AIPIS 182 - Luxury Properties and Travel Club Perks with ThirdHome's Wade Shealy

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It's my pleasure to welcome Wade Shealy. He is the founder, chairman and CEO of an innovative company called 3 3rd Home. They have beautiful properties around the world that people can rent for bargain prices and they've got a really interesting business model. So let's dive in and check it out. Wade, welcome. How are you?

Hey, doing great, Jason. Thank you very much.

Good. It's good to have you on the show. So tell us about third Home and you know, what it is, how old it is. Give us some background.

We say that we're a luxury property and travel club, but really what we're geared towards is people who have a luxury second home that want to go occasionally go other places than just their second home. And with a membership in third home, they can travel anywhere else in the world instead of any of our other properties, which is about 9,000 properties in 87 different countries. And they can stay in another club member's second home and they don't have to pay rent to stay there. So for example, if somebody has a lovely home in Aspen, Colorado, but they like occasionally going to the beach, they could go to Cabo San Lucas, they could go to Miami, they could go to the Caribbean, they could stay in another beautiful second home without having to pay rent. So it really just gives them a lot more flexibility with their second home than just going the same place over and over.

Yeah, well, that would certainly be interesting to people, Wade, kind of distinguish if you can for the listeners. There have been home exchange clubs for decades. This type of thing has been around. Of course, you know, there's Airbnb, there's vrbo, there's all these different sort of offerings out there. And there are clubs and groups that actually buy all of these estate homes around the world and they actually own them, go out and raise investor money to do that. And you guys don't own the homes you offer kind of an exchange platform sort of define, if you would, for the listeners, what makes Third Home unique? What's the sort of the angle on, on maybe the Overview of the different business models out there for this type of thing.

Well, we really have the first ones to ever do this. We started with full ownership second homes. And there's really, to my knowledge, there's no other company in the world that is a club like this with a pooling system and a vetting system for all of its members for full ownership people being able to exchange and use their home to go to another full ownership home. As most people know, in the timeshare industry, there's always been exchange clubs ever since timeshare. There's RCI and there's Interval International and there's others. And there's about 10 million people who bought timeshare weeks that exchange those weeks and go other places. And that's really what's made the timeshare industry survive. Because people probably wouldn't have made it, Jason, if they hadn't had the exchange component. Because people wouldn't want to buy a week somewhere and go the same place over and over and over and over again every year they want exchange and go somewhere else. Well, it's the same is true for full ownership people who didn't buy a week in a condo. They bought the whole house. They bought 52 weeks. And Kiawah Island, South Carolina, or in Vail, Colorado, they also get tired of going to the same place over and over. What we found is I started a real estate company in 1984 in Hilton Head, South Carolina, and what I found was that no matter how excited the people were when they bought that second home in Sea Pines or Palmetto Dunes or wherever, typically almost every single person who bought that second home was back in my office within five years wanting to sell it. And I'd ask them, why do you guys want to sell it? I thought you liked it here. Oh, we've, we've loved it here. It's just we feel like we've eaten at every restaurant, we've played every golf course.

Right.

Sort of seen and done it all. And we. There's a lot of other beautiful places we want to try somewhere new.

Yeah, they want some variety, of course. Yeah.

And people are a lot more mobile today, Jason, than they've ever been. And, you know, people do a lot of different activities and it's hard to find one place that you can snow ski and go to the beach at the same place. So people want diversity. So they don't want to spend two or three million dollars for a second home and feel like they've got an anchor around their ankle that feel like they have to go there because they have such an investment. So I really believe that 10 years from now, very few people buy a second home without having a membership to a club like Third Home. There will be other companies, I'm sure, but that way that they can go there when they want to, the kids can grow up there and it can be the legacy and the family place. But when they want to try somewhere, they feel like they can, they don't have to go pay rent, you know. So the frustrating thing for a guy that just bought a $3 million second home is the family wants to go somewhere else and he's got to fork out 10, 15, $20,000 to rent another place.

So talk to us from the experience though of just the, the guest. Right? Like you don't have to have a second home to put into the pool of Third Home's offerings, right? You can just use it as a guest. See, I'm a JetSmarter member and as I was mentioning to you, I became familiar with Third Home when jetsmarter made a deal with you and put it on their app. And I was looking at all these gorgeous mansions really around the world, and I thought, gosh, this is fantastic. I want to, want to stay in some of these beautiful places. So I just was interested in using it as a guest. Right. Is that something you really appeal to? Are you mostly looking for people to put homes into the pool? I mean, I own lots of rental properties, but believe me, they're nothing that you guys would be interested in. They're just bread and butter rental properties. So.

