# Crescendo



## TarheelTraveler (Jun 13, 2007)

I just discovered the site and thought that I would share my thoughts regarding Crescendo.  It's great to hear what others are saying about their destination clubs and their thought processes in evaluating the DCs.

Of course, joining a destination club is very much a personal decision.  I'm sure what I considered important in deciding to join Crescendo is not necessarily important to others.  This is obvious when you see that 2000+ members who have joined Exclusive Resorts, and I personally couldn't imagine joining ER.

I stumbled on the concept of destination clubs and really liked the idea of staying in great houses for far less than the typical rental cost.  I was disappointed though when I found out that you typically don't own any real estate and don't get any appreciation.  For me, I couldn't afford putting aside 250K-400K without any potential return other than a "lifestyle return" like a country club.  

I limited my search to equity destination clubs and non-equity destination clubs that had some potential appreciation in the membership fee.  In the end, I didn't feel comfortable in relying on increased membership fees for appreciation in the event growth slowed or competition picked up, so I focused on equity destination clubs.  There aren't many choices in the equity DC space.  I just didn't like (or maybe I just didn't get) the hybrid BelleHaven's model. A development company gets 30% off the top if I remember correctly, and then the house went into a non-profit entity owned by the members.  Crescendo's model was much simpler.  The LLC owns the houses and you own part of the LLC.  I never requested M Residences information, because their houses and locations didn't appeal to me.

Unlike the classic salespeople I encountered elsewhere, I got very straighforward answers when I spoke with the Crescendo people.  The cost per night on Helium was in the middle of the pack for Crescendo, but the analysis does not take into account any appreciation.  If you apply a very modest return over a ten year period, the cost per night ends up very low (and a negative if you get great appreciation).

Now that I've traveled with Crescendo, I can tell you that it does spoil you.  Even a Ritz-Carlton or a Four Seasons does not compare, particularly if you bring family or friends.  You get an amazing house in an amazing resort fully stocked with everything you need (from movies, board games, video games, music, high speed internet and kitchen appliances to the more mundane like paper, printer cartridges and post-it notes).  You get local destination hosts who know the lay of the land, plus a corporate office concierge who helps with anything you need.  All of the houses are owned (none are leased). The financials are independently audited. There are not that many houses at this point (although it will still take us a few years to visit all), but because there aren't that many owners, you are not having to book two years out like some clubs for popular properties.  For the more popular properties in high season, four to six months is sufficient in most cases.  For off season or less popular properties, you can easily do short notice reservations. Crescendo management is very responsive and communicates well with the owners. Financially, the real estate portfolio has also done well.

Hope this helpful to anyone looking at destination clubs.


----------



## NeilGoBlue (Jun 13, 2007)

I agree.  

I would have gone with Crescendo, but wasn't ready for that price point, so I went with Bellhavens.


----------



## hipslo (Jun 14, 2007)

I am waiting for a DC to come along that essentially utilizes the Crescendo model, at roughly 1/3 or so the price point (900k or so condos would more than do it for me - 2.8m 5000 sf homes are nice, but overkill in my case, and the 325k intitial fee is something I cant justify - too many eggs in one basket).  I may need to wait a long time, but I have no problem with that.  Crescendo appears to me to be doing a lot of things right.


----------



## vineyarder (Jun 14, 2007)

Crescendo wasn't around when I did my due diligence, so I don't know alot about them, but on the surface it sounds like what a number of posters here (that are opposed to non-equity DCs) are looking for... so it will be interesting to see if the naysayers will pony up & join Crescendo?  

Out of curiosity, do you only realize the appreciation when you leave the club?  That is one thing that really appealed to me about PE Platinum; the 'real estate appreciation credits' are used every year to decrease your annual dues, so you benefit from the real estate appreciation without quitting the club; I wanted to join a club that I would never want to quit!  With PE Platinum and the RE credits, I get to have my cake (the quasi-equity stake) and eat it, too (the usage of the homes).  My problem with most equity clubs is that you have to choose one or the other; take your appreciation by quitting the club, or stay in the club but see the appreciation purely as paper profits...

