June 3, 2025 • 23 mins
One of the most original ideas in property investment is the ThirdHome group, a global exchange club for holiday home properties that opens up what in many cases is an under-utilised asset to the wider world: Just quietly, the group has signed up more than 500 Australian luxury holiday homes - it's a fascinating story.
Wade Shealy, founder and CEO of the ThirdHome group, joins Associate Editor Wealth James Kirby in this episode.
In today's show, we cover...
* The upmarket holiday home swap
* The rules of luxury property
* Wade Shealy on how he built a global property enterprise
* New directions for the luxury holiday home market
See omnystudio.com/listener for privacy information.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:09):
Hello one, Welcome to the Australian's Money Puzzle podcast. I'm
James Kirkby. Welcome aboard everybody. You probably guessed by now.
The way our show works, one thing leads to another,
and we had a really interesting conversation in the last episode,
last Property episode last Tuesday, with Shane Smollen. He's a
luxury property developer and I opened my eyes. Basically, there's
(00:30):
a two tiered property market that we have and they
basically almost run to some degree autonomously. At the big
real estate conference on the Gold Coast Hora conference, where
I had talked to Shane Smollen, I also met an
American property operator by the name of Wade Sheile. You
(00:51):
may not know of Wade, but he is the man
who invented and created Third Home, which is an exchange club. Basically,
he'd explain all this in a more it's an exchange
club for residential holiday properties around the world. I wanted
to get him on the show because it's a really
original idea, and original ideas in any business are rare.
(01:14):
In property, I think they are particularly rare. And ideas
are easy, but execution is the issue, and here we
are with his venture. He started in two ten, so
he's on his fifteenth year. It is now if I
remember correctly, he'll tell me all this. But twenty thousand
properties folks, one hundred countries around the world, of which
(01:35):
more than five hundred are in Australia. How are you, age, Chiley?
Speaker 2 (01:39):
Doing very well, James, thank you for having.
Speaker 1 (01:41):
Me, Thank you very much. So the essence of this
was an idea you had, and you had been in
real estate in Carolina in the US and you noticed
a pattern. And this often comes up on the show
economics of the holiday home. And the one thing that
does seem to be in issue, apart from the sort
of unproductive in many ways, it is where people have
(02:02):
a holiday home, they don't use them. They're empty most
of the time. But there's also that issue that people
get tired of going down to wherever it is. It's
lovely the first time. Then they realize they've done everything,
They've been to the little restaurant around the corner forty times,
it hasn't got better, and they need they want to
perhaps somehow leverage it. So tell us your story briefly.
(02:25):
What happened in two ten, What was your idea and
how did you begin.
Speaker 2 (02:30):
Well, it started before twenty ten in my mind, because
in nineteen eighty four I went to Hilton Head Island,
South Carolina to sell real estate, and I got pretty
good at it. I was in the first year. There's
about a thousand real estate agents there. In the first year,
I think I was in the top three of a thousand,
So I got pretty good at answering objections that people
(02:51):
would come up with before they went by. But there's
one objection I noticed that it was just almost impossible
for me to answer, and that was that people would say,
you know, I don't know if we want to buy here,
because if it makes it feel like we're committed to
all of our vacations coming to this one place, and
we liked one so many different places around the world
(03:13):
and doing different things that we just don't know if
we want to commit to always going the same place
over and over. You know. I felt that way when
I traveled too. You know, we wouldn't want to be
just committed to one place. So that was a hard
objection for me to really overcome with people. And I
understood their concerns the ones that I could get past that,
(03:34):
and they did purchase there in Hilton Head from me,
and later I had a large real estate company there,
and it was this way for everybody that worked in
our company. We noticed that no matter how happy they
were when they bought that property, that typically within five years,
every one of them would be back in our office saying, hey, wait,
I want to I want to sell our property. I'd say,
(03:57):
I thought you loved Cheltonhead. Oh wait, we've loved that.
We've come down here so much and we just want
to try somewhere new. We just feel like we've done
everything here, We've seen everything, We've eaten at every restaurant
a few hundred times, and we just want to go
somewhere new. And so what they would do is they
would sell their house there, and then they'd go somewhere
else and probably buy there, and then probably five years
(04:18):
later go by there. And so this has always been
in the back of my mind that why couldn't someone
create a platform that allowed all these people that on
these vacation homes to not have to sell their home
to go somewhere else. They don't have to pay rent
to go stay, because that's a terrible feeling when you're
paying a mortgage, taxes, insurance, maintenance, upkeep on the property
(04:41):
and then go rent somewhere when you got your setting empty,
why not create the platform? And so really, James, it
was the advent of the Internet, the ability to create
platforms like this, the shared economy companies like Uber coming out,
Airbnb and your that's made all this successful to allow
(05:02):
people to take an empty asset like a third a
second home they're sitting empty most of the time, and
convert that unused asset into something very valuable for you
and their family to use to go travel somewhere else
and stay in another beautiful home and not have to
pay rent. So our members when they traveled our homes
go from a million US dollars to about sixty million
(05:26):
US dollars yachts and catabarians and castles all over Europe,
and on average, our members only pay to the club
about nine hundred dollars for a week's stay in one
of our homes.
