Equity Estates

To understand fractional ownership, we first need to take it back to the 1970s, when vacationers first saw the emergence of something that at the time was deemed revolutionary: Timeshares, which provided an alternative to whole ownership of a vacation property. For the next three decades, timeshares reigned supreme in the world of one- to three-bedroom hotel-style suites and provided the perfect opportunity to “own” a vacation home with hotel-style services that would otherwise be financially out of reach.

Although it’s grown to be a $10.2B industry, timeshare popularity appears to have reached a crest in the 1990s.

Enter the sharing economy in the 2000s, which gave vacationers more choice, and less commitment through destination clubs and online travel rental portals like VRBO, Airbnb, and HomeAway. In one 2018 study, nearly 70% of respondents to the International Society of Hospitality Consultants’ annual survey said the appeal of timeshares fell as the popularity of home-sharing started to take off, especially in the luxury market where most timeshares cannot complete.

The rise of vacation rentals was two-fold: As guests felt more confident staying in strangers’ homes, more homeowners opened their doors to strangers. A look at Airbnb’s data shows this plainly. In 2014, Airbnb hosted about 10 million guests who stayed in any of the 800,000 listed homes worldwide. Fast forward to 2019, and about 2 million people were staying in an Airbnb each night, in as many as 6 million rentals around the world. Only a very small fraction of these would be considered luxury homes.

With so much demand for home-sharing accommodations, homeowners saw a path to second home ownership by supplementing their mortgage via vacation rentals. One HomeAway study suggests the average person who rents out their second home collected about $33,000 annually.  Good for a vacation home valued under $1 million with low operating costs, but barely a drop in the bucket for a multimillion-dollar vacation villa with professional property management, daily housekeeping, pre-trip planning, and local concierge support. These homes often require $150,000 or more in annual operating expenses.

However, the vacation rental space wasn’t without its pitfalls. Inconsistent (or just plain bad) guest experiences, rising property management costs, and a plethora of unmanaged rental homes had a hand in the rise of the next phase in vacation homes where travelers were craving luxury and consistent quality: Fractional ownership.

And that brings us to now. By 2018, there were 126 fractionally owned properties in the United States, which were most commonly divided into quarter shares.

So, what is fractional ownership, what makes it different, and is it for you? First, let’s answer a few basic questions about fractional ownership.

Fractional ownership FAQs:


How does fractional ownership work?

In fractional ownership, you own a share of the real estate itself and are issued a deed for the property, not a time that you can use the home. This keeps the costs lower than whole ownership, but you still have access to the home if you are satisfied with the sharing model.

Is fractional ownership a good investment?

Compared to timeshares, yes. With fractional ownership, your share of the real estate rises as the value of the home rises with the market, just like whole ownership.

Timeshares do not have a secondary buying market whereby someone is buying the home from the timeshare owners, rather, a timeshare seller must find a timeshare buyer. With no limit on supply, most timeshare owners are conditioned to getting a fraction of their money back when they try to sell, if they can at all.

Can you get a mortgage for fractional ownership?

Yes and no. As it’s still not a widespread financial product, you’ll have to seek out banks that offer mortgages for fractional ownership, as it’s not likely regional or smaller banks would have the systems in place to offer such a loan. However, they are out there.

Fractional Ownership: Pros and Cons


Just like its timeshare and vacation rental predecessors, there are of course drawbacks to fractional ownership. Here are a few of the most pronounced advantages and disadvantages.

Pros

It’s more affordable

Perhaps a $4M home is out of reach, but $1M is right in your wheelhouse. Fractional ownership lets you get the home you want in the most desirable location at the price you can afford. This goes for home upkeep and maintenance, too. By sharing the costs of upkeep, fractional ownership makes long-term ownership a much more realistic possibility.

The home will get some love

No home should sit vacant 48 weeks out of the year. By sharing the ownership, the home will be opened up at regular intervals. Opening and closing windows and doors, running the water, turning on the AC and heater, using amenities like the hot tub and pool—all of these are essential to maintaining the home. It provides an opportunity to identify issues early on and preserve the home’s long-term value.

Peace of Mind

Fractional ownership also means sharing the burden of homeownership. Rather than a single point of failure (i.e., you), you essentially have a group that shares accountability, schedules maintenance, checks on the home, and divides the work and chores that would otherwise be left to a single owner.

But as with anything, there are downsides to fractional ownership.

Cons

Selling can be a tedious task

In traditional fractional ownership, selling isn’t as straightforward as whole ownership. While it’s by no means as hard as selling a timeshare, you’ll have to do research to check on how the ownership is structured and what restrictions may apply with regard to your opportunity to sell your share.

Consensus can be tough

In fractional ownership, you’ll need to decide on everything from decorations to who, exactly, is allowed to use the property in your stead. When you’re working with groups of between four and 10 owners, this decision process can be long and stifling. And when some members want to rent out their share via vacation rentals and others don’t, it can lead to discomfort between the group, at best.

