An Atlanta-based fund that lets investors own and use vacation homes throughout the world is expanding its access in Europe.
Equity Estates Fund I LLC, which currently owns 12 homes, mostly in North America and the Caribbean, has allied with The Hideaways Club, a similar fund in London that has 18 homes in places like Tuscany, Italy; Cape Town, South Africa and Croatia.
No money changed hands. As part of the deal, Equity Estates investors get access to The Hideaways Club properties and vice versa, a combined 30 homes in 23 destinations, Adam Capes, co-founder of Equity Estates, told GlobalAtlanta.
“This was a missing piece for us,” Mr. Capes said, noting that Equity Estates only had one European property in Florence, Italy. “Likewise, for their members, they did not have places like New York, Florida, the Caribbean and ski destinations.”
Equity Estates investors typically put down $200,000-$400,000, which the fund pools to buy homes valued at $2-4 million, he said.
The arrangement lets investors own a portfolio of luxury homes “for a fraction of what one of the homes would cost,” Mr. Capes said. In the U.S., Equity Estates has ski properties in Telluride, Colo., and Park City, Utah, as well as beach homes in Maui, Hawaii and Hilton Head, S.C. Besides Florence, its homes abroad are in Los Cabos, Mexico, and the Caribbean island nation of Turks and Caicos. Investors can use any of the homes for 15, 30 or 45 days per year, depending on which package they choose, Mr. Capes said.
“It’s really, we think, the premier second-home alternative,” he said.
The Equity Estates model differs from timeshares. While they generally cost less, timeshares have more constraints and properties are often part of large, crowded complexes, opposed to the standalone luxury homes Equity Estates offers in most destinations, Mr. Capes said.
Timeshares are also difficult to sell, while the homes are a solid asset, he added.
Established in 2006, Equity Estates has avoided the worst of the real estate downturn, Mr. Capes said. The company has tried to buy homes in popular travel destinations that also display sound real estate fundamentals. That means overlooking markets like Las Vegas and Miami, both of which had “tremendous inventory and lots of speculation,” he said.
The fund only bought three homes in 2007-08, the years when home values saw the biggest declines.
“It was a bit of foresight and a bit of good fortune,” Mr. Capes said.
The fund plans to make the bulk of its purchases over the next two years, while values are low. It aims to sell off its entire inventory in 2021. At that time, investors will receive 100 percent of their principal investment and 80 percent of profits, leaving 20 percent for Equity Estates, Mr. Capes said.
About 95 investors, mostly from the U.S. and Canada, have contributed to the fund so far.
