Delivering Peace of Mind
Each of our LLCs has a defined term so all stakeholders know exactly how and when they are getting their investment returned.
The LLC term is typically a 6 or 8-years. At that time, the home will be offered to the shareholders to see if one of the families wants to acquire the property. If not acquired by a current owner, Lifestyle Asset Group will list the property and sell it on the market at the highest possible value.
Each shareholder will then get their original capital contribution returned plus any appreciation that may have occurred over the term.
If the Shareholders are not ready to sell at the end of the term, they can vote for a one-year extension via supermajority vote.
Example:
A $4.8m property in Florida where the original capital contribution for each of the 6 shareholders is $864,000 and the LLC term is 6 years:
With 6% compounding appreciation over a 6-year LLC term, each of the six shareholders will receive back $1,134,815 when the home is sold.
Lifestyle Asset Group participates at 15% of net appreciation proceeds above the original capital contribution of $864,000, or $40,000 = $1,094,000 return on your original $864,000 capital contribution, a gain of around $230,000.
Here are those total appreciation numbers based on the original purchase price of $4.8m:
- 4% appreciation rate for 6 years: $6,073,531 property value
- 5% appreciation rate for 6 years: $6,432,459 property value
- 6% appreciation rate for 6 years: $6,808,892 property value
If you combine the appreciation potential plus the ability to rent weeks to offset the annual fees, this shared ownership model allows you to vacation in a $4.8m, 4 bedroom Seaside home for the next 6 years “rent-free”.
Footnotes:
[1] National Association of Realtors (NAR) year-end report.
[2] On a cost per night basis, this can be very prohibitive — particularly so with mortgages, which occur in approximately 70% of all transactions. Additionally, insurance costs in coastal communities can run as high as $30,000 per year. When you add property taxes, repairs, maintenance, HOA or Community Association Dues, utility charges and more, those 30 nights of vacation bliss can come at a cost of $2,000 to $3,000 per night, or even more.
[3] This includes complicated reservation processes that are necessary for projects with 100’s of owners and scores of identical units
[4] This shared ownership model is offered as a securities offering under Regulation D of the Securities Act and more specifically, under Rule 506c.