Laura Welch of Kansas City recently visited New York on a business trip. She stayed at the Trump International Hotel & Tower where she paid just $495 for five days. Not bad, considering that when I last checked the cost of a basic hotel room at the Trump International Hotel it was a minimum $895 a night.
How did she do it?
The secret is, Ms. Welch belongs to a private club called 3rd Home, which is about the best vacation home concept I’ve come across — and that’s a serious statement considering I have utter disdain for almost every other vacation home scheme I’ve ever seen, from time shares to fractionals to condo/hotels and beyond.
Unfortunately for middle-income folks like you and me, 3rd Home is not available. This terrific little program is only for those who reside in the high-income world of Mitt Romney and his ilk.
Here’s the way it works: If you own a luxury second home and if you don’t mind others who own luxury second homes elsewhere in America or around the world staying at your place when it would otherwise be empty, you can join 3rd Home and place your property into a pool of residences available to others.
"We are not a rental company, we are not a management company," explained Wade Shealy, who founded the company in Nashville. "Simply put, we are a private club that allows people who have homes that qualify a chance to travel to other luxury homes around the world."
Other programs usually require a direct, simultaneous exchange, which means finding a willing trader with a desired property on the exact dates required. But, with 3rd Home every property listed is available to club members.
And what properties they are! As a company release states: "We are very selective and only accept properties, resorts and locations that are among the most desirable in the world. We pre-screen our members for home quality and personal character before admittance, solicit review from hosts and guest for every stay, and require good standing in order to remain in the 3rd Home club."
If you’re thinking entry into this private club for the wealthy is going to cost a king’s ransom, then you would be wrong. This was one of Shealy’s masterstrokes. The cost is a mere $495 for a two-year membership (plus your home has to qualify). Then there is the transaction fee; private club members pay $495 for a week’s stay somewhere that would normally cost, who knows, anywhere from $3,000 to $30,000 for a week.
"Once you are in and approved, you deposit weeks into the club and in return you get ‘keys,’ which are the currency that everyone uses in the club," Shealy said. "The keys in your account allow you to go to another member’s house whenever, wherever, you might want to go, independent of who might come to your house."
Welch, who put her Aspen, Colo., second home into the 3rd Home pool for summer and winter use, told me she has been in the program since Shealy came up with the concept in the summer of 2009.
"We really liked the concept of being able to extend the value of our property," she said. "We feel like we have many homes. This allows us to choose different places where we want to go on vacation. This winter I will be using keys for New York again. We have also been to Costa Rica for two weeks, and last January we were in Brazil and used out keys for that as well."
Asked if there were concerns about having strangers in her expensive Aspen home, she said her experiences have been exactly the opposite.
"One couple left us a gift certificate for our favorite restaurant," she said. "When you sign up for a property, you are immediately connected to that homeowner. Every single person that has contacted me has been very gracious. Each said the same thing: ‘We will take care of your home as it was our own.’ That has been our experience."
Currently, 3rd Home has 1,100 members featuring more than 1,300 properties that are worth an average of $2.25 million and many are worth in excess of $4 million. These homes are spread over 66 countries and consist of everything from expansive log cabins in premier ski locations to luxury apartments in major global cities.
3rd Home has been particularly successful in bringing in iconic developments such as luxury condo/hotels and resorts, one of which is the Trump International.
Doug Russell, who is a board member at Trump Tower, said the board there decided to allow the introduction of 3rd Home because it saw the program as a perk for owners, who know there are certain times of the year when residences are quiet. Of the 150 to 160 owners, 10 have signed up to be part of 3rd Home, including Russell.
"I put my residence up and someone immediately contacted me and rented my place for a week," he said. "I have a million-dollar property at Trump, so I get two keys. We are trying to figure out how to get four or five keys, which means I have to put my residence in the pool for at least another week. We have friends who want to go to Italy for the summer and we would like get a house to stay in."
He added, "There is a whole lot of down time in second homes. If all I have to do is pay $495 to have a week in Italy or Bermuda where I would normally be paying $1,000 a night, this works."
Shealy pointed out that if folks with a luxury second home wanted to rent that residence for a week at $10,000 they would typically use a property management company that is going to take about half that revenue for managing and renting the property. Then on the remaining $5,000, the tax would be about 40 percent, netting the homeowner about $3,000.
"With us, if you put your property up, you can stay in another $10,000-a-week property equivalent," he said. "For those people who don’t rent their property all the time, there are weeks it is sitting empty, so this value proposition is very high."
Obviously, this program is out of my league, but I thought I would bring attention to it because it was well-conceived, which is more than I can say about most other vacation home, money-making schemes.