W E A LT H A S A VAC AT ION
something and hurts themselves on your property, they can sue you. It is much better to have it in a corporate name. This gives you another layer of security. The question of type of corporation is completely determinant on what you’re purchasing, and with whom. For example, there are eight golfers who want to buy a home together. They want the greatest golf home you can build. It’s three floors high, and it’s got a golf simulator in it, and they want to use it for four months out of the year. Then, they will rent it out for the remaining eight months of the year to other groups of golfers. They want to be very specific about who their rental goes to, and they’re all prepared for it. They’re going to have a completely different corporation or a partnership—a corporate entity—then a husband and wife would have. A skilled lawyer will help them draw up an agreement that dictates, for example, if the individual eight owners will be able to sell to an outside party. Or if they have to sell to somebody on the inside, or if they’ll have to have committee approval for it. There is a pretty wide array of ways of structuring your business entity, from LLCs to corporations to LPs. Talk to an attorney, an individual who will be a key part of your VRP team.
3.6 Group Investment There’s a distinction between a group investment and individual (or family) ownership of VRP, and it’s relevant to this chapter of the book because when you embark upon a group investment, you’ll need to be very careful when you set up your business structure. What happens with group ownership is this: the typical buyer is a family looking to have a vacation home and rent it out when they are not using the property. In some cases, they can’t afford the property they want to buy. However, they don’t want to back off of the quality, size, or desirable location. Some people want privacy, they want higher quality fi nishes, they want a more expensive home, and they want a better cap rate.
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