Private Residence Club
Private Residence Clubs (PRC) are at the high end of the Fractional Ownership real estate category.
What is a PRC
Due to their popularity, PRCs (Private Residence Clubs) are always being compared to timeshares, but there are many key differences that the discerning buyer should know.
A PRC is a fractional ownership. In fractional ownership, you own a share of the real estate itself and are issued a proof of ownership of the property, not a time that you can use the home such as timeshares properties.
This keeps the costs lower than whole ownership, but you still have access to the home if you are satisfied with the sharing model. 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.
PROS
Perhaps a $5M home is out of reach, but $250K 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.
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.
Fractional ownership also means sharing the burden of homeownership. Rather than a single point of failure, 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.
CONS
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.
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.
As with vacation rentals and vacation properties, fractionally owned homes could be subject to HOA restrictions.
BOTTOM LINE
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.
Buying into a PRC 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.
That’s the perfect combination for luxury vacation home ownership.
