We’ve mentioned that off-island individuals and businesses own 80% of the 2,000 short-term rentals registered with the State. A significant portion are investor-owners who decide Nantucket should be part of their rental portfolio. This group of owners, in particular, puts significant pressure on the island’s housing supply and cost, neighborhoods, infrastructure, and environment.
But not every investor is alike. Let’s explore a few of the business models out there.
Real estate developers and managers.
This group buys and manages real estate to turn a profit. The Copley Group is the most obvious example – it owns 14 “homes” that can accommodate 140 people. Many smaller companies hold one or two short-term rentals on Nantucket part of a broader real estate portfolio on the mainland. One company out of Plymouth, for example, owns a rental on the island, commercial property on the mainland, and a small restaurant group.
Introduced in the late nineties, membership-based destination clubs give members access to luxury homes and hotels. One of these is Exclusive Resorts. It offers its 4,000 members access to over 370 properties worldwide, including three on Nantucket. In turn, members pay an initiation fee plus a flat nightly rate. The club owns most of its properties, but also leases others from owners.
Inspirato, on the other hand, advertises 156 properties on its site, including seven on Nantucket. Our research suggests the company enters into long-term leases with property owners, then it turns around and offers access to members for shorter-term stays. Inspirato charges a recurring monthly fee of $2,500 to $5,000 based on the frequency of travel.
There are other examples of property management companies that enter into seasonal or long-term leases with owners and avoid having to put up the capital needed to purchase short-term rental properties.
Regardless of the model, these are businesses that operate mini-hotels in residential neighborhoods. What’s more is they pay residential property tax rates while commercial property owners pay 1.7x higher taxes.
If we keep the floodgates open, investors will turn this place into precisely what they suggest – a club, a transaction, an investment.
At its core, Nantucket is a lifestyle and a community. It’s time we put this beautiful island first.
Enjoy your week,