 22% APY to those who buy real estate tokens on its marketplace. But what is included in this sum, and where does the money come from?
12% — Rent
Let’s visit the Financials section on Binaryx Marketplace. We’ll use the page of the first penthouse tokenized in Bali as an example. Here’s what we will see:
22% is the total return expected on this property. In strictly financial terms, it’s called the IRR — internal rate of return. Luckily, our lawyers don’t ask us to use this term in our everyday communication😊
12% is Rent — the money that accrues in the personal account of a property token holder from the rent start date. Rent accumulates daily and can be withdrawn at any moment.
Let’s say you’ve invested $1,000 in real estate on Binaryx. That means you will earn $120 of “withdrawable” rental income in a year.
Where does rent come from?
In the case of the first penthouse tokenized on Binaryx — from Roman. This is the tenant who inhabits the penthouse after it was sold to 199 investors on Binaryx Marketplace on March 28. Roman signed a year-long contract with PARQ Ubud, the company managing the residential complex where the apartment is located.
Every month, Roman pays $2,050 to PARQ Ubud. The management company puts $1,687 from this sum on the penthouse’s smart contract and distributes it among 199 investors. In your Financials, it’s called the Monthly cash flow (see the bottom of the screenshot):
Now, if you multiply $1,687 by 12 (months), you’ll get $20,245, or Annual cash flow. This is the total rental income that property investors receive in a year. Divide it by the property price ($170,250), and you’ll get 11.9% — the rental APR.
As we said, Roman pays $2050 per month ($20,245 per year), and $1687 from this sum reaches investors. Where does the rest go? Let’s walk through all items from the screenshot:
- Property management — the money collected by PARQ Ubud residential complex for operational needs.
- Utilities — internet, water, electricity, and all these things, you know.
- Maintenance reserve — if a tap breaks or the cat picture in the bathroom needs urgent repair, it will be fixed using funds from this reserve.
- Binaryx fee — we collect 2% of each property’s rent, that’s one of the ways how Binaryx Platform receives income.
Now that we’ve finished with rent, let’s review the second way how real estate investors earn passive income on Binaryx.
10% — Projected appreciation
At the beginning of the article, we gave you a screenshot where 22% was the total income and 12% was rental income. What about another 10%?
10% is the Projected Appreciation — we expect the property to grow 10% in price year-to-year. Binaryx Platform partners with an audit oracle that tracks the market price of penthouses that we’ve tokenized and changes the property token value in case of any changes.
Bali is a very attractive place where the demand for residential real estate is very high and only increasing. That means every property token that was worth $50 in March 2023 is expected to cost $55 in March 2024.
On May 15, based on real estate market monitoring, our experts increased the property value from $170,250 to $171,612 on the smart contract for the first time! Every token that was worth $50 on the sale date (March 28) costs $50.4 at press time (May 17).
Let’s wrap it up
Let’s say you invest $1,000 in PARQ Penthouse 62 on the sale date, May 24. The total income that it will offer is expected at 22%: 12% from rent and 10% from projected appreciation.
- In one year, you will earn $120 or rental income from a $1,000 investment. You can withdraw it at any time (USDT on Polygon).
- In one year, we expect that your tokens will grow by $100 in price. You can’t withdraw this sum, but you can sell the tokens.
That’s it — $220 yearly from $1000. Importantly, this is a stable income offered by one of the world’s most stable markets — real estate. To learn more about the perks of tokenized real estate, follow here.
