caribbeansun

So what do you think, would a DIY DC work?

By DIY I'm talking about the following:
- forming groups of people to purchase vacation properties
- 10 owners per property
- 4 weeks usage a year
- ownership of each property is in a separate company (owners each get shares in the company)
- reciprocal trading amongst any commonly managed property
- organizer takes a small ownership stake (2.5%) for back end profit as compensation for marketing efforts
- 10 year limited life to each property at which time they are sold or if majority vote to retain ownership leave it another 5 years
- annual fees of less than $5,000 a year
- nominal management fees
- no reselling limitations
- no fee for resales unless manager sells

Thoughts?

Tedpilot

Sounds like a fractional.

caribbeansun

Yes and no.

If the commitment is to sell the entire project at the end date then you avoid the uncertainty of the fractional resale market.

You also don't get the inflated cost at the front end either.

Full participation in the appreciation of the property.

Of course liquidity could be an issue in the short term if someone had to sell. I'm not entirely sure how to mitigate that issue other than have some sort of shotgun clause in the shareholders agreement or a right of first refusal.

LTTravel

My thoughts:

Good luck getting 10 people to purchase a property and abide by the rules
Good luck dividing the useage weeks
Good luck devising a fair trading policy.
Good luck keeping everyone happy about the level of maintenance and service.

I have a corporate membership in a DC and GIVE AWAY my weeks to colleagues and staff. I can't tell you how many times someone has wanted a reservation and canceled just as I make it, or much worse, less than a week before the reservation. They think it is like a hotel reservation and can cancel at any time, and then expect to give them another one. With only 10 owners per property there will be alot of arguing, about scheduling, upgrades to furnishings and maintenance.Everyone will think they are "the" owner and want special consideration. Have you ever belonged to a Coop or Condo or Homeowners Association? The president of our homeowners association spent $100,000 renovating our clubhouse (which needed no renovation) and hired his cousin to do the work. Now, after the money has been spent, the association is trying to sue to get the money back.

I don't think you're plan will work. An equal partnership among 10 people is never "equal". I think that the DC model will work only in a corporate structure. If you think that maybe you can do it with a group of friends, I would not recommend it. As they say, never do business with family or friends. I would never purchase a home with one other person, let alone 9 other people.
Just my 2 cents. But maybe there are others who will bite. You wanted thoughts. Please do not get offended, but these are mine.

vineyarder

AMEN!

BTW, LTT, I am very impressed with how generous you are, giving away all those HCC weeks to colleagues and employees... maybe you McGregorites are just more altruistic than us Burtonites???

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Living in a vacuum sucks!

LTTravel

Just continuing the F Entry Vigilante legacy.

DCTraveler

If you want to do this first check out Elite Destination Homes. You buy a fraction of the property that you want and then get weeks. We're talking hand-picked homes, not fractions of condo developments. Fractional Ownership
Other weeks are rented and revenue split -- you choose the property that will have the best revenue model. I believe you have some/priority access at their other properties. Empty weeks can also be put into Trade to Travel for points and then you can go to any one of their homes.

Kagehitokiri

DCTraveler, isnt that one of the companies that will also split a property on request?

interesting it seems their upcoming turks property is the same model as lusso's.

LTTravel

I doubt that there are two exact homes on Turks. So does Elite own it or does Lusso?

DCTraveler

I believe that they might allow that. Usually their experts find the home or find one where there is interest. Properties vary I believe, but usually sell 1/5 interested and you are always free to buy more or split interests.

I have seen their Paris home -- it was very nice -- much larger and better situated than the other DC homes in Paris. T&C is called Villa Osprey. Here is the web-site for deatils on that one: Villa Osprey in Turks and Caicos Islands where you can enjoy golf, fishing, beaches, ocean and restaurants

I can tell from the pictures of Lusso's Constentina it's not the same house as Villa Osprey.

Kagehitokiri

if osprey is their upcoming property, why do they have pictures of the same layout as lusso's? (im suggesting they need to get a handle on their site, not that DCTraveler is wrong.)

ah, i see on the homepage, they show some correct pictures, but on the turks page they are of lusso's.

http://www.elitedestinationhomes.com/caribbean.php

maybe lusso beat them to that property or something. that would be interesting.

thanks for pointing out the original names of both villas DCTraveler :thumbsup:

DCTraveler

I have only seen the first T&C home -- I think it's the one they launched EDHs with. Read this -- maybe the Taylor Bay photos are cookie cutter photos of a group of homes "in development."