Lastly, can you ever have phantom profits that trigger a tax liability for the members without any distribution to the members? (i.e. the company sellls a property for a big gain in order to buy a home in a different location, but doesn't make a distribution to the members, since it using the proceeds to buy a different home, but there are taxes owed on the profit)... Guess it may depend on the corporate/tax structure ofthe Club.

Glad you're enjoying your club!


----------



## puffpuff (Jun 14, 2007)

vineyarder said:


> Crescendo wasn't around when I did my due diligence, so I don't know alot about them, but on the surface it sounds like what a number of posters here (that are opposed to non-equity DCs) are looking for... so it will be interesting to see if the naysayers will pony up & join Crescendo?
> 
> Out of curiosity, do you only realize the appreciation when you leave the club?  That is one thing that really appealed to me about PE Platinum; the 'real estate appreciation credits' are used every year to decrease your annual dues, so you benefit from the real estate appreciation without quitting the club; I wanted to join a club that I would never want to quit!  With PE Platinum and the RE credits, I get to have my cake (the quasi-equity stake) and eat it, too (the usage of the homes).  My problem with most equity clubs is that you have to choose one or the other; take your appreciation by quitting the club, or stay in the club but see the appreciation purely as paper profits...
> 
> ...


1. PE has discontinued the credit program . You got in at the right time. 
2. Yes. You can have potential capital gains tax payable without distribution from the LLC to pay for the tax. That is one of the potential pitfalls. This is clearly mentioned as one of the risk in the Cresendo offering.


----------



## Elsway (Jun 14, 2007)

What is the pricing at Crescendo - upfront, annual and number of days of useage?  Thanks.


----------



## travelguy (Jun 14, 2007)

puffpuff said:


> 1. PE has discontinued the credit program . You got in at the right time.
> 2. Yes. You can have potential capital gains tax payable without distribution from the LLC to pay for the tax. That is one of the potential pitfalls. This is clearly mentioned as one of the risk in the Cresendo offering.



1. PE Discontinued the RE Credit program while I was considering them for DC membership.  I asked PE why they had discontinued the RE Credit program.  They really didn't offer a good explanation other than they wanted to streamline their biz model to be in line with the majority of other DCs.  They also showed me that the RE Credits for the previous year were inconsequential for the membership I was considering .

2. The tax liability without cash distribution from property sales of equity DCs is a huge issue for those of us already dealing with RE tax issues from other investments.  High Country Club has this same issue on the investment side of membership and has a very direct way to handle it so that the investor doesn't get caught in the squeeze of tax liability w/o cash proceeds to pay for the liability.  In fact, the largest section of the PPM deals with the intricacies of handling these RE tax issues.  Great reading if you are an account (I'm not).


----------



## TarheelTraveler (Jun 14, 2007)

I don't have the info. in front of me, but my recollection on current pricing is a family plan at $225K upfront, 15-20 nights, $13,500 in dues.  There is a corpoate membership at 400K, 40-45 nights and $30,000 in dues.  There is also a family plan in between, maybe 325K, about 35-40 nights and low to mid 20s in dues.

As far as when you can realize appreciation, it would be when you leave during the LLC's term or at the end of the 10-12 year period when you decide to roll over your investment into "Crescendo II" or take your investment out.  As one poster pointed out, it would be nice to receive appreciation along the way, but it really is no different than owning any other type of real estate where you enjoy the real estate along the way, but it is all paper profit until you actually sell.

With respect to the sale of a property, it is possible that you would recognize your share of the gain like any other LLC, but as a practical matter, you would do a 1031 exchange into another house and not just a straight sale.  It's much more likely that you would have depreciation along the way, rather than a capital gain.


----------