You’re tied into one location

In most cases, fractional ownership is tied to one property. If you or your family likes variety, this arrangement can be limiting. Some properties are part of an exchange program, allowing owners to trade their nights for another location with equal value. But most owners find it very challenging to match the location with the time of year they like to travel.

Restrictions may be present

As with vacation rentals and vacation properties, fractionally owned homes could be subject to HOA restrictions, banned outright in certain areas, or hit with new forms of taxes aimed at homes that offer transient usage like rentals.

So, what came next?

We’ve seen what happened to timeshares over the last 30 years, and we’ve seen the bumpy road vacation rentals have taken—with an uncertain future. Now, with fractional ownership on the rise, a new form of ownership that began in 2006 by an innovative vacation home investment company, has demonstrated success in offering the best way to own and enjoy a collection of vacation homes in a diversified manner.

Luxury Residence Funds


Buying into a Luxury Residence Fund offers accredited investors the chance to see returns from traditional real estate appreciation through a diversified portfolio of luxury residences around the world. And just like fractional ownership, the homes in the portfolio are yours to use when you want and are only available to other investors—not the general public.

So, you get the returns of a passive investment vehicle, the control and peace of mind of a fund manager, and the joy of a vacation home, without ever actually having to take care of it, decide how or when to sell it, or come to a consensus with other owners. That’s the perfect combination for luxury vacation home ownership.

Learn more about Equity Estate’s Luxury Residence Fund here.

A photo diary of the perfect weekend in Napa Valley

An idyllic getaway for wine connoisseurs and foodies alike, Napa Valley is the perfect place for a weekend escape. Our travel concierges have curated the ideal itinerary to give you a peek inside some hidden gems in this picturesque region.

“We spent an incredible long weekend in Napa at Equity Estates’ property within the phenomenal Calistoga Ranch. The property is truly unique and exceptional.  It is extremely well located for both major attractions in Napa Valley– wine tasting and restauranting. The resort is architecturally impressive and the unit combines outdoor and indoor living harmoniously, giving the feel of  luxury and space. The service was first rate.Thanks to a fantastic effort by Stephanie, our EE Personal Travel Concierge, and Nora, the EE Local Host, we experienced the most unbelievable few days of wine tasting on record. They arranged visits to several wineries that have limited access and even arranged a driver for us to get around safely and comfortably. All in all, a fantastic property and the perfect place for a long weekend getaway!”  –Equity Estates Investor Steven B.

Day 1: Indulge in a spa treatment at Calistoga Ranch

This Auberge Spa is designed to leave you feeling relaxed and revitalized whether you opt for treatments alone, with your significant other or closest friends. You can’t go wrong choosing from the long list of massages, body restoration treatments and facials.

Dinner—Farmstead at Long Meadow Ranch

With an authentic farm-to-table menu, dinner at the Ranch will surely be one to remember. Long Meadow Ranch owns multiple vineyards which produce the wine served at the restaurant, as well as their own olive oil used in the kitchen.

Day 2: Morning Wine Tasting and Lunch

Stop 1: Turnbull Wine Cellars

Tastings include a look at some of their most special wines and current releases. From the winery you also get some of the most impressive views of Napa Valley.

Stop 2: Mumm

Their tasting includes a flight which offers an assortment of their sparkling wines or by the glass selections. Whether sitting inside or outside you’ll have stunning views over their winery.

Stop 3: Clif Family Winery

Indulge in a delicious lunch that perfectly pairs with Clif Family wines. With a large variety of wines for every taste, there is sure to be one that pairs with your meal and palate.

Dinner—Ad Hoc

An exceptional dining experience, the four-course menu changes daily resulting in creative, unique dishes from its five-star chefs.

Day 3: Brunch—Archetype

Offers a contemporary, out-of-the-box approach to classic Americana dishes. Their creative cocktails and wine list are chosen to perfectly pair with your dish at brunch.

Ready to start your weekend away in Napa Valley?

*Equity Estates is an equity destination club in its 13th year. This vacation home alternative is for accredited investors, offered via private placement.  A globetrotter’s dream with 60+ private luxury residences spanning more than 25 countries, Equity Estates’ mission is to deliver measurable and memorable returns. Equity Estates Fund I sold out in 2012, Fund II sold out in 2016, and Fund III sold out in October of 2019. Equity Estates has collectively raised and effectively deployed more than $125 million and delivered over 13,000 outstanding vacation experiences.

Preview some of the top ski destinations you’ll enjoy as an Equity Estates investor and get inspired to shred some powder or indulge in après-ski.

Without Further Ado, Our Five Favorite Ski Destinations:

5) Chamonix: The best place to sample some of the finest skiing in the Alps, Chamonix gives you five ski resorts nearby.  Enjoy French cuisine and wine apres ski as you spend your nights in a beautiful Chalet.

