Luxury Housing Options Without Being Rich
NEW YORK ( MainStreet) When Dr. Piero Policicchio was ready to buy a beach house in Charleston, South Carolina nearly three years ago, he couldn't find anything attractive he could afford. So, the Holland, Mich. dentist opted for luxury interval ownership along with 13 others in a $3.5 million home on Folly Beach.
The doctor drives 17 hours from Michigan to South Carolina with his dog and partner to bask in the lap of five bedrooms, an ocean view and a swimming pool among many other luxury amenities.
"Instead of paying $600,000 plus $20,000 taxes to buy a home, I paid $242,000 for equity ownership and one week every three months," Policicchio told Mainstreet. "When you are splitting costs with 13 other owners, everything's cheaper."
Unlike a timeshare, luxury interval ownership affords the affluent like Policicchio a deed and the ability to rent out the weeks he misses to others.
"When I want to exit the luxury interval ownership program, a realtor will sell my share for whatever the market will bear, which will be at a profit," Policicchio said.
Luxury interval ownership is also known as luxury fractional ownership.
"It's a value proposition for wealthy people to opt for luxury interval or fractional ownership rather than outright buying a home," said Anthony Polvino, chair of the hotel and hospitality group of the Taylor English law firm in Atlanta. "Many wealthy people could choose to buy a second vacation home, but what comes with that is all the obligations of home ownership."
Aaron Goldman became an owner-member in a fractional ownership opportunity called Equity Estates six years ago. The Atlanta-based commercial real estate developer and his business partner paid $300,000 to buy into a fund of 15 to 20 owned houses with reciprocal use.
The investor members now own an 80% interest in the appreciation of the homes.
"Most of us who are working and have families don't have the ability to use a house that we would own enough to justify the expense, the mortgage and the upkeep," said Goldman. "When you own in a fractional ownership situation, that hassle factor is taken away."
Goldman's investment is backed by equity in a diversified group of homes in the Equity Estates portfolio.
As a result, Goldman and his partner use 30 nights a year to lodge in Cabo San Lucas, Turks and Caicos, Deer Valley, New York City and other locations.
"In addition to a diversity of locations, you don't have to worry about decorating the home because it's done by the management," Goldman said. "They also take care of roof repairs, landscaping and insurance, which are all things we have in our own homes that we don't want to worry about when vacationing."