Speaker 1 (05:39):
We'd get into how it works in a moment, but
I wanted to ask you when I mentioned at the
start of the show, there is that you could have
pitched this in various ways. You had the idea, it
was a very strong idea. You were in a position
to start it. It didn't mean it was going to work,
but it has worked so well done. But also you
pitched it up market, and it seems to me, even
(06:00):
as it's growing in any sort of iterations of the
business that you're thinking of, they move up market. How
do that in mind that it would be and it's
the luxury market world to some extent of its own,
a million dollar US plus market, which is what you're
alluding to there.
Speaker 2 (06:14):
Yeah, So we made the decision on a couple of reasons.
One is a home exchange has been around for seventy years,
but it's been a traditional home exchange. It was started
by teachers about seventy years ago. Teachers had the summers
off and they didn't have much money, so they would
swap houses with each other. And what they would do, James,
is you come to my house, I go to your house,
(06:35):
and we do it the same week, and it's my
primary home and your primary home. That has been around,
and there's companies like Home Exchange that do that, but
the hard thing with that is it is a peer
to peer. You come to mind, I come to yours.
We do it at the same time. And most of
those homes out there are primary residences where people live
all the time. My background has been in luxury and
has been in second home ownership. I felt like that
(06:56):
the platform for us would be not people's primary homes,
but it would be people's vacation homes that were sitting
empty most of the time. That way, we could create
the platform that did not have to be a simultaneous exchange.
In other words, if you come to my house, James,
I'm probably not going to go to yours. I mean,
there's one in twenty thousand chants, then I'm going to
(07:16):
go to your house. I'm going to go wherever I
want to, whenever I want to go, because.
Speaker 1 (07:22):
It's not one to one yes for our listeners, I
know you say million dollars US plus, but that's it's
more accessible than that, isn't it. It doesn't have to be
what is your minimum threshold that if I have a
holiday property I'm listening to the show, if I aspire
to have one, what's your minimum threshold that I can
join this exchange club?
Speaker 2 (07:42):
Well, on our website we say half a million dollars US.
Speaker 1 (07:46):
That's maybe seven hundred and seventy thousand Australian yeah, yeah, okay.
Speaker 2 (07:52):
Our average in our club right now, company wants about
two and a half a million in US and then
we go up. We have a higher tier that starts
at about fifty million and goes up to sixty million,
and that's called the reserve, and that's our super high
hand yachts.
Speaker 1 (08:05):
And that's your fantasy your fantasy strata.
Speaker 2 (08:10):
And people can go there. They just have to give
us more time in their house. Let's say they have
a five million dollar house. They can go to a
fifteen million dollar house, but they may give us two
weeks of their house to go up. I see, I see.
Speaker 1 (08:22):
Very interesting. All right, we'll take a shortbreak and we
back in a moment on how this works. Folks. Hello,
welcome back to the Australians Money Puzzle podcast. James Kirby here,
and I'm talking to Wade Chiley, who's the founder an
(08:43):
operator of the Third Home group, which he's just starting
to explain to us how about how it all works.
But it's basically an upmarket holiday home swap operation. When
you started this, I find it such an interesting idea.
As I say, it's so rare that someone comes up
with a completely new idea. What they called blue ocean,
the management theory that you didn't need to compete in
(09:05):
a market. You created a market. No one did this before,
are you how because and the advantage of that, obviously
is it's blue sky, right, But the disadvantage is you
have no rails to follow. Did it just morph as
it went on? Did you sort of layer on these
ideas up, for instance, an extra layer or the mathematics
of how people would stay or not stay, or how
(09:27):
long they could stay for. Did you create all this
yourself or had you something to guide you?
Speaker 2 (09:32):
You know, you're exactly right. I mean oftentimes and very
often people say, you know, I had that same idea
to do something like that. I always think to myself,
you know, the idea was the easy part. The execution
of getting the twenty thousand homes in one hundred countries
is the more difficult part. So how do you scale
something when you start with zero or one? You know,
and I'm you know, I'll give you an example. I
(09:54):
got to know in Memphis to see a gentleman named
Fred Smith who started Federal Express. You start a delivery
service that's going to go all over the world. You know,
when you don't get two planes, you know, so you
know it's a hard thing to scale. However, I have
to say that it was you know, me getting on
(10:15):
the phone talking with people originally saying, hey, I've got
two homes in the club. I got three homes in
the club. Trust me, we're going to get more. And
as we got more and more members traveling, that meant
they were telling their friends about it, and so it
started growing organically just by word of mouth. And so
really we got to first fifteen hundred the first year
(10:36):
by just getting people to tell their friends about it.
Once they got back from there, you.
Speaker 1 (10:40):
Got fifteen hundred sign ups as such the first year.
So and in your mind, did you have a number
that you knew was feasible?
