This equity destination club has a very strong investment focus, in which it buys distressed vacation properties, and revamps them to add value. The fund has just bought two new homes in Florida and Hawaii.
New Properties
The latest additions to the portfolio include a 6 bedroom, 4500 sqft home in Palm Beach Shores (pictured above) on the Florida Gold Coast. Greg Salley, one of the founders of Equity Residences, told me they had bought this home for "45 cents on the dollar below market peak, below construction cost and 25% below current market price". The property is currently undergoing an interior remodel, and will then be available to fund investors for their vacations.
The second addition is a 3500 sqft, 5 bedroom home on the big island of Hawaii, and features ocean and sunset views. This home, with its own private pool, is located in the gated community of Keauhou Estates. The fund closed on this home last month and is finalizing remodeling plans.
Finding the Best Deals
Greg Salley notes there are several factors that help Equity Residences find the best undervalued properties, these include:
- Knowledge of which markets provide good rental yield and exceptional investor vacations
- The ability to move fast with all cash offers
- A willingness and expertise to remodel and/or fix structural issues that scare others
- Experience negotiating short sales and foreclosures with lien holders
The fund aims for homes in year round use markets, where they can expect a better rental return. This rental income means that the fund does not charge an annual maintenance fee to investors, so that investors can essentially vacation for free. They have recently been looking for new homes in Lake Tahoe, Florida Keys, Kaui, Los Cabos, La Playa/Tulum and Costa Rica.
Investment in the fund starts at $104,000 for one unit, which provides 2 weeks of annual usage, plus unlimited space available usage. All investors share in the sale proceeds of fund properties at the end of 10 years.