The Turks and Caicos have figured prominently in the Elite strategy from the outset. Elite’s first foray into the Turks and Caicos was building a four bedroom, four bath ocean front home. Elite identified a piece of land that could be purchased advantageously. Elite then interviewed the rental agents that cater to the high-end tourist villa rentals. Elite designed the home to have maximum appeal for personal and rental use. The home has consistently generated over 30 weeks of rental over the past four years. The home is currently under contract for just over two times its cost of acquisition and development.

Elite Destination Homes’ second development was an ocean-front villa situated on an acre of ocean front property with over 200 feet of pristine shoreline. Elite purchased the home in 2005 and completed an extensive renovation in January 2008. The home is comfortably worth twice what the Elite group acquired it for.

Villa Lynda, Elite's third home on Providenciales was completed in January 2008. Villa Lynda is located in Chalk Sound, and has its own small private beach. This brand new four bedroom, four-½-bath ocean side villa looks out over crystal waters from every room in the home. The home has extraordinary indoor and outdoor living spaces, including an outdoor kitchen.

In addition Elite has a new oceanfront villa, Taylor Bay House, under construction. Bay House, situated on an oceanfront lot, with 3,500 sq. ft. of indoor living space and 2,000 sq. ft. of outdoor living space, will feature four master suites, each with its own full en-suite bathroom and private access to a terrace that overlooks the water. The Taylor Bay House, will be complete at the end of 2008.

Every time Elite acquires or develops one of these homes or lots, we own the real estate while we are looking for the right group of partners. We are confident enough to make these investments with our own resources. We hope this will provide our prospective clients confidence as well.

Kagehitokiri

ah, so the upcoming one will be their 4th in T&C.

The Villa Lynda - Tranquility

those are exactly the same pictures as lusso.

so it was supposedly completed less than 5.5 months ago, and its appearing as a rental, fractional, and DC property...

3DH

As a LUSSO member, I can tell you that the club has obviously secured the property for its members, but for whatever, reason it is still (possibly outdatedly?) featured on EDH’s website. Regardless of whether or not the home is used to illustrate the quality of homes on the EDH site, the LUSSO home is available for bookings, as it is on the long-term reservation calendar, telling me that it is exclusively availability for LUSSO members. I have heard from the management that LUSSO is currently considering its expansion opportunities beyond this first property on T&C, given the popular reception that the first residence, and the destination, has received.

Has anyone tried to call EDH and attempt to rent the home or buy a fraction in it? That would be the telltale sign if anyone is concerned. I, personally, feel confident in the way management has run the club in the past and have no reason to doubt that this is, indeed, an exclusive LUSSO property.

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"Boutique" is better! Another extremely satisfied LUSSO member!

Kagehitokiri

so i guess it was a fractional, rented by some of the owners, and then lusso got it..

caribbeansun

Great feedback!

I actually contacted Elite Properties some time ago and was less than impressed with their customer service so no chance that I'd deal with them.

I'd never heard of Trade to Travel though and that looks really interesting!

Cheers!

jyc

How about this: Start an equity destination that truly attempts to be the equity country club model. Principals start the club and perhaps even draw a moderate salary as they provide the corporate management, real estate acquisition, organizational skills, etc, but all other costs are borne by the club. Annual budgets approved by a board, etc. Initially, members buy in at a certain deposit of say $100,000, dues of 7k for 14 days for a club targeting roughly 50% occupancy of $1.5MM homes. Assuming 90% of deposit goes to real estate and 25% leverage I think these numbers are do-able. New members after the "founders" round would join at 120% of the clubs net asset value or NAV (meaning real estate value less debt divided by total members aka basically tangible equity per member) while old members would resign at 80% of NAV. This 20% premium and 20% discount allows the club to retain capital, build member capital, etc. The trick is that this club long term probably will never compete with the for-profit big guys as it probably won't be scalable. I think the club would pay an Ultimate or a Quintess to manage assets, provide reservation services, website, etc for a fee. Might seem counterintuitive for clubs to do this as it somewhat cannibalizes their business but it allows them to scale their overhead/infrastructure better and frankly is incremental cash flow for them. Does this seem remotely viable?