Speaker 2 (10:48):
You know, I just knew that we had to reach
a certain scale because people didn't want to have just
three options. They wanted to have hundreds of thousands of
options of where they can go. And still even to
this day, you know, we run across place is that
people may want to travel to that we just have
a limited number of homes there because it's a big
it's a big world, you know, so we have to
cover it. But we try to be in places the
(11:11):
majority of places that we are where our luxury tier
people like to go. For example, in the United States,
we don't really have any homes in Brandson, Missouri. Now
Brandson's and Missouri is a famous place for people to go,
but it's not our members don't go there, you know,
our members want to go to New York City, Paris, France, Aspen, Colorado,
(11:31):
and so we can not target so like, for example,
we do have about six hundred properties in Aspen, Colorado
because people love going to Aspen.
Speaker 1 (11:39):
What are the Australian parts with Aspen and what do
you think I'm guessing to the obviously some Byron Bay
parts of northern Sydney. But you tell me where are
the properties in Australia do you think that people really like?
Speaker 2 (11:53):
You know, Australia has a lot of areas. I mean
the entire East Coast where our office opened in the
Gold Coast, and so we're focused right now on the
Gold Coast and the Sunshine you know, Sunshine Paradise, all
those areas. But you know we're also at properties out
on the West Coast in the Perth area and of
course down in Victoria, Melbourne, Sydney. Last year when we
(12:15):
were here, we stayed at a beautiful apartment overlooking Bandai Beach
in Sydney, and so we try to get in the majors.
Speaker 1 (12:24):
How do the prices seem to you? Do they seem
reasonable by global standards or on the steep end. We
think they're on the steep end. Certainly, residential property is
by most measures. What's your view?
Speaker 2 (12:35):
You know it's the same in the US, James, im,
same all over the world. Depends on where you are.
Some of our prices in the US. I mean, Debbie
and I have a home in Aspen, Colorado, and the
average home in Aspen, Colorado is sixteen million.
Speaker 1 (12:49):
That's the average, right, Yes, that is an exceptional place.
Speaker 2 (12:53):
Of course, I'm sure there's like that here. If you
go to Palm Beach and side of Sydney, I'm sure
the homes are very expensive there. If you go, you know,
certain markets, they're more expensive than others. And you know,
people often say, well, if I if you put my
home there, it'd be worth this much. I go, well,
it's not there, you know it is. You know, you
(13:16):
didn't do that because part of the reason the houses
are sixteen million on average and aspens because of the
town of Aspen. So if you take a house in
West Virginia, in the mountains of West Virginia, that's not
the same as being in Aspen, Colorado.
Speaker 1 (13:28):
So that scarce to be value. So for in Australia,
then tell us you've got roughly five hundred people signed up,
is that right? And they have mostly come in the
last year or.
Speaker 2 (13:39):
Two, yes, last year.
Speaker 1 (13:41):
Have you any sense of the nature of any thing
you could tell us about the nature of people listening,
the nature of the properties that you that were successful,
or the price range that was common.
Speaker 2 (13:54):
So they again they ranged apartment in Sydney to you know,
sixteen We just had one ad this week that was
a sixteen million dollar house in New Zealand that an
agent with Forbes real Estate Agents up there and Wellington
added to the club and so you know, they all range.
(14:16):
We have wineries, we have Wahika Island off the coast
of Auckland. We have one of the most beautiful homes
in Wahika Island there in the club. And an other
aspect of the club that we've found is that it's
more than just a travel club. James is also a
little bit of a social club. That we get our
members together, like when we were in Auckland a couple
(14:38):
of weeks ago, we had all of our members from
come have dinner with us. In Auckland. We had a
closed off part of the restaurant and had all the
members there and they got to know each other and
people say, oh, I stayed in your house, and they
talked about where they stayed in the club. We do
these events. Last year we did one in Sydney, we
did one in Melbourne, we did one in Cape Town, Singapore,
(15:00):
London Pairs and we try to get all of our
members together so they can actually meet each other. I
have what my farm and outside of Nashville, Tennessee, October
twenty sixth we has two hundred members who I am
for the day for all over the world just to
meet each other. And we have live music. And one
of our members is the Kenny Loggins and he performed
for us. There you go, there you go.
Speaker 1 (15:21):
All right, Well, look, I think most our listeners would
now be very clear what the offering is as such.
And of course there's a glamour aspect here and it's
highly attractive. I want no one could doubt that. In fact,
in some ways this it's going to prove, and that's
been translated into television show folks, which you may or
may not have heard of, called Millionaire House Swap. But
you are really at that glamor I won't say fantasy end,
but you're at that glamour end of the market where
(15:43):
it's particularly aspirational. So what I want to do in
the last part is to actually ask Wade how it works,
tell us how it really comes together for people who
participate or wish to participate. We'll be back in a moment. Hello,
Welcome back to the Australians Money Puzzle podcast. I'm James Krabin.
(16:06):
I'm talking to Wade Chile, founder of the Third Home group.
Twenty thousand properties, one hundred countries, five hundred of those
properties in Australia and growing very interesting. So the elevator pitchway,
if I knew nothing about it, tell me in a
paragraph how it all works.