4) Lake Tahoe: Ranked the top ski mountain for families, Northstar offers great skiing for the entire family and incredible views of Lake Tahoe. The ski- in/ski-out four bedroom residence has wonderful amenity access to the nearby Ritz Carlton and Tahoe Mountain Club.  Or feel free to take in the views from your own hot tub out back.

3) Aspen/Snowmass: Voted one of the top ten ski resorts in the world with terrain for any level of skier, Snowmass is easy to get to with 200+ flights a week to the Aspen airport.  And, of course, Ajax Mountain, Aspen Highlands, and Buttermilk are just minutes away from your beautiful residence.  You’ll stay in the best located ski-in ski-out residence in the new base village with sweeping mountain views and be right next to ski school.

2) Park City/Deer Valley: Ski the legendary Wasatch Powder, just 45 minutes door to door from the airport with two Equity Estates residences to pick from: downtown Park City and Deer Valley. Enjoy après-ski by bellying up to the dozens of watering holes just steps away from your home off of Main Street. Or take in the the Sundance Film Festival and skip the skiing. Get bored quickly? There nine ski resorts to pick from within an hour’s drive.

1) Telluride: Sitting high in the San Juan mountains, this historic mountain town is off the beaten path, but worth the journey. Stare eye to eye with fourteen thousand foot peaks from your living room–just steps from skiing where the lift lines are non-existent. Enjoy amenity access to the Peaks Resort and Spa and try your hand at some of the best heli-skiing in the lower 48 with Telluride Helitrax.

How often do milestone birthdays or anniversaries come around? Don’t pass up the opportunity to celebrate these special moments with loved ones.

How many of the investments in your personal portfolio are you able to actually enjoy with loved ones? Equity Estates allows you to create lasting memories and enjoy all of life’s precious moments, while simultaneously making a sound financial investment in real estate. Browse our Top 5 Recommended Trips for Life’s Milestones below.

1) Top Destination for Anniversaries: Napa Valley, California

How many anniversaries have passed by without a proper celebration? Life’s too short—celebrate with your partner in Napa Valley this year. From the picturesque rolling landscapes, to the five-star cuisine, to the renowned vineyards—Napa is well equipped to play host to your romantic anniversary trip. Our residence lies within the world-renowned Calistoga Ranch, an Auberge Resort, and comes complete with an array of amenities from the celebrated spa to the exclusive Vintner Member Program.

2) Top Destination for Family Reunions: Hilton Head Island, South Carolina

Always dreamed of getting several generations of your family together under one roof?  Now’s the time, and Hilton Head Island is the place. Hilton Head Island is small in size, making it a 100% bike-able island, but mighty in family-friendly activities. Our residence is located just steps from the sands of the #1 Best Beach in the Continental U.S. as ranked by Travel + Leisure and boasts a resort-style private pool and Jacuzzi, gourmet chef’s kitchen with seating for the whole family and nearly 4,500 sq. ft. of living space.

3) Top Destination for a Milestone Birthday Celebration: Los Cabos, Mexico

Milestone birthdays only come around every decade or so—if you or a loved one have one approaching, don’t pass up the opportunity to celebrate. Los Cabos has something for everyone, from its world-class golf to its picturesque waters to its bustling nightlife. Our two expansive residences are both located within the Puerto Los Cabos neighborhood and offer a combined 11 bedrooms, making them the perfect homes to play host to your extended family and friends. With both homes featuring fabulous outdoor living areas including resort style pools, fire pits, panoramic ocean views and plenty of seating, they are begging to host your next celebration.

4) Top Destination for a Girls’ Getaway: Florence, Italy

There are many reasons Florence is consistently ranked as the #1 Best City in the World. With exquisite food and wine, scenic views, and world-class shopping, it’s the perfect destination for a girls’ getaway with close friends and family. Our residence is made up of two separate one-bedroom apartments featuring elegant finishes, modern amenities and floor-to-ceiling windows to take in breathtaking views of the Arno River and the famed Ponte Vecchio. This jewel is located in the heart of Florence—you’ll be able to practically touch the Vasari Corridor—and our concierge team can arrange a fabulous trip filled with five-star dining experiences, artisan tours and jaunts to the Tuscan wine region.

5) Top Destination for a Guys’ Weekend: Park City, Utah

Park City is the rare mountain town with plenty to offer even if you have no interest in shredding through fresh powder—and the action isn’t limited to Sundance. Historic Main Street is still reminiscent of a silver mining town but is modernized with a plethora of restaurants, brew pubs and whiskey distilleries. Of course, this charming city also offers top ranked ski and snowboard facilities with more than 7,000 acres of terrain. Our five-bedroom Park City abode is mere steps from Main Street and the town lift. Take the lift to challenging ski trails during winter or to exhilarating mountain biking and hiking trails during summer. After a day full of activity, enjoy a sundowner on your private rooftop deck while taking in the stunning views with close friends.