Well, you gotta put, you have to put your home into the pool. It's just like having a checking account. If you don't deposit occasionally in your checking account, you can't withdraw. And so for us, we have to have people, it's two sided. We have to have people that have a home. They're depositing weeks to allow people to pull weeks out. So our club is only for people who have a second home to put into the club. Now, the exception of that is JetSmarter. We did a partnership and a strategic alliance with JetSmarter, which is a great new private aviation company that's doing very well. And through our partnership, we do allow some JetSmarter members like yourself who don't have a second home to use a limited amount of our inventory, especially inventory that's about to expire, that we can put out there for the JetSmarter members.

What does about to expire mean? What does that mean?

Well, typically any, any inventory that's within 30 days out or less that's getting ready to come up within the next 30 days. We offer it out through the JetSmarter program. But yeah, our club is different that you. It is for luxury second homeowners. Now, you had mentioned earlier that there's other clubs out there, like destination clubs, and destination clubs were popular, you know, 15 years ago, and there's probably 30 or 40 where you pay three or $400,000 to join. You paid 25, 30, $40,000 a year in dues. And supposedly the club buys these homes and you can go stay in them. And so most of them went out with the downturn in the economy. I think there's one left right now which is Exclusive Resorts is the only one that's still around. But all those went under because, you know, and people had at risk these three or four hundred thousand dollars deposits with us. We don't go out and buy these expensive homes. All we are is a club, a conduit for people who already own these second homes.

Right. A much better business model, by the way.

Yeah, yeah, thanks.

Yeah. Okay. All right. So they put their second home in and then they can trade and then you have affiliations like the jetsmarter affiliations, where people don't have to put a second home in and they have access to a limited amount of inventory, not the entire inventory.

Right, Correct. Yeah.

Okay. All right, Interesting, interesting. What else do you want people to know?

You know, if people have a second home or they know somebody out there with a second home? If they could just look into our website, thirdhome.com they can go to the site and look, we have about 9,000 properties. We're in 87 different countries, all online. And so once you join, it's pretty simple. You deposit a week into the system and for that you get credits. Or we use keys. And the keys are based on two factors. One factor is the value of your house and the second factor is the week that you offer us. So if, you know, obviously a $2 million house is different than a $20 million house. And so we have a key levels that is based on the value of your house. It doesn't mean that if you have a $2 million house, you can't go to a $20 million house. You just have to give up more time at your house to do that and vice versa. If you've got an expensive home, a 20 million dollar home, you can give up one week and go a lot of weeks to a 2 million dollar house. And so the system is Built where you deposit time. It tells you how many keys that you get. The other factor is the seasonality at every location. Some weeks are more desirable than others based on the season. And so it'll tell you once you join if you want to deposit that week, how many keys or credits you get in the club. You deposit it, you get those into your account and then you go online and you pick where you want to go. Whenever you want to go there, hit a button and reserve it and it's yours for the week. We charge a nominal exchange fee, runs from $395 for the week to as much as $9.95 for the week. But our average exchange fee is around $650 for the week. But you're staying in a 3,45 million dollar house for the week, you know, for that. So it's a great value.

It's really amazing. And when you use it, do you have other affiliations like the jetsmarter relationship?

Are there other ones?

Yeah, I think we're in about 75 or 80 different partnerships, but JetSmarter is the only jet partnership we have. Most of the other partnerships are with resort developers or like Trump International Hotel and Tower in New York City's one. Ritz Carlton is one of our clients and we have about 1500 there members in the club.

So what does that mean? I mean, how do you are people a member of Ritz Carlton or a member of, well, the Trump Golf Course? They are. So that's basically the same kind of perk where someone buys a membership to something and then third home will make a deal to offer that to their members. Right.

Most of the relationships are with people or groups that are have product, have second home product. And so what we found is that a lot of the real estate, new developments, when they're trying to sell their product, if they can offer a membership to third home with the sell, right then it helps them make the real estate sale. Because whether people tell you or not, when you're looking at buying a $3 million house in Arizona, some of the family may want the beach. Well, Arizona doesn't have a beach. You know, some people may want to ski in Colorado. Arizona doesn't have those kind of mountains. So you know, you got to make it, the family's got to make a decision. And so some of the members may want somewhere else. And then also you may be thinking, hey, are we going to be happy coming here all the time? We want a vacation. Is this the only place? And so if that development says, hey, We've got this relationship with Third Home. When you buy this 3 million dollar house here, you can go anywhere in the world for 395 to $995 for a week and stay at, look at these homes you can stay in all over the world. And we're going to give you that membership. There's no cost for the membership. We're gonna give that to you as part of the purchase here at this development. That's how we partner. We partner with a lot of real estate companies and so in development groups.

Yeah, sure. Very interesting. Very interesting. There is a distinction that your homes in your pool aren't really like rentals. I mean, when you look on Airbnb, for example, pretty much everything there's a rental where it's being rented a lot. And I tell you, you know, over the years, I've stayed in some pretty tacky places like that. And I that's just generally why I gravitate towards just in nice hotels and resorts over these private properties. Because some of them are just beat up, aren't they?

