Private Residence Clubs

[Steamboat Bill]

I just found a very informative web site devoted to Private Residence Clubs....even thought some of the information seems dated.

http://www.residenceclub.com

A Private Residence Club (PRC) is a fractional, vacation real estate development owned by members and operated for their enjoyment. Each member owns a fraction, ranging from four to 12 owners per unit, of a club residence as well as an interest in the club facilities and common areas.

Most PRC communities feature spacious, thoroughly equipped and fully furnished apartments, cottages, townhouses, condominiums or detached homes accompanied by a private clubhouse with resort amenities and hotel services.

PRCs are commonly located in popular vacation destinations such as mountain, beach, golf or urban resorts. Locations typically include direct access to a lifestyle attraction such as ski resorts, oceans, golf courses or major cities.

According to research by Ragatz Associates, the average price for PRC membership is $230,280, regardless of the ownership ratio or square-footage. Ragatz also reports that 50% of all PRC buyers finance their purchase.

HOA fees typically range from $4,000 to $12,000 a year, dependent on the ownership ratio, square footage and local employment standards. However, some PRCs collect nearly $20,000 on an annual basis. Ragatz Associates' research shows that the average PRC week owned represents $1,330 in HOA fees.

 

[PerryM]

What's the difference?

A Private Residence Club (PRC), to me, is a marketing gimmick – they are fractionals, pure and simple. But heck, if folks can be convinced that a PRC is superior to a fractional, more power to the salesrep.

I did pickup on the fact that timeshares were viewed by holding your nose.

There is whole ownership and then there is fractional ownership – I don’t know of another type. Fractional ownership includes:

1) Timeshares (hold your nose)
2) Fractionals (old term for a PRC)
3) PRC (Fractionals)
4) DC (virtual ownership)
5) Soup De Jour marketing term for today

Of the above 4 types, the DC has no type of ownership at all. Ok, there is the BelleHavens that may or may not have ownership. 95% of DCs have none and that’s statistically significant.

Am I wrong, is there really a difference between a timeshare, fractional, and PRC; besides the BS the salesreps spew out.

 

[Steamboat Bill]

Am I wrong, is there really a difference between a timeshare, fractional, and PRC; besides the BS the salesreps spew out.

They all, in theory, are the same....here are my opinions:

1. Timeshare - entry level for most people, have stood the test of time, hundreds (if not thousands of properties), huge price range (free to $100,000), fantastic ability to trade via II/RCI, sleezy sales people image, Guaranteed loss of 15-90% once you buy from a developer, huge resale market, great message board and web sites (TUG!!!). This industry is getting better over the past 10 years with the introduction of DVC, Marriott, Hyatt, Hiliton...etc. but those properties are priced much higher than the historically average timeshares. This is the best choice for the average person....just pick a family of properties you like best.

2. Fractional - sorta of a poor-mans condo image, more upscale than a TS, higher price than a timeshare, questionable value unless you plan on visiting several weeks per year, as in anything else...location is key. The Ritz, Marriott, Four seasons are greatly improving this concept. Questionable resale record....some people could lose $50k or more if they have to sell in a hurry. You are limited to staying at one location. This is the best choice if you really like the place but can't afford a full condo (like Aspen).

3. PRC - just like a fractional, but adds the ability to trade among other similar properties like within the Ritz or Four Seasons properties. Again, questionable resale value...hard enough for developers to sell $120k-$500k properties...resales may even be harder. Good for people that like fractionals, but want a family of properties to visit.

4. Destination Club - the new kid on the block, no long term track record, this is a club...not a deeded real estate ownership, immediate loss of 20% when you join. However, may represent the next big thing in upscale travel of the upper middle class to wealthy individuals. No resales, no renting, but fantastic hassle free trades within the DC. Good for people with disposable cash and want a high end travel experience buy not be tied to a particular location.

5. Hotel condos - something Donald Trump must love...and not a huge track record of success (IMHO), seems to benefit the developers much more than the owners, however it has a more sexy image than full condo ownership to people as they don't have to do a thing except pay the mortgage and taxes. Great locations...no trading ability with most. Good for speculators hoping to get capital appreciation with minimal headaches.

6. Condos - the best opportunity to make a lot of money (on resale) or loose a lot of money (if you buy high and sell low), this has the most hassle for most people as you are the property manager. If you are content to go to one place over and over again for a long period of time...this is your best choice.

 

[Sherpa]

A big difference between standard fractionals on one hand, and PRC's and DC's on the other are the levels of furnishings, amenities and service. The simplest way to think of this is to think of it as the difference between a Fairfield Inn and a Ritz-Carlton (both are Marriott brands/chains). One gives you all the basics you need, the other gives you full 5 star service, with luxury fittings. For the folks who want and are prepared to pay for that level of luxury and service they would choose a PRC rather than a standard fractional.

Last week we put out a list of some of the reasons for buying into Private Residence Clubs.

I've also heard some anecdotal comments that the value of fractionals and PRC's track the overall real estate market - but at the moment it's just various anecdotal reports. When I come across some hard data on this I'll post it here.

 

[Steamboat Bill]

Thanks Sherpa...welcome to TUG.

Although we have never met, spoke on the phone, or even traded e-mails...I have visited your web site:

http://www.sherpareport.com/

Got any good deals on a fractional G5 jet....

I think the information you present is excellent, fair, and balanced.

For TUGers...the Sherpa Report is like Helium reports, Robb Report...etc.

 

[PerryM]

Math I understand

Ok, so the difference in fractional ownership is all based on money; to sum it up.

Mathematically it might be:

Timeshare := 1/52 condo

Fractional := Timeshare*N + $

Private Residence Club := Fractional + $

Ok, I can buy this. Real estate agents do draw the line between a timeshare and a fractional. A typical agent in a resort area has no problems handling the fractional in the MLS - have a hard time dealing with timeshares. I guess the PRC means bigger bucks so more agents handle them.

This really boils down to marketing. I remember when the “Pet Rock” was a hot Christmas present – great marketing.

 

[Steamboat Bill]

Ok....I found a fantastic resource on The Sherpa Report that has a chart that lists several Private Residence Clubs.

http://www.sherpareport.com/prc/compare-prc.html

I spend some time on each link and I am AMAZED.....I can see how some people would LOVE this concept.

I still like my DC membership....but PRC may be better for individuals that want to return to the SAME location or same family of properties (i.e. Ritz, Four Seasons, etc.).

If my kids were off to college or if I did not have kids....I would definately buy a PRC over a DC!!!

*** Warning ***
The PRCs have some of the most beautiful web sites I have ever seen in my life....after an hour or so of exploring each one...I feel like I just traveled the world and my head is spinning....and I can see how PRC's will be a successful alternative to TS's, DC's, condo-hotels, full ownership condos....