• Foreword: Back to SFL Fundamentals

• The end of a confusion: Decoding the luxury SFL asset class

• Navigating a predatory landscape: Adding transparency to the unit economics

• Why we love the luxury vacation rental (SFL) asset class.

• Marketing is EVERYTHING.

• Why we focus obsessively on unlevered yield.

In our world, big hurts you, and what often seems counterintuitive is actually where the most value is created. True value in luxury real estate isn’t created from a spreadsheet or in the size of a portfolio. It’s created with proper execution at the asset level, with thoughtful design and evidence-backed luxury marketing strategy. And if you look closely, that’s extremely rare in the space right now, even at the local level.

Larger VRMs with with a lot of assets in the same market thrive with uniformity and rapid capital injection for scalability for their business models to work efficiently. And exclusively local based managers also have too much local bias, and lack the ongoing international experience to fulfill the marketing and asset management requirements for maximizing returns on multi-million dollar real estate at the international level.

Both of these models work against you in the luxury segment, which naturally requires tact, exceptionalism, rarity, and devout understanding of the international luxury real estate and capital market trends to create value.

This is why we only onboard one property at a time and intentionally cap the number of assets we manage at just 4 per market and 100 total. You can learn more detail about this here.

I’ve been studying, working and personally investing in luxury real estate for fourteen years, and I come from a family of luxury builders. How much does that matter?

Quite a lot when you recognize that today, almost anyone can post a property online and call themselves a property manager. With today’s online platforms and technology, it’s almost too easy. I’ve built a successful team and proven method that produces property revenues in the top 1% of all luxury vacation rental managers in the world. I also personally manage my own luxury renovation projects which produce 6-figure profits and sell for record prices per square foot.

So, aside from the fact that we outperform 99% of all operators in our industry? In my case, SPECIALIZATION brings most of the value. Because of my unique background, I deeply understand the intricacies of building massive value in luxury real estate.

Anyone who knows me well also knows that I always choose the side of what is measurable and clear.

I believe instincts and intuition are sharpened over time, but also that the information needed to make the right decisions is almost always easily available — you just have to look.

I always prefer a sure thing (or as close as you can get to it) and I structure all my investment and management decisions based on these beliefs. And that’s how we generate strong risk-adjusted returns for our partners.

In short, any market where the economics at the asset level make sense is a smart opportunity.

However, I personally like markets with historically outsized luxury rental demand, all year round. I like markets with outsized historical growth rates, typically at least 25% faster than the USA national average.

I also like markets that perform exceptionally well during times of crisis and economic distress (like the recent COVID 19 global pandemic). 

Neither of these requirements can be achieved outside of destination markets that have a rare draw and a uniqueness that makes them intrinsically more valuable than others. And I do not believe in following hype or making long-term decisions based on short term trends.

For obvious reasons, any investments outside of these rare destination markets will grow at a much slower organic rate, or will be subject to much more volatility. 

We are open to working with any asset size, partner, or market in the world, as long as all three fit our criteria.

That said, we do have a number of red flag show-stoppers that we hold inviolate. For example, we don’t like lawsuits, insufficient predictability of rental demand or regulatory changes, financial engineering, or construction defects. Those are the obvious ones. Other red flags include contempt for unfulfilled potential, value strategy misalignment, and overly optimistic projections.