HomeSlice has launched the HomeSlice Destination Home Collection, a co-ownership opportunity across a diverse portfolio of ten vacation residences in top tier, stateside destinations. Members enjoy 28 nights of travel experiences annually, while benefiting from potential home value appreciation over the 10-year life of the fund.
Editorial Update: May 2023 - HomeSlice has put fundraising on hold and is not looking for new homes or new investors.
As part of its membership structure, HomeSlice offers an innovative “Crew” opportunity. This enables groups of friends and family to share membership benefits and travel experiences at a fraction of the individual member cost.
SherpaReport spoke to co-founder and CEO Aaron Berkey about this new fund.
CEO Aaron Berkey
HomeSlice co-founder and CEO Aaron Berkey has an extensive background in real estate, having completed post-graduate studies in real estate at Boston University, followed by a year of residential brokerage experience and then 15+ years advising commercial real estate clients at Cresa Global. Aaron has been a licensed real estate professional in four states over the course of his real estate career and has managed nearly 100 investments in real estate and venture capital.
Aaron explained why he started HomeSlice, saying that he had built a second home on the Delaware shore during the COVID pandemic, but then struggled with the many of the issues that second home owners face, including high costs relative to actual usage and the burden of managing a second home away from home.
Aaron discovered that his family wasn’t able to visit the home as much as needed to justify ownership, and that they often “struggled with the guilt of second home ownership” that interfered with their desire to travel to new places with family and friends. As Aaron put it, “vacationing never felt like a vacation” at the second home. So he set out to create a solution that provides members with the long-term value of real estate ownership along with “delightful, flexible travel experiences”. “My family was previously a member of a rental vacation club and while we enjoyed the experiences and memories created, rental costs skyrocketed and we missed out on the upside of real estate appreciation that being an owner would have delivered.”
“Our goal with the HomeSlice Destination Collection is to provide our members with the best of both worlds, delivering exceptional and flexible travel opportunities built on the foundation of a diversified real estate investment,” Aaron stated.
The Vacation Homes
HomeSlice is planning to acquire ten vacation homes with average acquisition values in the $2.5m to $3m range. The core investment strategy seeks to capitalize on the softening in the real estate markets that the rapid rise in interest rates have created. “The Destination Home Collection is well positioned to make all cash, opportunistic acquisitions with outstanding long-term value creation potential during this cycle”, he said. The company has gathered over a 100 survey responses to help identify the most desirable locations, home types and local amenities that travelers and investors are looking for.
The diversification strategy includes a “good mix of East and West coast homes” in popular ski, beach and urban lifestyle destinations that are easily accessible for members nationwide. Aaron said they are looking at 4-5 bedroom homes in the beach and ski locations, and 3 bedroom residences in urban locations.
Each home will be equipped with brand new furnishings and décor, state of the art modern technology including AV and IOT, and will be in close proximity to local amenities and attractions, such as the beach and ski slopes, golf courses and tennis facilities, and restaurants and nightlife.
HomeSlice will avoid homes that require major capital improvements and will manage capital reserves to ensure homes are professionally maintained throughout the life of the fund to “maximize both member experience and long-term value creation potential”, he said.
The Home Locations
HomeSlice has selected ten top tier destinations based on customer feedback, taking into account accessibility across east and west coasts, a variety of activities such as beach and ski, and desirable locations with outstanding long-term investment return potential.
Ski + Mountain: Park City, UT and Breckenridge, CO.
Beach: San Diego beaches, Kiawah Island which offers “a unique mix of amenities including beaches, tennis, golf, and a variety of family activities and great access to Charleston”, Rt 30A/Rosemary Beach FL which Aaron describes as having “unbelievable white sand beaches and abundant activities for the entire family” and the Hamptons, the New York region’s premier beach destination.
Urban Lifestyle: Miami, FL and Charleston, SC, with their unique cultures, arts and culinary experiences for year-round enjoyment.
Leisure: Napa/Sonoma wine country and Truckee near Lake Tahoe, California, both offer a variety of activities and attractions across all four seasons.
All locations are in the contiguous United States and may be accessible by driving for many members. Aaron pointed out “this accessibility of stateside destinations in the Collection are in contrast to other funds with multiple international destinations, that require longer-term planning and fewer spontaneous travel opportunities.”
Financial Investment
Aaron highlighted the goal of creating a more achievable vacation lifestyle solution at a fraction of the cost of alternatives, and which overcomes the lack of consistency and high cost of short-term rental options while “providing members with true ownership of their travel lifestyle.”
The initial equity investment is $250,000 with annual expenses targeted at around $15,000 per year. Annual expenses include the actual home management expenses and a 2% Asset Management Fee. Each member receives 28 days of access per year with scheduling that allows for long-term vacation planning and more spontaneous near-term bookings.
With a 10% syndication fee, 90% of member’s capital is invested into real estate assets, which is favorable compared to other funds and provides greater long-term appreciation potential for members. At the end of the ten-year life of the fund, the homes will be sold and after investors receive their original investment back, 80% of any appreciation will also be returned to members. This is a very typical structure for these funds.
HomeSlice is offering a special promotion for the initial members who will receive 100% of any real estate gains upon liquidation, rather than the typical 80%. In investor parlance, the fund is fully waiving the carried interest for these members. “We believe these first members deserve this special benefit that can deliver greater rewards for their families upon liquidation and look forward to helping them create lasting memories for many years to come.”
Create a Crew
One unique feature of the fund structure is the concept of a “Crew”, in which a group of friends or family are able to share in the investment and travel experiences together. Aaron told me that “a core mission of HomeSlice is to make ownership of the vacation lifestyle more achievable and accessible”, and their Crew concept is designed to deliver on that mission.
A Crew, which may have up to five people, enjoys the same access as an individual member, but each one pays a fraction of the individual investment and annual costs. Aaron said this has “been really well received in our recent discussions as many prospective members are excited about forming a Crew with close friends and family to share in unique travel and investment benefits together”. Forming a Crew “encourages friends and family to create more precious memories together in a more achievable way,” he said.
The fund will complete its first close with an initial 25 members and will ultimately have 125 member investors in the first Destination Home Collection. As HomeSlice creates additional Collection offerings, members of each will have the opportunity to exchange time across funds to open up additional travel opportunities to new destinations.
Vacation Scheduling
Members will enjoy up to 28 nights of travel per year, with the ability to make two advanced reservations with the support of the HomeSlice concierge team for long term vacation planning. Near term bookings are completed in real time via HomeSlice’s scheduling platform for more spontaneous, flexible travel.
One feature of the scheduling program is member access to vacancies within 30 days of check-in, that does not count towards their 28 annual nights. This enables more spontaneous, flexible travelers to potentially benefit from more than 28 nights per year.
To provide maximum flexibility for members, HomeSlice is offering a rental program which will allow members to offset or eliminate their annual costs by renting unused reservations. Aaron stated that “HomeSlice has created the rental option based on feedback from prospective members, who would like to have rental flexibility as travel plans can change from one year to the next.”
HomeSlice provides a dedicated travel concierge team that supports members with vacation planning as well as recommendations for local experiences, restaurants and other activities for each stay. “Delivering delightful member experiences while also creating flexible options that maximize ROI on their investment are equally important to our model,” said Aaron.
Editorial Update: May 2023 - HomeSlice has put fundraising on hold and is not looking for new homes or new investors.
