How many times have you seen this one? A client's retirement portfolio performs like a well-oiled machine until they suddenly "fall in love" with some astronomical vacation residence.
Before you can say "shopping spree," they spend $750,000 to $1 million on full ownership of a two-bedroom unit for part-time vacation living in (pick one): Playa del Carmen, Hawaii, Fort Lauderdale. Their assets have been drastically reduced, meaning portfolio income and performance begins to sink like a stone. At the same time they'll statistically use the place for only two to four months a year. Then it sits, gathering dust, taxes and monthly fees.
The result gives many an advisor gray hair as this poorly performing asset devours other investment potential. The good news is that I recently learned about an alternative called a PRC.
A PRC is a very affordable version of the "private residence club." But before you tag the PRC as even a distant cousin of the dreaded time-share, take a closer look. A PRC holds value, offering an affordable alternative to full/fractional ownership while eclipsing the notorious time-share altogether.
The affordable PRC is a fast-emerging vacation home alternative. A prime example comes in a delightfully intimate resort I just heard about called Sueno del Mar, on Ambergris Caye, Belize.
As I found with Sueno Del Mar, the real power of PRCs, unlike the uncertainty of weekly time-share allocations, is buyers enjoy the stability of owning the same location for a fixed, long-term period every year.