Speaker 2 (16:25):
Or a private club for lecturer second home owners. You
have to have a second home or lecture second home
to get into the club. But once you're in the club,
you can give up an empty or unused week at
your house that you're not using or runting and for that,
you get a week somewhere else in the club whenever,
wherever you want to go, and you don't pay rent
to go. You simply pay a nominal fee to the
(16:46):
club for the club to operate, which averages about nine
hundred US.
Speaker 1 (16:50):
Dollars for the week wherever you may be.
Speaker 2 (16:54):
And so there's no cost. There's no cost to join
the club. Your entry levels, your property. You have to
be approved. We vet all the members to make sure
the issues with backgrounds on our members. But once the
members are in the club, they can deposit as many
weeks in the system as they want. They choose the
weeks they want to put in based on whether they're
using it that week or if they're not running it
(17:17):
that week. Some people, about half of our properties do
short term letting and so they deposit a week and
they get credits. So what we call keys in the club,
and your keys are based on two factors, James. One
is the value of your property and the second is
the week that you offer into the system. Because all
places have a seasonality to them, some not all weeks
(17:38):
are the same at that property. It depends on you know,
for example, and asking Colorado keep give them that as
an example, if you give us Christmas or New Year's
or what we call spring break, that's a high season
and so you get more keys because for that. So
every member gets to decide what they want to offer
at their house and for that they immediately get their credits.
(17:59):
So you could deposit the week today, it could be
a year out and you would go ahead and get
your keys today into your account, so that tonight you
could book a house in Italy. You don't have to wait,
it doesn't depend on somebody booking yours. You get your credits.
Speaker 1 (18:16):
And the key is the unit of value that you
created inside the system. It's very interesting, right, Okay, consequences
for the Australian participant.
Speaker 2 (18:26):
So the great news is there's no money changing hands, James.
I mean, you don't get any money, but there's no
access too because there's no money exchanging hands. And the
other great thing about it is that you know it's
you're letting people use your house that are also doing
the exact same thing with their house. So there's a
level of trust. And so as I mentioned, about fifty
(18:49):
percent of our members do some type called short term letting,
where fifty percent would never consider that they just don't
want somebody running in their house, but no third home causes.
Speaker 1 (18:59):
Other people will participate in third home, but they wouldn't
generally rent. Yeah, I get it. Tell me, what if
someone has a party and they fall off the balcony.
What's my insurance situation.
Speaker 2 (19:08):
All the members secured their own liability insurance, you know,
and they should have liability insurance anyway. If you had
friends over for dinner and they drank too much and
fell off the balcony, I hope you got insurance for that,
you know. So it's the same thing. So our members
are like guess guests coming to your house. And like
I said, we typically try to leave a gift, you know,
when we stay. We encourage our members to leave a
(19:29):
nice gift for the host. My partner that travels with me,
she's here now, is Debbie Fields. She started a cookie
business years ago called Missus Phil's Cookies.
Speaker 1 (19:38):
Missus Bear's Cookies. Of course that's what that's your partner. Yes,
I meant to mention that, and of course they were, Yeah,
the franchise right, yeah, many a shopping center Missus Spears Cookies,
So she's Missus Speer's Cookies and you're mister third home.
Speaker 2 (19:52):
Yeah, right. The Debbie leaves, she always leaves cookie dough
in the freeze, or she makes cookie dough while she's there.
She leaves it with a nice note for the owner
of the house that she made cookie dough. Missus Fields
made cookie dough for the people and left it for him.
So that's usually our gift to the host.
Speaker 1 (20:08):
I see what an entrepreneurial pair you are. Tell me
what if things go wrong? And I don't want a
good burrow too hard, but things will go wrong in
an enormous enterprise like this. Do you have some sort
of mediation elements where you know, someone said I thought
this was going to be X or whatever. I can't
even conceive, but there would things will go wrong.
Speaker 2 (20:29):
I give you an example. Over dinner last night, the
member told us that he when they first joined the club,
they went to book something and they booked it online
and then they realized after they booked it it was
the wrong week, and they felt terrible they made a mistake,
but they got the confirmation the book in had gone through.
So they immediately called our office and talked to la
(20:50):
works with us named Meghan, and they explained to Megan,
I made you know, made a mistake, and Meghan immediately said,
don't worries. I'll take care of that, and she got
on the phone within just about two minutes called them
back and said, no problem, we canceled that and you know,
if you want to book another week, you're welcome to.
And so they took care of it. And so our
goal is that we take care of our customers number one,
(21:10):
our members, and so if we can help you any
way to move some dates around for you or anything
like that's what we have a team of people here
to do to make sure it works out for you. Now,
there's certain things that happen that you know, we can't handle.
You know, hurricanes come through and things like that are
of our control. We try and move people around best
we can and rechange some dates for people, but there
(21:31):
are certain things out of our control that we just
can't change. But we always try and make sure we
do the best we can to help accommodate our members.
Speaker 1 (21:38):
Okay, and just why before we run out of time,
you mentioned at the start you have a sort of
higher level. Again, you have this reserve level which is
fifteen million plus US level. So how many properties are in.
Speaker 2 (21:55):
That so we've got about I think cross about four
hundred properties in there right now. I think we'll end
up about five hundred at the end of the year.
