Five proven reasons private residence clubs are gaining popularity again as the smarter way to own a vacation home
Anne and Bruce Anderson knew what they wanted a vacation home in Costa Rica for their family and thought they had a realistic budget. However, as they began shopping seriously in their favorite vacation destination, the couple soon found $300K-$400K didn’t deliver much bang for the buck. “We didn’t want something tired or a fixer-upper,” Bruce says. “We wanted a place that was big enough for the kids, something new and somewhat luxurious in a gated community, and we also realized pretty quickly, we also didn’t want all the headaches and expense of maintenance. Then we discovered a private residence club at Hacienda Pinilla, and knew we’d found something that just made sense for us.”
Fractional real estate ownership and private residence clubs have been embraced by affluent travelers and value-seeking consumers for over 20 years–yet many consumers looking for a second or vacation home still are not familiar with the concept. Private residence clubs and the fractional ownership model are proven ideas often described as “the smarter way to own,” and more and more people are finding that to be the case.
Even during the recent real estate downturn, residence clubs progressed and continued to grow in popularity just at a slower pace. Luxury resort companies such as Four Seasons, Ritz-Carlton and others saw the value of the concept, and now utilize it in selected properties as an value-based alternative to whole ownership—particularly in terms of price and the advantage of the “lock and leave” concept. In practice, shared ownership simply makes sense for those who want a second home in a special place, but understand they’ll only use it five to six weeks per year.
On the other hand, the fractional private residence club model offers all the enjoyment of a vacation retreat but without the costly and time-consuming responsibilities that accompany second-home ownership. Not to mention the simple logic of enjoying a vacation home, along with luxury and services, at a fraction of the price. Along with the ownership of their own home, many residence clubs also offer opportunities for owners to visit and enjoy other desirable locations, thus broadening the experience. According to Club owners, there are several strong reasons they would recommend a fractional Residence Club to a friend.
Reason #1: A Better Investment
Number one on the list is money. Anyone who has ever owned a second home or vacation retreat knows why this is tops on the list. First, most people come to realize they only use a second home four to six weeks per year, which is the national average, according to National Association of Realtors. For that simple reason, paying only an eighth or a tenth of the total price for acquiring a luxury home of your dreams is both much more prudent, and, quite frankly, just easier to rationalize.
“The fundamentals of the vacation home market have changed,” says Dr. Richard Ragatz of Ragatz Associates. “The days of buying a $2 million house on the beach or at a ski resort with the expectation of 20% annual appreciation are gone for the foreseeable future, maybe forever”
Paying less than $200,000 for a well-furnished $1.5 million ski-in/ski-out home or a large villa overlooking the Caribbean saves you over a million dollars. And with today’s uncertain real estate market, you still get the use and enjoyment you seek, with virtually zero risk on your investment. In addition, the monthly costs to run and manage the place, from maintenance to property taxes, are divided equally among the owners, once again saving tens of thousands of dollars over time.
Reason #2: No Costly, Time-Robbing Responsibilities
With a second home, an owner is responsible for all the maintenance and upkeep. This includes not just the bills, but also the time-draining hassles that take you away from just enjoying your vacation time with family and friends. With a residence club, you still receive the security of deeded real estate but have other owners with which to split costs. The club management company handles all maintenance and repair issues, such as storm damage or just the regular upkeep that’s always required. With the club concept, you sit back and enjoy your time while the club’s staff takes care of everything.
Reason #3: Much More Bang for Your Buck
Consider this part of the equation: Although many people dream of owning a vacation home in their favorite destination, most either can’t afford the type of home they want, or they would not use it often enough to justify the substantial expense. Perhaps you have a budget of $500,000 in mind for a vacation home, only to discover that will buy you surprisingly little in many top destinations—and certainly not new and luxurious. In many markets, this is quite often the price for a tear-down or remodel, which brings even more potential headaches. With private residence clubs, you generally are able to purchase more and get pure bang-for-your-buck than you would buying an entire home.
Factor in, as mentioned previously, that most Americans only use their vacation homes a limited amount each year, and the fractional approach makes logical sense.
Reason #4: A True Approach to Carefree Living
The idea of being “carefree” is much more than having someone take care of the chores for you. Most private residence clubs offer the services of a luxury boutique hotel as a feature of the club. To be blunt, very few vacation homes come with concierge and daily maid services, or someone to call the plumber when an unexpected issue arises.
With shared ownership, your home is always kept in perfect shape so that each time everything is ready for you, right down to the fridge filled with your favorite groceries. You show up, hang up your clothes (some clubs even do that for you) and settle down. The club staff has everything set up for you–the concierge can book restaurant reservations or tee times, secure lift tickets or arrange spa treatments, which allows an owner to maximize vacation time. When you leave, place the dishes in the sink and leave the beds unmade, knowing the staff will handle all the chores.
Reason #5: A Key to Other Vacation Destinations
Because many private residence club owners tend to be business owners or professionals, many seem to be more adventurous and seeking new experiences. The vast majority of private residence clubs are members of networks and special programs that provide opportunities for owners to also visit and utilize other clubs and resorts. This means you can enjoy your own vacation home just as you planned, but also travel to new and interesting places where you’ll receive the same special treatment.
All Good Reasons for Fractional Ownership!
When you stop and consider all the details and advantages, it’s easy to see why shared ownership or fractional ownership is a proven concept that is appealing and gaining even more widespread acceptance.
And the reservation and usage policy of your home is really simple and fair for all owners as well…you can use it as much as want based on availbilty. The usage policies are set up to make it simple as well as fair for all Owners.
That’s why the fractional approach to ownership is a clearly logical means to add enjoyment and carefree living to your world. If you look at the details and do the math, it’s very difficult to argue against the wisdom of shared ownership, now or in the future.
For more information, please call us at 239-243-0791 or email Info@PalmsIntlCR.com.