At some point, nearly everyone fantasizes a bit about the allure of owning a beach home. And why not? Time at the beach with family and friends ranks on the top 3 wish list for most people as the sights, sounds and smells of the ocean are undeniably hypnotic. But behind the romance of all this lies a stark reality that stuns most when they discover this one fact: the cost of insurance in hurricane zones.
Not to be a Debbie Downer here, but with Hurricane Joaquin recently hitting the east coast, it is a timely subject that comes with it a real wake up call. Let’s use real numbers so the impact is meaningful: the cost of insuring LifestyleOne’s villa at St John, in the US Virgin Islands is just over $20,000 per year with this cost available only due to a willingness to agree to a deductible of $25,000. In the event of a hurricane causing material damage to the villa near Cruz Bay, the first $25,000 of repairs are out pocket with $20,000 in premiums per year on top of this.
Absent debt service if the property is financed, a budget line item of $20,000 for property insurance is a buzz killer for the romance of that idyllic beach home near the ocean - or certainly the case if you are the sole owner. But if you own a share in LifestyleOne LLC, which owns the villa in St John along with what will be 6 vacation homes when at full subscription, this cost would be shared equally by the 49 other shareholders within the LLC. This creates a cost per shareholder of, brace yourself, $400 per year. And in the event of damage by a hurricane that creates $25,000+ of damage? That would be $500 per shareholder.
The single owner runs the risk of incurring $45,000 in out of pocket costs when a tropical storm or hurricane rolls through the Caribbean, or up the Atlantic seaboard or even along the Pacific coast of Mexico (Hurricane Odile in September, 2014, by way of example). A shareholder of LifestyleOne, due to the magic of our business model called “Collective Asset Ownership”? Their downside is $900.
It is why our approach is called, “The most enlightened vacation home ownership model in the world”.