We have a a fellow that's been working with me
since I started the club in twenty ten at London,
and his name is Giles Adams and Giles was the
(22:16):
star on Holiday Holiday Home Swap Millionaire Holiday Home Swap.
That there's a six hour TV show as you mentioned
that's running around the world. But he handles that it's
more of a white glove service too, so they do
a lot for those people going to the castles and
yachts and different things where they do a lot more
concierge service for those members.
Speaker 1 (22:34):
Right. Interesting. So yes, so you are moving it to
the extent that you are moving it even further upmarket
on that tier. Terrific. Well, it sounds like a great idea.
It sounds like it was very well executed. Lovely to
have you on the show. Very original idea. Best of
look with everything, Wade.
Speaker 2 (22:50):
Thank you very much and come visit us in the
United States whenever you get a chance. We'd love to
host you.
Speaker 1 (22:55):
I'd love to see some of those places in Aspen.
They sound very nice. Okay, thank you everybody. Now listen, folks,
James Gerard is back on Thursday with the Incentives Electric
Incentives sequel. We had so much correspondence I couldn't get
over about turning your home electric, the various grants that
are there, and of course electric cars in the mix
(23:16):
there as well, so we will be covering that on Thursday.
You still have time to send in questions for that
if you wish to do so the Money Puzzle at
the Australian dot com dot au. Talk to you soon,
Hello one, Welcome to the Australian's Money Puzzle podcast. I'm
James Kirkby. Welcome aboard everybody. You probably guessed by now.
The way our show works, one thing leads to another,
and we had a really interesting conversation in the last episode,
last Property episode last Tuesday, with Shane Smollen. He's a
luxury property developer and I opened my eyes. Basically, there's
(00:30):
a two tiered property market that we have and they
basically almost run to some degree autonomously. At the big
real estate conference on the Gold Coast Hora conference, where
I had talked to Shane Smollen, I also met an
American property operator by the name of Wade Sheile. You
(00:51):
may not know of Wade, but he is the man
who invented and created Third Home, which is an exchange club. Basically,
he'd explain all this in a more it's an exchange
club for residential holiday properties around the world. I wanted
to get him on the show because it's a really
original idea, and original ideas in any business are rare.
(01:14):
In property, I think they are particularly rare. And ideas
are easy, but execution is the issue, and here we
are with his venture. He started in two ten, so
he's on his fifteenth year. It is now if I
remember correctly, he'll tell me all this. But twenty thousand
properties folks, one hundred countries around the world, of which
(01:35):
more than five hundred are in Australia. How are you, age, Chiley?
Speaker 2 (01:39):
Doing very well, James, thank you for having.
Speaker 1 (01:41):
Me, Thank you very much. So the essence of this
was an idea you had, and you had been in
real estate in Carolina in the US and you noticed
a pattern. And this often comes up on the show
economics of the holiday home. And the one thing that
does seem to be in issue, apart from the sort
of unproductive in many ways, it is where people have
(02:02):
a holiday home, they don't use them. They're empty most
of the time. But there's also that issue that people
get tired of going down to wherever it is. It's
lovely the first time. Then they realize they've done everything,
They've been to the little restaurant around the corner forty times,
it hasn't got better, and they need they want to
perhaps somehow leverage it. So tell us your story briefly.
(02:25):
What happened in two ten, What was your idea and
how did you begin.
Speaker 2 (02:30):
Well, it started before twenty ten in my mind, because
in nineteen eighty four I went to Hilton Head Island,
South Carolina to sell real estate, and I got pretty
good at it. I was in the first year. There's
about a thousand real estate agents there. In the first year,
I think I was in the top three of a thousand,
So I got pretty good at answering objections that people
(02:51):
would come up with before they went by. But there's
one objection I noticed that it was just almost impossible
for me to answer, and that was that people would say,
you know, I don't know if we want to buy here,
because if it makes it feel like we're committed to
all of our vacations coming to this one place, and
we liked one so many different places around the world
(03:13):
and doing different things that we just don't know if
we want to commit to always going the same place
over and over. You know. I felt that way when
I traveled too. You know, we wouldn't want to be
just committed to one place. So that was a hard
objection for me to really overcome with people. And I
understood their concerns the ones that I could get past that,
(03:34):
and they did purchase there in Hilton Head from me,
and later I had a large real estate company there,
and it was this way for everybody that worked in
our company. We noticed that no matter how happy they
were when they bought that property, that typically within five years,
every one of them would be back in our office saying, hey, wait,
I want to I want to sell our property. I'd say,
(03:57):
I thought you loved Cheltonhead. Oh wait, we've loved that.
