When it comes to vacation properties, sharing can mean less commitment and fewer headaches than owning.
In recent years, a number of fractional ownership sites have sprung up, including NetJets for private planes, PartnerShips for yachts, and The Hideaways Club for villas and chalets. Through the Equity Estates’ Luxury Residence Fund, high-net-worth investors can take their pick form a number of high-end private homes when it’s time to plan a vacation.
Investors in the fund buy interest in a portfolio of high-end vacation properties in beach, city, mountain and leisure destinations around the globe and can access these homes until they are sold. The properties are worth about $2 million to $3 million each on average, according to the Equity Estates website.
The return on this investment is measured in three ways, according to Equity Estates:
- Long-term gains to share when the properties sell for a profit and proceeds are shared with the investors
- Consistent outstanding quality vacations with personal travel concierge attention
- Investors share in the actual operational costs and carry of the homes prorated among all investors with no markup
As a result, average nightly costs work out to 25% to 50% of what a similar home would cost in rent.
“Our success is measured by return on investment and return on living,” Equity Estates’ founder Philip Mekelburg said in a statement.
“We take pride in designing inspired experiences that create lifelong memories. This is undoubtedly the smartest way to own and enjoy luxury vacation homes around the world.”
Equity Estates Fund II is raising about $30 million of contributed capital, designed to acquire 10 to 12 residences. Each residence in the portfolio and others available for use through reciprocity agreements will be valued between $1.5 million and $4 million.
A standard investment is equal to about half the typical 20% down payment on any of these single vacation homes, the statement said.
Fund II portfolio liquidation will begin June 1, 2025.
Fund I, which began raising capital in 2006, sold out in mid-2012, and can now be accessed only through the purchase of a current investor’s interest.
The fund raised some $60 million, and bought high-end vacation properties in North America, Europe and Asia.
Fund I’s governing board will start liquidating the residences in November 2021, and distribute proceeds first to investors at 100% of their capital contribution and then 80% of profits thereafter.
According to Equity Estates, Fund I investors can sell their membership interests to any qualified buyer before it begins to sell off the homes in the portfolio in 2021.
Fund II investors can get liquidity after 12 months of ownership.
Equity Estates noted, however, that neither fund was designed for short-term “flip” investing. Each fund’s private offering memorandum spells out secondary market limitations.