How We Model Ownership

How Capital Is Deployed

Your purchase price is usually not due all at once. For a pre-construction villa, payments are typically structured across the build timeline in three phases:

• Down Payment — a percentage you choose, paid at contract signing (net of your reservation fee)
• Construction Installments — the remaining balance spread evenly across the construction period
• Delivery Payment — a final percentage paid when the villa is complete

The exact split between these phases depends on the assumptions you enter in the Scenario Builder. Closing costs and furniture (FF&E) are also paid at delivery. For a ready-to-deliver villa, the full purchase price is paid upfront with no construction phase.

How Rental Income Is Modeled

Once a villa is delivered, it may begin generating net operating income (NOI) — rental revenue after operating expenses. You set the initial monthly NOI in the Scenario Builder, and the model compounds it annually at a growth rate you choose.

If you set 10% annual growth, projected monthly NOI in Year 4 would be 33% higher than Year 1. You can also factor in vacancy and additional operating costs for a more conservative projection. Actual rental income will depend on market demand, occupancy, and local conditions.

How Property Appreciation Is Modeled

In the model, property value compounds annually at the appreciation rate you choose. At exit, the projected gross value is reduced by any sale costs (commissions, taxes) to arrive at estimated net proceeds. Actual appreciation will depend on market conditions and is not guaranteed.

What We Calculate

• Projected Total Return — Projected net profit divided by total capital invested. A simple percentage based on the assumptions entered.
• Projected Net Profit — Projected total inflows (rent + sale proceeds) minus total outflows (purchase + closing + furniture), based on the assumptions entered.
• Projected Net Operating Cash Flow — Estimated cash flow from rental operations alone, separate from any projected sale proceeds.
• Capital Deployed — Purchase price + FF&E + closing costs. The estimated full cost basis of the purchase.

Understanding IRR

Unlike Total Return, the Internal Rate of Return accounts for when cash flows occur — money received sooner is worth more than money received later.

Think of IRR as the annualized interest rate an ownership scenario would effectively earn under the given assumptions. A 15% IRR means capital would be growing at the equivalent of 15% per year, assuming all projections hold exactly as modeled.

We calculate IRR using the XIRR method (Newton-Raphson iteration), which handles irregular cash flow timing — since payments and receipts don't fall on neat annual intervals. IRR is a modeling tool, not a guarantee of performance.

Example vs. Your Scenario

The Results page shows your customized scenario next to AMARI's example projection. The Impact column highlights the difference, making it easy to see how your assumptions change the projected outcome.

This isn't about right or wrong — it's about understanding how different variables may affect projected results.