A hybrid property is a private getaway for the homeowner, though it tends to be used only sporadically. For the part of the year where it stands unoccupied, it becomes a unique source of additional rental income.
In theory, there’s nothing new about hybrid properties in the luxury real estate sector — such a term could have easily applied to the Vanderbilts’ summer estates in Newport during the Gilded Age. In practice, however, they have gained renewed prominence over the last decade as more vacationers seek destination accommodations that go beyond traditional hotels.
Naturally, these types of homes attract affluent Gen X homebuyers who value having vacation homes where they can bring their loved ones together. At the same time, entrepreneurially minded millennials see the potential that such properties hold — an investment today that can yield ongoing returns tomorrow.
The unique opportunities and challenges of hybrid properties
Eric Lavey – Sotheby’s International Realty – Beverly Hills Brokerage
With year-round demand for vacation rental properties, those who own hybrid homes enjoy a dual benefit: they can have the freedom to take bespoke holidays as frequently as they like, or they can profit from the current popularity these properties command and rent them to visitors.
This holds true for hybrid properties at either end of the luxury spectrum:
- The lower end tends to include secondary homes in the submarkets of major cities. In Los Angeles, where my practice is primarily based, that would mean areas such as Palm Springs, Ojai, and Carpentaria, where affluent millennial buyers may have been able to acquire houses or condos at a relatively low entry point and are now seeing value in terms of their rentability.
- The higher end of the spectrum consists of more remarkable properties that are kept as second, third, or fourth homes by those with portfolios of multiple residences. Examples might include a private Caribbean island, a mountainside mansion in Aspen, a ranch in Telluride, or a historic Paris apartment. Such homes can each command a seven-figure rental income annually.
Of course, homebuyers — and the agents representing them — need to be realistic and savvy when calculating the return on investment for such properties. How high is the demand in the area? What condition is the property in, and is it worth commissioning repairs and upgrades on a place that’s far away and that may only be used a few times per year? Can guests get to the location by conventional modes of transportation, or is it too remote?
Gen X and millennial homebuyers tend to be highly practical in their pursuit of hybrid properties, whether they’re for family get-togethers or a supplementary stream of income, and these factors matter a great deal.
3 critical considerations for your hybrid property homebuyers
Eric Lavey – Sotheby’s International Realty – Beverly Hills Brokerage
If a prospective home is feasible as a hybrid property, there are three additional conversations luxury agents should have with their Gen X and millennial homebuyers.
1. Access and service
I already alluded to the need for a hybrid property to be accessible to guests, but it also needs to provide accessibility to the attractions and recreation the location is known for. If it’s a Colorado mountain chalet, for instance, clients and their renters will want ski-in, ski-out.
Given that these homes are often rented for luxury retreats, it’s also necessary to consider how accessible they are to adjacent services, from private chefs to spa services to concierge teams; residents — including temporary visitors — demand resort-style service.
2. Convenient storage
It may not be the first thing that comes to a potential homebuyer’s mind, but storage is a crucial component of any vacation home where the owner will also occasionally be staying.
There must be spaces in the home, such as a secure garage, where personal belongings can be kept out of the way when guests are renting the space, but retrieved without fuss when it’s just friends and family.
3. Home management
Most importantly, I advise agents to help their homebuyers connect with a home management professional or company that will make the ownership experience as easy and stress-free as possible. No one wants to field phone inquiries from prospective renters throughout the year, nor do they want to worry about their property during the periods it’s empty.
Is a hybrid property right for your Gen X and millennial clients?
Eric Lavey – Sotheby’s International Realty – Beverly Hills Brokerage
In the weeks ahead, my team and I will be listing a residence in Antigua set one of the most exclusive private islands on the planet — the sort of place that most people will never have the chance to access, let alone own — and this is precisely the type of home that can become a hybrid property of the highest caliber.
Gen X and millennial clients who see the potential of such places are well-suited to owning hybrid properties. And when they do, the autonomy afforded to them proves to be the ultimate luxury.
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