Equity Residences has rolled out a limited time offer for accredited investors who want to test their business model and get a full investor experience. You can put down a deposit that equals 10% of the investment amount, and then stay at the fund homes for vacations.
For just $15,750 (10% of the starting $157,500 investment) would-be investors can get the full Equity Residences investor experience: stay at the Fund homes, book trips through the Equity Residences affiliates Elite Alliance and Third Home and participate in the reservations process that ensures investor access to the homes in the fund portfolio.
The deposit is non-refundable. At the end of the trial period, investors can fund the full balance of their investment or simply walk away. But they potentially receive vacation values that exceeds the deposit amount, making this trial an easy choice.
Equity Residences gave us some examples of potential trips. Take an option of going skiing to Northstar Resort, Lake Tahoe in February. A week at the Equity Residences luxury ski-in/ski out home would cost a third party renter $2,156 per night, before the California 10% transient occupancy tax and rentals site booking fees, bringing the total amount to $18,416.
An investor can stay at Northstar during the same week with a 10% minimum deposit of $15,750 and pay no extra taxes and rental site booking fees. There is a nominal cleaning fee which covers setup costs for a home.
Upon submitting a 10% deposit, a limited partner will also get bonus credits to travel with affiliates Third Home and Elite Alliance. Essentially providing additional travel options.
As examples, the key credits at Third Home could mean a stay at Rosewood Bermuda Golf Villas - for those who prefer to warm up on the islands after braving frigid mountains. A comparable vacation rental would go for $1,500 per night, bringing the total to $11,721.50 for a rental with local taxes and booking fees.
The Elite Alliance credits could get an investor a week-long trip to the Cote d’Azur, France and a stay at a 4-bedroom villa.
Overall, the 10% deposit with Equity Residences could mean between $25,000 - $30,000 in vacation value, if a trial investor goes to Tahoe and then flies to Bermuda, as in the examples above.
A further feature of the trial is the bonus use on short notice. As much as 30 days out you can book an Equity Platinum Fund home on short notice and as much as 60 days out through the affiliates. Your exact bonus scenario and value calculation depend on your schedule, availability, and willingness to experiment.
The balance of the investment funds must be received by September 30, 2019.
The Full Model
Equity Residences model combines vacation home ownership and investment for accredited investors. Here is how this works.
Equity Residences buys luxury vacation homes as an investment class. They raise money from accredited investors to buy these homes with cash to create a lower risk investment, making fund investors part owners of the homes in the portfolio. Investors can then use the homes rent-free for 10 years.
When the investment matures, Equity Residences sells the homes and returns the original investment amount plus appreciation to its investors. Equity Residences investors are also eligible to receive dividends based on the portfolio performance on the rental market.
As part owners, investors don’t pay local transient occupancy taxes and avoid rental site booking fees. They work directly with the fund concierge team to book stays at homes within the fund portfolio.
Ownership of luxury homes is usually associated with high upkeep costs. After all, local property taxes, heating and cooling bills, and gardeners need to be paid in a timely manner. To cover these costs, Equity Residences rents out the homes when they are not being used by the fund investors. The homes are rented out to high net worth individuals, which covers most upkeep costs. Rental performance also allows the fund to pay investors dividends, if the fund homes generate extra income.