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Private Residence Clubs: Benefits and Comparisons
Vanessa DellaPasqua, Helium Report
Private residence clubs (commonly referred to in the industry as “PRCs” or “fractionals”) combine the services of a luxury hotel with the ownership of a second home. PRCs are typically smaller residences ranging from 750 square foot city condos to 3,000 square foot resort villas.
PRCs allow members to:
- Visit their property on a regular basis with some flexibility;
- Enjoy resort services and amenities;
- Enjoy high-quality home furnishings and design;
- Avoid upkeep and repair hassles of owning a second home;
- Increase financial investments through fractional ownership;
- Send family, friends and clients to use their club;
- Reserve more than one residence per reservation to accommodate large groups (only some clubs allow this);
- Exchange reservations for accommodations at other PRCs around the world (only some clubs allow this).
PRCs vs. Timeshares
A PRC is much different than a timeshare. A timeshare is typically the ownership (or right to use) of a specific week, and lodging is limited to a specific unit. Timeshares are much less expensive than PRCs. Since members of timeshares have limited usage rights, their units are smaller, have fewer amenities and lower quality furniture, fixtures and equipment (FF&E). Service levels are also minimal compared to PRC services.
PRCs are similar to private, equity, golf country clubs, except members reserve lodging rather than tee times. Members receive a real estate deed, which is recorded and guaranteed by a title insurance policy, and in some private residence clubs members can access all residences in the club, with the right to use anytime, subject to reservation policies.
How Does Fractional Ownership Compare?
From a cost-based and investment perspective, acquiring a fractional property at a private residence club only makes sense for certain types of customers.
Check out our chart comparing PRCs vs. vacation clubs and home rentals.
Cost-Based Analysis
The industry-average PRC membership for a 1/8th fraction costs $230,000 in a property with an average value of about $1.2 million. Assuming you’re looking for the above-mentioned product/service offerings and comfortable with their limitations—if you don’t have enough money to afford buying a second home outright (or make the down payment with monthly mortgage payments)—joining a PRC makes more sense.
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