If the idea of a “private residence club” sounds a lot like “timeshare” then you are on the right track. Timeshares, those real estate darlings of daze gone by that no one either wants to buy or can’t get rid of, have taken a more modern form. The idea is definitely trendy and where there is trendiness money is almost certain to follow – for an unknown period of time.
For those too young to remember the timeshare frenzy, they were vacation homes that people would rent out during the year located in desirable venues such as beachfronts. The timesharer would sign an agreement with the management company to pay for x-number of days or weeks to use the property. In most cases, the timesharer would have to schedule their preferences weeks – usually months – ahead of time. Being able to use your timeshare in Maine during the summer is much preferable to scheduling your time in December.
What happened is that timeshares fell out of favor, but the timesharer was stuck with this very long term agreement with the management company to pay for the upkeep and maintenance of the property as well as the normal rental fee. People either couldn’t afford to go due to periods of economic downturns or could no longer afford to keep up the maintenance payments. On top of that, timesharers couldn’t sell their place because everybody figured out that it really wasn’t that great of a real estate “investment” and even today there are people who desperately want out of a contract that costs them thousands of dollars a year.
Where the private residence clubs differ is that they are deeds to smaller pieces of a vacation property and generally cater to the wealthy and the affluent. You don’t buy the entire property but a piece of the “club.” Since the real estate opportunity costs far more than the timeshares of yore, it whittles down the number of people to those who can actually afford the exclusive vacation getaway. This limits the risk for the property management company and is generally less hassle in the long run.
But make no mistake. Private residence clubs offer far more than moist timeshares. You get the privacy afforded by the exclusivity of the club, a staff to meet your needs 24/7, and the opportunity to schedule spa treatments.
The big selling point is that members of the clubs don’t have to worry about maintaining the property all year ‘round but only for the time they stay there. When you arrive everything is set up for you; when you depart the mess is left for someone else to clean up. The industry term is “personalized service” or “personalized experience” and if that sounds pricey buy yourself an ice cream.
One question to ask about this trend is the number of available properties that have been designated as private residence clubs. Some new ones are being built, so clearly the current demand is outpacing the supply. It seems we have heard this story before. The new clubs are certain to upgrade their clubs and include the amenities that future customers want. This will create a higher demand for the newest (and best?) properties which are also likely to cost more. As for the older private residence clubs, their fate remains to be seen.
All of this seems to be a warning to potential trendsetters that things can go south fairly quickly, and not to jump into the mix too quickly. If you are a former or current timeshare owner you are already well-aware of the potential downside. If not, it would do you well to sit down and have a chat with a few timeshare owners and listen carefully to what they have to say. It’s not that the private residence club is necessarily a bad investment, it’s just that it is not for everyone.
The best way to take advantage of the trend and opportunities is to locate a venue that is your ideal vacation home. The properties range from ski lodge resorts to coastal beachfront properties, so it is very likely you will find something that fits your needs and budget Be sure you will go there every year as a way to unwind and forget about the problems at home for a few weeks. Carefully check out the terms of the “deed” and your long term commitment before signing. Creating a separate savings account that will be used to pay for the annual fees will avoid any embarrassing problems when an economic downturn comes your way. Then take advantage of every service, amenity, and opportunity offered to you and enjoy your temporary home away from home.