|Spring Real Estate 2006
Publication Date: Friday, April 28, 2006
Vacation at home
by Marian Brown Sprague
If you're contemplating the purchase of a vacation home but are leery of high purchase prices, taxes, and the time and expense of furnishing and maintaining the home, you might want to consider two relatively new options in the burgeoning second-home market.
As a concept, luxury residence clubs are less than a decade old. They operate much like country clubs, with members who pay an initial fee and annual dues for the privilege of having access to the club's services. The second alternative, called deeded fractional real estate or ownership clubs, are an update on the older timeshare model. By limiting the number of buyers, deeded fractional ownership purveyors are aiming their sales at the high-end, luxury market.
In the past few years, dozens of companies have opened, providing a world of options for those interested in luxurious, hassle-free escapes.
Los Altos residents Amy and Patrick Morey spent more than two years looking for a vacation home in Lake Tahoe. They came up empty-handed, disappointed with the quality of homes available in their price range. Then, Amy overheard an evening magazine show about Tonopalo, a fractional real estate club at Lake Tahoe - while she was in labor with her second child. She called her home answering machine with the information she'd just heard on the hospital's television.
Two weeks later, still in the throes of new motherhood, she began the research that led them to purchase a share at Tonopalo (www.tonopalo.com). With a $380,000 investment, the Moreys purchased an undivided interest, fee-simple deed to the entire property, which entitles them to seven weeks at their home. With relatively low annual fees and taxes, it's a decision they haven't regretted. "You go there and it's your happy place. You get away from all the tedious stuff," Morey said.
Much of the draw to fractional home ownership is being able to spend vacation time actually on vacation.
Julie Hawkes of Santa Clara, who owns vacation homes in Kauai and Palm Desert, estimates she and her husband spend two-thirds of their leisure time working on the upkeep of their homes. With her purchase of a trial membership with Signature Destinations, "I'm hoping our time away will be all play." She'll test out her theory soon with a weekend at the Signature Destinations' Seascape home, followed by a week at their property in Cabo San Lucas, Mexcio.
Signature Destinations (www.signaturedestinationsclub.com) recently introduced the first regional luxury residence club in the Bay Area. That business plan piqued Hawkes' curiosity. "I thought this sounded interesting because they provided homes close to home."
Hawkes' interest in a nearby second home is the norm: The median distance between a vacation homebuyer's primary home and vacation home is 49 miles, according to the National Association of Realtors.
Signature Destinations' co-founder Chad Stevens initially considered the fractionalized real estate model but came to the conclusion that the club model, which does away with worries like taxes and resale values, would work best. Signature Destinations is rolling out homes at Tahoe Donner and Napa Valley in addition to its Seascape Cabo property.
The phasing in of the Northern California regional hub follows the company's first regional hub in the Pacific Northwest by just six months. In 2006, the company plans to open additional hubs in the Southwest, Colorado, and Hawaii, as well as Puerto Vallarta, Mexico, and Park City, Utah. Signature Destinations offers its members 56 days of vacation time at its properties for a $145,000 one-time membership fee and $9,500 in annual dues.
With 1,800 members, Exclusive Resorts (www.exclusiveresorts.com) bills itself as the country's largest luxury residence club. It manages more than 280 properties around the world, in beach, mountain and metropolitan destinations. It also maintains homes in highly sought-after "leisure" destinations such as Tuscany, Italy, and Devon, England.
"It comes down to a lifestyle choice. Our members aren't worried about equity. They want a turn-key experience and no hassles," said Collin Conaway, public relations manager for Exclusive Resorts.
With an average home value of $3 million, one-time membership fees at this premier destination club range from $195,000 for an affiliate membership to $350,000 for an elite membership. Annual fees are similarly structured, ranging from $9,500 to $25,000. As the membership costs increase, so do the number of vacation days. Affiliate members can spend 15 days a year in Exclusive Resorts properties while elite members are provided with 45 days of travel each year.
Luxury residence clubs and fractional ownership clubs both provide a full range of services to their members, bestowing on them all the benefits of a top-flight resort. Amenities include luxurious homes equipped with the newest in technology and lavish appointments, and grocery shopping services, arranging for golf tee times, spa appointments, and babysitting. "The services are phenomenal," Morey said.
These new-style vacation properties also offer those special touches that make the home feel like, well, home. At the beach, members will find the houses well stocked with beach towels, boogie boards and sand toys. Residences are outfitted with large libraries for reading and DVD watching. Some will even display your family's framed photo collection.
Both luxury residence and fractional ownership clubs ensure the availability of their homes by keeping a low unit-to-member (or owner) ratio. Peak periods, like Christmas week, are generally awarded on a rotating priority schedule. It's a system that seems to work; according to Morey, "I've gotten every week I've wanted so far."
But what if you decide you no longer need that second home? Both Exclusive Resorts and Signature Destinations refund 80 percent of the initial membership fee once a new buyer has been secured for the membership. Fractional ownership models offer the possibility of equity appreciation on the sale. Morey estimates their deeded fractional interest at Tahoe's Tonopalo "has increased 24 percent since we bought a year ago."
For Morey, "It just all makes sense."