We've come down here so much and we just want
to try somewhere new. We just feel like we've done
everything here, We've seen everything, We've eaten at every restaurant
a few hundred times, and we just want to go
somewhere new. And so what they would do is they
would sell their house there, and then they'd go somewhere
else and probably buy there, and then probably five years
(04:18):
later go by there. And so this has always been
in the back of my mind that why couldn't someone
create a platform that allowed all these people that on
these vacation homes to not have to sell their home
to go somewhere else. They don't have to pay rent
to go stay, because that's a terrible feeling when you're
paying a mortgage, taxes, insurance, maintenance, upkeep on the property
(04:41):
and then go rent somewhere when you got your setting empty,
why not create the platform? And so really, James, it
was the advent of the Internet, the ability to create
platforms like this, the shared economy companies like Uber coming out,
Airbnb and your that's made all this successful to allow
(05:02):
people to take an empty asset like a third a
second home they're sitting empty most of the time, and
convert that unused asset into something very valuable for you
and their family to use to go travel somewhere else
and stay in another beautiful home and not have to
pay rent. So our members when they traveled our homes
go from a million US dollars to about sixty million
(05:26):
US dollars yachts and catabarians and castles all over Europe,
and on average, our members only pay to the club
about nine hundred dollars for a week's stay in one
of our homes.
Speaker 1 (05:39):
We'd get into how it works in a moment, but
I wanted to ask you when I mentioned at the
start of the show, there is that you could have
pitched this in various ways. You had the idea, it
was a very strong idea. You were in a position
to start it. It didn't mean it was going to work,
but it has worked so well done. But also you
pitched it up market, and it seems to me, even
(06:00):
as it's growing in any sort of iterations of the
business that you're thinking of, they move up market. How
do that in mind that it would be and it's
the luxury market world to some extent of its own,
a million dollar US plus market, which is what you're
alluding to there.
Speaker 2 (06:14):
Yeah, So we made the decision on a couple of reasons.
One is a home exchange has been around for seventy years,
but it's been a traditional home exchange. It was started
by teachers about seventy years ago. Teachers had the summers
off and they didn't have much money, so they would
swap houses with each other. And what they would do, James,
is you come to my house, I go to your house,
(06:35):
and we do it the same week, and it's my
primary home and your primary home. That has been around,
and there's companies like Home Exchange that do that, but
the hard thing with that is it is a peer
to peer. You come to mind, I come to yours.
We do it at the same time. And most of
those homes out there are primary residences where people live
all the time. My background has been in luxury and
has been in second home ownership. I felt like that
(06:56):
the platform for us would be not people's primary homes,
but it would be people's vacation homes that were sitting
empty most of the time. That way, we could create
the platform that did not have to be a simultaneous exchange.
In other words, if you come to my house, James,
I'm probably not going to go to yours. I mean,
there's one in twenty thousand chants, then I'm going to
(07:16):
go to your house. I'm going to go wherever I
want to, whenever I want to go, because.
Speaker 1 (07:22):
It's not one to one yes for our listeners, I
know you say million dollars US plus, but that's it's
more accessible than that, isn't it. It doesn't have to be
what is your minimum threshold that if I have a
holiday property I'm listening to the show, if I aspire
to have one, what's your minimum threshold that I can
join this exchange club?
Speaker 2 (07:42):
Well, on our website we say half a million dollars US.
Speaker 1 (07:46):
That's maybe seven hundred and seventy thousand Australian yeah, yeah, okay.
Speaker 2 (07:52):
Our average in our club right now, company wants about
two and a half a million in US and then
we go up. We have a higher tier that starts
at about fifty million and goes up to sixty million,
and that's called the reserve, and that's our super high
hand yachts.
Speaker 1 (08:05):
And that's your fantasy your fantasy strata.
Speaker 2 (08:10):
And people can go there. They just have to give
us more time in their house. Let's say they have
a five million dollar house. They can go to a
fifteen million dollar house, but they may give us two
weeks of their house to go up. I see, I see.
Speaker 1 (08:22):
Very interesting. All right, we'll take a shortbreak and we
back in a moment on how this works. Folks. Hello,
welcome back to the Australians Money Puzzle podcast. James Kirby here,
and I'm talking to Wade Chiley, who's the founder an
(08:43):
operator of the Third Home group, which he's just starting
to explain to us how about how it all works.
But it's basically an upmarket holiday home swap operation. When
you started this, I find it such an interesting idea.
As I say, it's so rare that someone comes up
with a completely new idea. What they called blue ocean,
the management theory that you didn't need to compete in
(09:05):
a market. You created a market. No one did this before,
are you how because and the advantage of that, obviously
is it's blue sky, right, But the disadvantage is you
have no rails to follow. Did it just morph as
it went on? Did you sort of layer on these
ideas up, for instance, an extra layer or the mathematics
of how people would stay or not stay, or how
(09:27):
long they could stay for. Did you create all this
yourself or had you something to guide you?
Speaker 2 (09:32):
You know, you're exactly right. I mean oftentimes and very
often people say, you know, I had that same idea
to do something like that. I always think to myself,
you know, the idea was the easy part. The execution
of getting the twenty thousand homes in one hundred countries
is the more difficult part. So how do you scale
something when you start with zero or one? You know,
and I'm you know, I'll give you an example. I
(09:54):
got to know in Memphis to see a gentleman named
Fred Smith who started Federal Express. You start a delivery
service that's going to go all over the world. You know,
when you don't get two planes, you know, so you
know it's a hard thing to scale. However, I have
to say that it was you know, me getting on
(10:15):
the phone talking with people originally saying, hey, I've got
two homes in the club. I got three homes in
the club. Trust me, we're going to get more. And
as we got more and more members traveling, that meant
they were telling their friends about it, and so it
started growing organically just by word of mouth. And so
really we got to first fifteen hundred the first year
(10:36):
by just getting people to tell their friends about it.
