Lifestyle Asset Group: the best of both worlds
Lifestyle Asset Group, a recently-launched US company, has devised an innovative vacation property ownership solution which appeals to both the head and the heart.
The head, because its product offers a medium- to long-term investment in prime resort and city real estate, and the heart, because members can enjoy memorable vacations in a collection of stunning properties at triple-A locations.
Styled as the most enlightened second home ownership option, Lifestyle Assets is aimed at seasoned travellers who expect high standards from their accommodation, and who also appreciate the chance to invest in high quality real estate. The company describes its target market as “half Warren Buffett and half Jimmy Buffet – 50% good time traveller and 50% savvy investor”.
So how does LAG appeal to these two separate strands? Here are the basics. It has launched a concept called Collective Asset Ownership (CAO), a model which forms LLCs to purchase collections of stunning residences debt-free, with an average value of $2.5 million. LLCs will have 100 participants who collectively own the real estate, and can use the properties for their vacations for a period of seven years before the portfolio is sold – with members sharing any profit made from its increase in value over the term of the LLC. Members can then exit or join a new, unsubscribed LLC.
The number of nights each member can spend in the properties varies according to the annual credits purchased, more of which later, but each owner's base plan gives them up to five weeks of travel annually, subject to timings and location.
Colorado-based LAG has been formed by four leading experts in the vacation real estate and luxury travel sector who have over 30 years of combined experience. It is led by CEO Richard Keith (left) – the founder of Private Escapes – who says: “Having been a member and CEO of vacation clubs, I was able to, with my colleagues, create a unique model that uses only the best attributes that will be easy-to-use and beneficial for each of our equity owners and their families and friends. Each of our properties is in a prime location that our equity owners will appreciate and want to return to over the length of the LLC.”
When developing its model, LAG undertook extensive research in to the real estate markets where it would be buying and found that, in spite of economic cycles, quality properties are highly likely to show a significant rise in value over a seven-year period, hence the chosen life term of the LLCs. There is an option, however, should a majority of LLC members decide it is appropriate, to extend the term for a further year. This could either be to take advantage of a rising market, or to allow more time to sell a property in a temporarily subdued market – either option maximizes the equity owners' chances of a good return on their investment.
The LAG model has been thoughtfully designed to use the cash buying power of the LLCs to acquire real estate at highly competitive prices, at or near the bottom of the market, thereby optimising the chances of accumulating significant profits while enjoyable memorable vacations. It is also a tax-efficient structure, with capital gains from accrued profits taxed at a rate of 15%.
The discerning investor/experience-seeker hybrid buyer LAG attracts is well represented by one of the company's first members, Danette Stewart.
Danette, who lives on a trout stream in North Central Arkansas, is retired after selling two business interests. A seasoned traveller, Danette and her late husband travelled for around 170 nights per year so she knows what she wants from vacation accommodation.
She says: “I suppose the most compelling reason for my investment would be the travel benefits. I have a close knit circle of friends and family who have not been as financially blessed as I and LAG is a vehicle for sharing extraordinary experiences with both groups. Of course, I am optimistic my investment will eventually bring financial returns. I have had a relationship with Rich Keith and his staff since 2003 and trust his foresight in this venture. Although I am not a serious risk taker, this product "feels" right for the current economic environment. As a member of Rich's original destination club, Private Escapes, I knew he and his staff had thoroughly researched the marketability of LAG.”
Currently, LAG is in the process of expanding PortfolioOne, a real estate portfolio that includes a mix of luxurious beach, leisure, city and mountain locations. To maximize the amount of travel options and times available to equity owners, PortfolioOne is limited to only 100 Equity Owners.
Currently available in PortfolioOne is a four-bedroom, 4,770-square-foot Antebellum mansion in Charleston, South Carolina (below). Located in the Old and Historic District, the restored, 200-year-old home blends historic preservation with just the right amount of modern conveniences. Owners will appreciate the 1,800 square-foot patio for outdoor dinner parties and late-night cocktails. Also available is a five-bedroom, tropical residence in the Caletón Estates in Cap Cana. While staying at the Dominican Republic hideaway, owners and their families will enjoy member access to the Punta Espada Golf Club and Caletón Beach Club, with a terraced swimming pool, spa treatments, and full-service dining.
PortfolioOne also features residences on the West Coast, including a four-bedroom villa in Cabo San Lucas, Mexico (top picture), featuring an infinity pool, swim-up bar and access to the Ocean Course at Cabo del Sol, a Jack Nicklaus signature golf course. The Blue Sky Lodge, a five-bedroom, five-bathroom mountain home in Deer Valley, Utah, features private balconies for each bedroom and breathtaking views of the Park City and Deer Valley ski areas.
Future destinations of PortfolioOne include Chicago, IL; New York City, NY; Palm Beach, FL; Punta Mita, Mexico; San Diego, CA; Scottsdale, AZ; Turks & Caicos, Caribbean; and WaterColor, FL.
In common with most private residence clubs and destination clubs, LAG charges a one-off capital contribution plus annual dues. Where LAG differs is the flexibility and transparency of its charges, which have even been refined further since the company's “soft launch” in March 2011. To become an Equity Owner in PortfolioOne, a one-time capital contribution of $300,000 is required.
The usage model has been refined to reflect the fact that most of us can't predict when, or for how long, we will take vacations from one year to the next. It offers an unprecedented level of flexibility, while reducing fixed annual costs to a minimum. A fixed $14,000 annual fee covers the maintenance and operation costs of the properties, a further $10,000 entitles members to 2,500 credits, which will provide them with up to five weeks of annual usage within the portfolio, depending on location and seasonality. This equates to a remarkably low cost of $434 per night for 23 nights in properties worth more than $2 million.
Once the 2,500 credits have been used, further credits can be bought at $4 each, so members can use travel as often as they like, according to availability – there is no cap on usage. This option opens up a new world of spontaneous vacations, as well as the more planned family breaks which many members will take at the LAG properties.
Potential investors who are considering LAG but would like to find out more can book Discovery Trip, which allows them to stay for up to four nights at one of four properties, for $650 per night – this money is refunded if the guest becomes an equity owner.
To find out more about how you can have the best of both worlds when it comes to luxury vacation real estate, visit www.lifestyleassetgroup.com or call +1 970.449.4292