Consumers in the market for a luxury second home can choose from destination clubs, fractional residences and wholly-owned homes. Halogen Guides has outlined the top five reasons for why a consumer would choose each option. We also weigh the potential benefits and pitfalls.

When to Consider a Destination Club

Destination clubs are a popular choice for luxury travelers because of the diversity of units they offer. Members of destination clubs share access to fully-furnished multi-bedroom homes in locations around the world. The most popular destination clubs include Ultimate Escapes, High Country Club, Quintess, LRW, Exclusive Resorts, and the Lusso Collection.

1. Destination clubs are a good choice if you frequently go on vacation with a large group of people. The homes typically have 3-5 bedrooms, making them an attractive choice for families and entourages.
2. Destination clubs are a good option if who want to visit many destinations in a single year. When you are a member, you have access to a large portfolio of properties that you can choose from.
3. Destination clubs are a lifestyle investment, but not a financial investment. You will not build equity in real estate by being a member, but you will have access to a variety of luxurious destinations.
4. Destination clubs are a good choice for individuals and families without liquidity concerns. They require an upfront deposit of 20% of the average asset value of a portfolio residence.
5. Destination clubs are ideal if you want to enjoy the services of high-end hotels within the privacy of a home.

Download Halogen Guide’s Decision Guide to Destination Clubs

When to Consider a Fractional Residence

A fractional residence is a club with properties— each owned by multiple members— usually in a community with resort/hotel amenities and services. Members own fractional equity in a real estate development. Each unit has a certain number of members that range from 6-12 owners. Fractional residence communities operate between 30 and 400 fully furnished apartments, cottages, townhouses, condominiums, or separate homes. They are also located in popular golf, ski, and beach resort destinations.

1. Joining a fractional residence makes sense for people who want to spend 25-60 days at a specific property for a specific time period.
2. Investing in a fractional ownership property grants owners access to luxurious residences for a (literal) fraction of the price.
3. Fractional residences offer members more personalized services than most hotel resorts. For instance, a fractional residence can pre-load units with members’ pictures, clothing, equipment, and other personal belongings.
4. Fractional ownership residences optimize investment in a vacation property, as owners buy only the time they are going to be physically present in the unit.
5. Fractional residences are ideal for small to mid-sized group of travelers. They usually offer ownership in 2-3 bedroom units.

Download Halogen Guides’s Decision Guide to Fractional Residences

When to Consider Owning a Vacation Home

One appealing vacation home ownership option is buying a unit within a luxury resort. You can take full advantage of all the resort amenities and not worry about some of the nagging aspects of second home ownership like repairs and housekeeping.

1. Owning a vacation home allows you to make a significant long-term investment. It gives you financial flexibility if you choose to sell or refinance, and tax benefits in term of write-offs.
2. You can secure the ideal level of privacy for you and your family.
3. If you plan to spend extensive period of time at the same place, that is more than 3 months a year, a second home is the best option.
4. You can stay there any time you want. You won’t need to schedule things ahead of time or worry about availability during holidays.
5. You can build a legacy for you and your family, and you can pass the property to your heirs.