HEI Mechanics
The foundation of Manifest's real estate strategy
What are Home Equity Investments?
Home Equity Investments (HEIs) are financial instruments that give investors a share in a home's future value. Unlike traditional mortgages where homeowners borrow money and repay with interest, HEIs provide upfront cash in exchange for sharing future home appreciation.
The homeowner receives immediate liquidity (typically $50,000-$175,000) with no monthly payment obligations. In return, the investor receives a percentage stake in the property's future value, secured by a lien on the property.
Preferred Positioning
Manifest's HEI lien is senior to the homeowner. This means that when a property is sold, refinanced, or the HEI term expires, Manifest gets paid out before the homeowner.
The 2x Equity Multiplier
The core economic driver of HEIs is the 2.0x equity multiplier:
Table: Illustrative example of 2x equity multiplier economics.
Component
Example
Home Value
$1,000,000
HEI Investment
$100,000 (10% of value)
Investor's Economic Rights
20% of home value (2x multiplier), equal to $200,000 in home value
This multiplier means investors receive rights to double their investment percentage. A 10% investment yields 20% of the home's value at settlement, subject to the effective cost cap.
The Effective Cost Cap
To protect homeowners, returns are capped at:
Monthly Rate: 1.666% (19.99% ÷ 12)
Annual Rate: 19.99% compounded monthly
Effective APY: 21.93%
This cap limits the maximum payout regardless of home appreciation or settlement timing.
Settlement Events
Breakdown of HEI settlement events:
Refinancing (~58% of settlements)
Home Sale (~40% of settlements)
Other Events (~2% of settlements, including defaults, foreclosure, and term expiration)
Average Settlement Time
The average HEI settlement time is 4.5 years.
Return Mathematics
Standard Settlement (4.5 Years)
Table: Modeled 4.5-year settlement assuming steady 3.5% annual home appreciation.
Metric
Value
Initial Home Value
$1,000,000
HEI Investment
$100,000
Home Value at Settlement (3.5% annual growth)
$1,169,859
Investor's 20% Share
$233,972
Cap After 54 Months
$245,094
Actual Payout
$233,972 (below cap)
Annualized Return
~21%
Quick Settlement (1 Year)
Table: One-year rapid appreciation scenario demonstrating impact of the effective rate cap.
Metric
Value
Initial Home Value
$1,000,000
HEI Investment
$100,000
Home Value at Settlement (10% growth)
$1,100,000
Investor's 20% Share
$220,000
Cap After 12 Months
$121,930
Actual Payout
$121,930 (cap applies)
Annualized Return
21.93%
Declining Market (3 Years, –20%)
Table: Adverse market scenario illustrating downside resilience of 2x multiplier structure.
Metric
Value
Initial Home Value
$1,000,000
HEI Investment
$100,000
Home Value at Settlement
$800,000
Investor's 20% Share
$160,000
Cap After 36 Months
$181,589
Actual Payout
$160,000 (below cap)
Annualized Return
~17%
The 2x multiplier provides positive returns even in declining markets. The home value must fall below $500,000 before the investor experiences a loss.
Key Mechanics Summary
Investment creates 2x leverage: $1 invested controls $2 of home value
Returns capped at 21.76% APY: Protects homeowners in rapid appreciation
No monthly payments: Value accrues until settlement event
Secured by property lien: Recorded interest in the property
Average 4.5 year duration: Though highly variable based on homeowner actions
Why This Matters for Manifest
HEIs transform home equity into accessible capital through a simple exchange: upfront cash for a share of future value. The 2x multiplier drives attractive returns while the rate cap ensures homeowner protection. This structure creates the ~15% pre-tax long-term portfolio returns that exceed the ~3–5% home price appreciation tracked by $USH, generating excess yield for the protocol.
The mechanics ensure robust returns across market scenarios, while the senior lien position provides downside protection. This combination of upside participation and downside protection makes HEIs ideal backing for a liquid real estate token.
Learn More
Understand portfolio construction using HEIs
See the homeowner perspective on these instruments
Review market scenarios and performance
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