When it comes to real estate investing, two key factors lead to success: finding the right location and timing the market.
Lifestyle Asset group got both right with the NYC acquisition for their LifestyleOne shareholders. After months of searching, the team toured 14 apartments in NYC and rejected every one due to lack of charm, undesirable location, and many other factors. Then, in October of 2104, they found the perfect apartment in the right location and knew the time was right to buy. And good thing, because after our full price, all-cash offer was accepted, four other offers came in within the next 24 hours. This decision proved to be a very good one, as evidenced by the increases in the Manhattan real estate market in 2015.
A recent report from Douglas Elliman shows that the average condominium price in Manhattan has increased 26.5% from Q4 2014 to Q4 2015, with the average price rising from $2.10 million up to $2.66 million. This confirms the market analysis performed by our own broker, that showed our Manhattan residence had risen from $1.6 million up to $2.2 million.
The rises in value are not just in Manhattan, but across our entire vacation home portfolio. While not every asset has seen such a meteoric rise as Manhattan, the other properties are performing very well.
Overall the portfolio has a current value of $5.65 million compared to an acquisition value $4.25 million. This means that if LifestyleOne LLC were to divest of all the assets today, net of selling costs and contractual obligations, the average shareholder would realize a return of all of their original capital contribution and additional profit of approximately $27,000 per share. And LifestyleOne has 6 years left in the term and more residences to acquire.
Current shareholders are excited about these gains and are optimistic about the next 6 years to see how the luxury real estate market performs. The good news for those looking to buy into LifestyleOne today is the built in equity from the assets already in the portfolio. New shareholders benefit from the rising luxury real estate market and already have additional equity greater than their buy-in from day one of ownership.
As we look into 2016, we can’t predict that Manhattan will appreciate at 26.5% every year, but if the current portfolio of homes just ran at 5% annual appreciation from now through the next 6 years, each investor would get back 100% of their original capital plus another $48,000 of additional profit. If the luxury real estate market appreciates at 8%, which is the historical average for this segment, they would get back their original capital contribution plus closer to 89,000 of additional profit.
The design of this offering is to provide our shareholders with immense vacation enjoyment, all while making a nice return on their hard earned capital.
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