Vacation Home Swapping for the Very Wealthy
After Dr. Celeste Good of Greenville, N.C., bought a vacation home on the north coast of the Dominican Republic almost 15 years ago, she has stayed there often, sometimes for weeks at a time.
The 6,000-square-foot, five-bedroom Mediterranean-style property, called Villa Celeste, has expansive outdoor space that includes a large pool and tropical gardens laden with orchids. Its beachfront location and views of the ocean from nearly every vantage point were a big draw.
“It was my dream escape,” Dr. Good, a psychiatrist, said.
But eventually, she wanted to see other destinations and started spending her vacations traveling all over the world.
Dr. Good said that because she was spending less time at Villa Celeste, she thought about selling it but was reluctant to part with a house she loved. “I had cut down on my stays, and it was hard to justify the cost, but I also didn’t want to let it go,” she said.
Through friends, she heard about Thirdhome, a luxury home exchange membership-based company where owners of second and third homes pay an average fee of $650 for each weeklong stay in other upscale vacation homes. Dr. Good applied and was accepted as a member. “It’s been the perfect solution,” she said. “I get to keep my property and travel the globe and stay in incredible high-end houses for not even a fraction of what they would cost to rent.”
That’s exactly the idea the real estate developer Wade Shealy had when he started Thirdhome in 2010. Mr. Shealy, who was behind upscale residential projects such as the 4,000-acre Hampton Island, off the Georgia coast, noticed that many of the vacation homes his friends owned, along with his own in Kennebunkport, Maine, sat empty most of the year.
The majority of these homeowners were looking to sell after having them for five or so years. “They were tired of going to the same place again and again and constantly had that guilt feeling of not taking full advantage of them and spending money on trips elsewhere,” he said.
He set up a small word-of-mouth system among his network where high-end homeowners could put their houses in a common pool in exchange for a stay in a property that was in a destination they were keen to visit.
“The idea was that, unlike a traditional home swap, you didn’t have to go to the same person’s house who comes to yours because you may not want to take your vacation there,” Mr. Shealy said. “You had the opportunity to go to a place you really wanted.”
The network quickly grew, and today, Thirdhome has a portfolio of almost 11,000 luxury properties in 95 countries and does between 600 and 700 exchanges a month.
Homeowners must apply to have their house listed and are required to give it up for a minimum of one week a year. The property cannot be their primary residence and must meet a list of criteria to be accepted: It needs to be in an appealing location for that destination, for one. A home in the Caribbean, for example, such as Villa Celeste, should be near or on the beach while a property in the Swiss Alps should be close to skiing. The homes also need to have top-of-the-line kitchen appliances, up-to-date bathrooms and high-end furnishings; Mr. Shealy said that a member of Thirdhome’s business development team vets the properties, either in person or through local brokers.
Although the average home listed is valued at $2.3 million, some are more extravagant than others.
Great Wall Villa in Beijing, for example, is a $6 million, 8,000-square-foot spread built into a mountain overlooking the Great Wall and surrounded by rock formations and forest. It has eight bedrooms and comes with a two-person staff.
Then there’s the 5,500-square-foot ultramodern home, also worth $6 million, in Queenstown, New Zealand, with a helipad and views of Lake Wanaka, regarded as one of the country’s most spectacular sites. The property is near skiing, hiking and golf.
Thirdhome also has several thousand hotel residence listings including ones at Ritz-Carlton, Rosewood and Auberge properties globally.
Mr. Shealy emphasized that the company does not rent homes on its exchange platform (it recently started a small home rental division) and generates its profit from the $650 exchange fee. “In fact, a lot of the areas our members own homes in are rental restricted,” he said.
The concept of wealthy homeowners trading vacation homes with one another has long existed under the radar, said Patrick Melton, a co-founder and managing partner of South Street Partners, a private equity real estate investment firm based in Charlotte, N.C., and Charleston, S.C. “It’s a fantastic idea, and you hear of it happening among the elite, but Thirdhome is the first company I know of that’s made the concept of a luxury house pool a viable business,” he said.
Mr. Melton said that, in his experience, high-end vacation homeowners tend to be reluctant to rent their properties because they’re concerned about strangers treating them with disrespect. “Thirdhome is different,” he said. “It’s a community of people who also have luxury homes, and the assumption is that they have a mentality of treating any place they stay in like their own.”
At least a few Thirdhome members say they agree.
Stephane Rio, a resident of Paris and the founder of an information technology start-up, owns a 19th-century country house valued at $3 million in Soisy-sur-Seine, about 45 minutes from the city.
“I have never felt comfortable renting my house because it’s so expensive,’’ he said,“but when I read about Thirdhome, I was open to the idea because the members have homes similar to mine.”
Since joining in 2014, Mr. Rio has welcomed guests to his countryside retreat a dozen times and said that he has never encountered an issue.
“Everyone has been more than respectful,” he said. “The spirit of the company is that you’re loaning your home to a trusted friend.”
Similar to Mr. Rio, Ron and Ann Riley, residents of Denver with a $5 million ski house in Vail, were also hesitant to rent it to unknown guests. The idea of lending it to other luxury homeowners, however, was appealing.
“Thirdhome has a clubby feel, and we became members because we love staying in homes when we travel and thought the company had so many impressive properties to choose from,” Ms. Riley said.
Through the exchange, they’ve vacationed in homes in Cabo San Lucas, Mexico; Dubrovnik, Croatia; and Sintra, Portugal, where the five-bedroom property they stayed in was set among picturesque gardens and had an expansive collection of contemporary art.
Putting a luxury property in a home exchange pool has advantages for its owner, according to Taylor Marr, the lead economist for the international real estate brokerage and research firm Redfin.
“You have an incentive to keep your cash parked in your high-end home instead of selling it, and you get to vacation in a diverse range of other luxury properties for minimal cost,” he said.
But Mr. Marr added that there is no direct financial benefit to being part of a platform such as Thirdhome. “You don’t get additional income or see an increase in your home’s value,” he said.
For some members, at least, making money isn’t the reason to join Thirdhome — living in luxurious residential accommodations on their vacations is.
In exchange for listing his property, Mr. Rio has stayed in other upscale homes 14 times, including residences in Finland, the Philippines, the Bahamas and Thailand.
His most memorable trip through the company was to South Africa, where he stayed at a sprawling lodge (the property is no longer part of Thirdhome) near the Leobo game reserve. There, he went on hikes, guided safaris, swam in the large pool and stargazed in the lodge’s observatory.
“It was a total immersion in nature, and I was blown away that I had the opportunity to stay in such a spectacular place,” he said. “It’s not a property I could afford to rent and lucky for me, I didn’t have to.”