Ever wonder what sets Equity Estates apart from competitors? For starters, our signature five-star service and amenities including extensive pre-trip planning, personal travel concierges, attentive daily housekeeping, personal chefs, local hosts and more.

Equity Estates prides itself on providing the best service in the industry for outstanding vacations in private homes. We combine the intimacy of a private residence with the service of a five-star resort. Each of your vacations are made ultra luxurious with the following standards:

LET US HANDLE THE DETAILS.

First Point of Service

Your Personal Travel Concierge- Imagine having someone whose full time job is to plan your vacations and take care of any detail you’d rather not. This dedicated person becomes your best vacation resource and gets to know all your wants and needs– from your favorite style of chocolate chip cookie to your least favorite meat on the deli platter.

Second Point of Service

Your Local Host- An expert in the destination you choose. Your local host allows you to enjoy yourself like a native resident, whether it’s your first or tenth time. These native tips about off the beaten path experiences and hidden gems set Equity Estates apart from the pack.

Additional Points of Service

  • Daily Housekeeping- The beds are made, the dishes are done. It’s time for you to truly relax.
  • Amenity Access- All Equity Estates residences are located in desirable, amenity-rich destinations, many in walking distance to five-star resort amenities like kids clubs, golf courses and fine dining.

No matter what destination you choose around the globe, you can rest assured that our service will remain the same. Sit back, relax and let us handle the details.

Equity Estates Top Investment Considerations for Purchasing a Vacation Home

Are you considering buying a vacation home? Let us help. Equity Estates has purchased dozens of vacation homes around the globe over the last decade. We have learned through experience exactly what to consider when scouting luxury real estate that will appreciate and be appreciated.

TOP 8 INVESTMENT CONSIDERATIONS FOR PURCHASING A VACATION HOME

1. SEASONALITY OF DESTINATION

From a value standpoint, how many days per year can be enjoyed in this destination? We try to purchase residences which present ideal conditions for at least 3 out of 4 seasons. Year round appeal is king when it comes to long term value.

2. RESIDENCE LOCATION

You’ve picked a destination—now how do you choose the right residence? Look for views and access to amenities, whether it be the ocean, ski trail or main street of restaurants. Sometimes it’s worth paying a little more for a prime location. There are a finite number of top-tier homes, and these homes are easier to sell in any market.

3. LONG-TERM APPEAL

Will this destination and residence appeal to you ten years from now? Are there activities you and your loved ones would enjoy as you and your family age?

4. GETTING THERE

Airlift is another key factor we assess. How many airlines service the market, and from where do they originate? Airlines dropping and changing plane schedules can kill a resort destination. As important to consider is the ease of getting to the residence, unless you intentionally want to be off the beaten path and potentially off the grid.

5. AMENITY AND RESORT ACCESS

The homes which appreciate the most have an increasingly attractive draw of activities and amenities. If you buy outside a community, you will need to establish relationships to replace what you get inside a community – and safety should be considered first.

6. COST TO LEASE

Buy the home which costs the most to lease. This typically correlates with home values, so when it’s time to sell you will garner the most appreciation.

7. PROMOTIONAL INVESTMENT

This often overlooked and sometimes difficult to ascertain key metric could make or break your future investment. How much money is being invested in marketing the area by the local government, chamber of commerce or resort real estate developers. The more activity, the better.

8. LAYOUT AND SIZE OF RESIDENCE

It’s important to find a home which can comfortably accommodate your family and the extended family and friends who undoubtedly will want to join when invited. Entertaining and media spaces are essential for marketability down the line. This will ensure the home is appealing to a wide range of people, and maintain its resale value

ARE YOU READY FOR THE HASSLES THAT COME WITH OWNING A SECOND/VACATION HOME?

  • Maintenance surprises, especially on arrival
  • Property management
  • Utilities
  • Property taxes
  • Property insurance
  • HOA fees
  • Storm preparations
  • Repairs
  • Remodeling
  • Furnishing
  • Landscaping
  • Vendor management
  • Liability and property casualty
  • SOLE RESPONSIBILITY

Consider this smart vacation home alternative.

Equity Estates offers an alternative for your dream vacations while presenting a sound financial investment in real estate. We deliver all the perks of vacation home ownership without any of the hassles—just like you’d expect at a luxury hotel.

Our portfolio spans the globe, featuring 60+ luxury residences, each valued at $1.5 to $4 million in the most desirable destinations. ‘Appreciating Luxury Residences’ is a tagline we are proud to have earned over the last ten years.

Don’t just take a vacation—Own it. Invest where you play in exclusive travel destinations from Paris to Park City to the gorgeous islands of Turks and Caicos.