Yeah. And so about half of our members in the club have never rented their second home before because they just don't want people renting it because they're afraid, you know, how they'll treat it and how the abuse it might take on it. So about half of the club members have never rented their home, but they're willing to do third home because it's not really a renter that's staying there. It's another person that owns a second home that's doing the exact same thing with their second home that they're doing. And so what we find is that the people take really, really good care and they end up treating the home as good as the owner or sometimes better. And what I usually do, and a lot of our members do it, is when I leave another member's home, I always leave a nice gift there. But you can barely tell I even stayed there because I'll take the trash out and I'll strip the beds and put them by the washing machine. And so our members feel really good about how our members treat it. And so the difference is when you walk into a house, like you said, that's never been into a rental program is a true second home, you can really feel the difference than when you walk into a house that's been heavily rented. When you walk in a house that the mates just got out 30 minutes before from the last family that stayed there and the last family that stayed there before that, you know, that house feels like a rental house where a lot of our homes that you go stay in, you walk in and you really feel like you're in somebody's private second home, that you're their guest and they're your host. That's a big difference. Yeah, I like that feeling better.

Explain to us the cleaning situation though, by the way. So what happens after someone moves out? I mean, I know this is just a little operational detail, but you kind of begged that question there. Does a housekeeping service come through afterwards and do all the laundry and everything?

So we let everybody use their own cleaning service. And so, Jason, when you're the host, it's your house that I'm staying in. Then after I depart, then you would have your cleaning service that you always use either for yourself when you stay there, or if you do the rentals, come in and do the cleaning behind me. And you as the host and the owner of that house will pay for that and take care of it. But then, Jason, when you travel and you're the guest and use your keys to go somewhere else, that owner will take care of it when you leave. So it's a wash. But that way every owner of the house is using who they normally use to go in and take care of their home afterwards.

And is there a rating service? I mean, for example, do you rate your host? Do you rate your guest? That's kind of been a neat system about the sharing economy that has these sort of bi directional ratings have been pretty successful, I think.

Yeah, we do. We have a. On the website you can look on each property and read the reviews and all the reviews are unedited. So whenever somebody posts a review, it goes straight to the website. And so you can read the reviews of other members who've stayed in that home and what they said about it. And then they also. We also asked the guest to review the host, what kind of host they were. Now, we don't post that anywhere, but we look at every review by the guest of how the host was to make sure the host was accommodating and communicated well with the people. And so if we get any negative things on that, we certainly respond quickly to it. But it's good because it is a system where if somebody's not a good club member and they don't treat a house well, then they're jeopardy to be kicked out of the club and lose all their keys or their credits that they've earned in the past. So what we found is when people go and stay, they tell the kids you know, be sure to take good care of everything here, because we don't want to get kicked out of this club. We don't want to lose our credits. And since 2010, we've done 17,000 exchanges, and we just don't have any problems. I mean, the people actually become good friends with each other. And we create a lot of social friendships and business connections through the club membership. We do parties. The last couple years, we've had one of our members is Kenny Loggins, and he comes and he performs for our members, and everybody flies into Nashville, Tennessee, and we have a big party for three or four days, and everybody gets to know each other. And it's created a lot of partnership, friendships, and business relationships.

Yeah, yeah, you say that, though. Mostly the host and the guest, though, never meet. Right. They're just doing this online. They live in, you know, vastly different places. Their second home is nowhere near where they live usually. I mean, I guess there might be an exception here and there, right?

Yeah. But sometimes when I book your house online, it sends me your contact information. It gives you my contact information. It suggests that the two of y' all get in touch with each other. So I do call you, and we get a chance to chat for a little bit. What we found is the host really enjoys getting to know a little bit who's going to stay at their house. It does create a little bit more of a personalized thing with the people. The host can give the guests suggestions of places they might want to eat. They're close by to the house. That's their favorite restaurant or favorite beach that they like going to there. And so if you have any problems when you get to the house, you know, you certainly have a contact there. You could call and say, hey, how do I turn the music off in the house here? Or whatever. But a lot of our properties are managed facilities, so about 50%, or at a Ritz Carlton, or they're a Trump International Hotel in Tower. So when you check in, there's somebody there 24, 7, and they have full services. A lot of times it's daily maid service. A lot of our properties in Deer Valley, Utah, are full service, where they'll give you twice a day maid service. You got ski in, ski out. They pick you up at the airport in Salt Lake City, they take you around to Park City, wherever you want to go, give you a full breakfast every morning, things like that.

Fantastic. Good, Good deal there. Anything else you'd like people to know before we wrap up?

That's pretty much it. I mean, if anybody has a second home and has interest, they should give us a call. We actually answer our phones here and we have a live chat and if you send us an email we'll be glad to respond and explain how the club works. We have a beautiful book that highlights a lot of our properties that we'll be glad to send to you, either an online book or by mail. Our website is third home t-h I r d h o m e.com thirdhome.com.

Thank you so much for joining us and explaining more about the program.

Great. Thank you Jason.

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