Once they got back from there, you.
Speaker 1 (10:40):
Got fifteen hundred sign ups as such the first year.
So and in your mind, did you have a number
that you knew was feasible?
Speaker 2 (10:48):
You know, I just knew that we had to reach
a certain scale because people didn't want to have just
three options. They wanted to have hundreds of thousands of
options of where they can go. And still even to
this day, you know, we run across place is that
people may want to travel to that we just have
a limited number of homes there because it's a big
it's a big world, you know, so we have to
cover it. But we try to be in places the
(11:11):
majority of places that we are where our luxury tier
people like to go. For example, in the United States,
we don't really have any homes in Brandson, Missouri. Now
Brandson's and Missouri is a famous place for people to go,
but it's not our members don't go there, you know,
our members want to go to New York City, Paris, France, Aspen, Colorado,
(11:31):
and so we can not target so like, for example,
we do have about six hundred properties in Aspen, Colorado
because people love going to Aspen.
Speaker 1 (11:39):
What are the Australian parts with Aspen and what do
you think I'm guessing to the obviously some Byron Bay
parts of northern Sydney. But you tell me where are
the properties in Australia do you think that people really like?
Speaker 2 (11:53):
You know, Australia has a lot of areas. I mean
the entire East Coast where our office opened in the
Gold Coast, and so we're focused right now on the
Gold Coast and the Sunshine you know, Sunshine Paradise, all
those areas. But you know we're also at properties out
on the West Coast in the Perth area and of
course down in Victoria, Melbourne, Sydney. Last year when we
(12:15):
were here, we stayed at a beautiful apartment overlooking Bandai Beach
in Sydney, and so we try to get in the majors.
Speaker 1 (12:24):
How do the prices seem to you? Do they seem
reasonable by global standards or on the steep end. We
think they're on the steep end. Certainly, residential property is
by most measures. What's your view?
Speaker 2 (12:35):
You know it's the same in the US, James, im,
same all over the world. Depends on where you are.
Some of our prices in the US. I mean, Debbie
and I have a home in Aspen, Colorado, and the
average home in Aspen, Colorado is sixteen million.
Speaker 1 (12:49):
That's the average, right, Yes, that is an exceptional place.
Speaker 2 (12:53):
Of course, I'm sure there's like that here. If you
go to Palm Beach and side of Sydney, I'm sure
the homes are very expensive there. If you go, you know,
certain markets, they're more expensive than others. And you know,
people often say, well, if I if you put my
home there, it'd be worth this much. I go, well,
it's not there, you know it is. You know, you
(13:16):
didn't do that because part of the reason the houses
are sixteen million on average and aspens because of the
town of Aspen. So if you take a house in
West Virginia, in the mountains of West Virginia, that's not
the same as being in Aspen, Colorado.
Speaker 1 (13:28):
So that scarce to be value. So for in Australia,
then tell us you've got roughly five hundred people signed up,
is that right? And they have mostly come in the
last year or.
Speaker 2 (13:39):
Two, yes, last year.
Speaker 1 (13:41):
Have you any sense of the nature of any thing
you could tell us about the nature of people listening,
the nature of the properties that you that were successful,
or the price range that was common.
Speaker 2 (13:54):
So they again they ranged apartment in Sydney to you know,
sixteen We just had one ad this week that was
a sixteen million dollar house in New Zealand that an
agent with Forbes real Estate Agents up there and Wellington
added to the club and so you know, they all range.
(14:16):
We have wineries, we have Wahika Island off the coast
of Auckland. We have one of the most beautiful homes
in Wahika Island there in the club. And an other
aspect of the club that we've found is that it's
more than just a travel club. James is also a
little bit of a social club. That we get our
members together, like when we were in Auckland a couple
(14:38):
of weeks ago, we had all of our members from
come have dinner with us. In Auckland. We had a
closed off part of the restaurant and had all the
members there and they got to know each other and
people say, oh, I stayed in your house, and they
talked about where they stayed in the club. We do
these events. Last year we did one in Sydney, we
did one in Melbourne, we did one in Cape Town, Singapore,
(15:00):
London Pairs and we try to get all of our
members together so they can actually meet each other. I
have what my farm and outside of Nashville, Tennessee, October
twenty sixth we has two hundred members who I am
for the day for all over the world just to
meet each other. And we have live music. And one
of our members is the Kenny Loggins and he performed
for us. There you go, there you go.
Speaker 1 (15:21):
All right, Well, look, I think most our listeners would
now be very clear what the offering is as such.
And of course there's a glamour aspect here and it's
highly attractive. I want no one could doubt that. In fact,
in some ways this it's going to prove, and that's
been translated into television show folks, which you may or
may not have heard of, called Millionaire House Swap. But
you are really at that glamor I won't say fantasy end,
but you're at that glamour end of the market where
(15:43):
it's particularly aspirational. So what I want to do in
the last part is to actually ask Wade how it works,
tell us how it really comes together for people who
participate or wish to participate. We'll be back in a moment. Hello,
Welcome back to the Australians Money Puzzle podcast. I'm James Krabin.
