Where does APY come from?

DISCLAIMER:

Due to Subunit’s investment club model and in order to comply with the SEC's definition of a utility token, income and rewards will only be distributed to active participants – specifically, those who stake their governance tokens and actively vote in platform governance. These tokens are governance instruments, not passive income assets. Simply holding them does not entitle users to any return.

Participation is required: Subunit’s design incentivizes community involvement in decision-making, such as property acquisition, management, and liquidation. Token holders who choose not to participate in governance (e.g., by not voting on key proposals) and who do not stake their tokens will not receive rental distributions, appreciation proceeds, or liquidity/trading-based earnings.

This is a fundamental part of the platform’s structure: rewards are aligned with participation. If you want to earn, you must contribute. Subunit is not a passive investment vehicle — it is an active investment community governed by its members.

As always, all returns are estimates, not guarantees. Please review all documentation and Terms of Service carefully before participating.

Subunit offers participants multiple avenues for earning returns on their involvement, combining elements of DeFi and traditional real estate ROI. These are target returns, rather than guaranteed outcomes, as actual results will vary based on property performance and market conditions. That said, Subunit estimates that investors could see a total return of around 20% annually (unleveraged) by combining various sources of yield.

Rental Yield

This is the most straightforward return – the net rental income distributed to token holders, as described in the Rental Income Flow section. Depending on the property, rental yields might range widely (for example, perhaps 5-10% of the property value per year is a common range for net yield in many markets). If we take an example of an 8% annual yield on a property, an investor who put in $1,000 would get about $80 per year in rental distributions. Rental yield is relatively steady income, akin to a dividend. In a 20% total return scenario, roughly a portion (say 5-8%) comes from rent.

Trading and Liquidity Gains

Since the property tokens (UNIT) can be traded on a DEX, astute investors might gain additional returns by actively managing their positions. Those who provide liquidity in the DEX (by pairing UNIT tokens with USDC in a liquidity pool) will earn a share of trading fees. These trading-related earnings are more variable and depend on market activity. They aren’t traditional “real estate” returns, but a bonus enabled by the liquidity of the tokens. In a vibrant market, trading gains could contribute a few percent a year to an active participant’s return. However, LPing does carry the risk of impermanent loss.

Property Value Appreciation

Over time, the underlying real estate may increase in value. This capital appreciation will be reflected in the token price (since if the property is worth more, each fractional token should be worth more correspondingly). Historically, real estate in many markets appreciates on the order of a few percent per year above inflation (though it can be higher in booming markets or negative in downturns). In a decent scenario, perhaps the property value (and thus token value) increases by 5-10% in a year. If you simply hold your tokens, this would be an unrealized gain (until you either sell your tokens on the DEX or the property is sold and proceeds distributed). For instance, a property initially worth $500k might be worth $550k after a year (a 10% increase), so a token representing 0.01% of the property would go from $50 to $55 in value. If a participant needed to exit, they could potentially sell tokens at that higher price, realizing that appreciation as a profit. Alternatively, if the property is held long-term, that appreciation is only realized upon an eventual sale of the property itself, at which point token holders can vote to liquidate and redeem tokens for the sale proceeds. When combining these factors, Subunit suggests that a well-chosen property, without any debt financing (“without leverage”), could yield on the order of ~20% total annual return (in a strong scenario). For example, this might break down as 8% rent + 7% appreciation + 5% from active trading/fee earnings = 20%.

NOTE: no profit guarantee: All projections of returns are just that – projections. Subunit documentation takes care to avoid guaranteeing any profit. Members of the investment club are collectively making decisions and share in the ups and downs. The 20% figure is an illustrative scenario, not a fixed yield or promised payout. Each property will have its own profile and risk. The documentation and the Terms of Service make it clear that users should not participate expecting assured profits; instead, they should expect to play an active role in maximizing the property’s value and understand that market factors largely dictate outcomes. By participating in governance, members directly influence these returns (for example, by choosing a good property manager, setting appropriate rent, deciding the right time to sell, etc.), reinforcing that it’s an active investment, not a passive guarantee.