From the outset, we were inclined to like the club philosophy and structure of BelleHavens, since it is very conservative – and the long-term ability of the club to return member deposits seems embedded in their thinking. They have a club structure that is unique but offers better asset protection than almost any other club:

• Members join an entity that owns all the club homes outright, with no debt. This provides a very clear path to membership deposit liquidity if needed.
• The investors and managers of the club take a development profit from buying/developing a home, after which they transfer the home into the club entitiy. So their profit margin is more transparent from the outset.

Some additional benefits to this approach:

• Membership dues should be able to cover all operational expenses, since they do not have to cover debt service, as there is no home mortgages.
• Memberships are retired at a 90% refund (80% is more typical), in part as the development side of the business has already captured most of its development profit, and this transfer fee is not as heavily relied on as a source of revenue.

If there is a ‘cost’, it’s that BelleHavens, since they do not use debt, need more members to fund a single home acquisition – 10 new members, and a new home (in the $2million range) is added to the portfolio. In order to ease the potential for availability problems, the club allocates 30 days per member (less than other club’s similar plans).

So here is the math: 10 members X 30 days = 300 days = 83% annual occupancy if all members use their full allocation. Our take is that most clubs experience less than 30 days usage. So the math seems to work – although it’s hard not to assume that availability will be tighter in their model than other clubs that are buying more homes per member.

Helium’s take:

BelleHavens has looked forward and anticipated what they see as one of the biggest concerns for prospective members: the financial durability of the club, to withstand escalating operating costs (people deliver service, and unless you can outsource to India, people costs are going up) and real estate values that go up AND down. Their model goes a long way to addressing these concerns, but by necessity is a little more complex to understand – and is very different than the typical club structure, as defined by Exclusiive Resorts, Dream Catcher and others. It may take some work to get prospective members to understand the BelleHavens approach, but in our opinion, it’s worth it.