(16:06):
I'm talking to Wade Chile, founder of the Third Home group.
Twenty thousand properties, one hundred countries, five hundred of those
properties in Australia and growing very interesting. So the elevator pitchway,
if I knew nothing about it, tell me in a
paragraph how it all works.
Speaker 2 (16:25):
Or a private club for lecturer second home owners. You
have to have a second home or lecture second home
to get into the club. But once you're in the club,
you can give up an empty or unused week at
your house that you're not using or runting and for that,
you get a week somewhere else in the club whenever,
wherever you want to go, and you don't pay rent
to go. You simply pay a nominal fee to the
(16:46):
club for the club to operate, which averages about nine
hundred US.
Speaker 1 (16:50):
Dollars for the week wherever you may be.
Speaker 2 (16:54):
And so there's no cost. There's no cost to join
the club. Your entry levels, your property. You have to
be approved. We vet all the members to make sure
the issues with backgrounds on our members. But once the
members are in the club, they can deposit as many
weeks in the system as they want. They choose the
weeks they want to put in based on whether they're
using it that week or if they're not running it
(17:17):
that week. Some people, about half of our properties do
short term letting and so they deposit a week and
they get credits. So what we call keys in the club,
and your keys are based on two factors, James. One
is the value of your property and the second is
the week that you offer into the system. Because all
places have a seasonality to them, some not all weeks
(17:38):
are the same at that property. It depends on you know,
for example, and asking Colorado keep give them that as
an example, if you give us Christmas or New Year's
or what we call spring break, that's a high season
and so you get more keys because for that. So
every member gets to decide what they want to offer
at their house and for that they immediately get their credits.
(17:59):
So you could deposit the week today, it could be
a year out and you would go ahead and get
your keys today into your account, so that tonight you
could book a house in Italy. You don't have to wait,
it doesn't depend on somebody booking yours. You get your credits.
Speaker 1 (18:16):
And the key is the unit of value that you
created inside the system. It's very interesting, right, Okay, consequences
for the Australian participant.
Speaker 2 (18:26):
So the great news is there's no money changing hands, James.
I mean, you don't get any money, but there's no
access too because there's no money exchanging hands. And the
other great thing about it is that you know it's
you're letting people use your house that are also doing
the exact same thing with their house. So there's a
level of trust. And so as I mentioned, about fifty
(18:49):
percent of our members do some type called short term letting,
where fifty percent would never consider that they just don't
want somebody running in their house, but no third home causes.
Speaker 1 (18:59):
Other people will participate in third home, but they wouldn't
generally rent. Yeah, I get it. Tell me, what if
someone has a party and they fall off the balcony.
What's my insurance situation.
Speaker 2 (19:08):
All the members secured their own liability insurance, you know,
and they should have liability insurance anyway. If you had
friends over for dinner and they drank too much and
fell off the balcony, I hope you got insurance for that,
you know. So it's the same thing. So our members
are like guess guests coming to your house. And like
I said, we typically try to leave a gift, you know,
when we stay. We encourage our members to leave a
(19:29):
nice gift for the host. My partner that travels with me,
she's here now, is Debbie Fields. She started a cookie
business years ago called Missus Phil's Cookies.
Speaker 1 (19:38):
Missus Bear's Cookies. Of course that's what that's your partner. Yes,
I meant to mention that, and of course they were, Yeah,
the franchise right, yeah, many a shopping center Missus Spears Cookies,
So she's Missus Speer's Cookies and you're mister third home.
Speaker 2 (19:52):
Yeah, right. The Debbie leaves, she always leaves cookie dough
in the freeze, or she makes cookie dough while she's there.
She leaves it with a nice note for the owner
of the house that she made cookie dough. Missus Fields
made cookie dough for the people and left it for him.
So that's usually our gift to the host.
Speaker 1 (20:08):
I see what an entrepreneurial pair you are. Tell me
what if things go wrong? And I don't want a
good burrow too hard, but things will go wrong in
an enormous enterprise like this. Do you have some sort
of mediation elements where you know, someone said I thought
this was going to be X or whatever. I can't
even conceive, but there would things will go wrong.
Speaker 2 (20:29):
I give you an example. Over dinner last night, the
member told us that he when they first joined the club,
they went to book something and they booked it online
and then they realized after they booked it it was
the wrong week, and they felt terrible they made a mistake,
but they got the confirmation the book in had gone through.
So they immediately called our office and talked to la
(20:50):
works with us named Meghan, and they explained to Megan,
I made you know, made a mistake, and Meghan immediately said,
don't worries. I'll take care of that, and she got
on the phone within just about two minutes called them
back and said, no problem, we canceled that and you know,
if you want to book another week, you're welcome to.
And so they took care of it. And so our
goal is that we take care of our customers number one,
(21:10):
our members, and so if we can help you any
way to move some dates around for you or anything
like that's what we have a team of people here
to do to make sure it works out for you. Now,
there's certain things that happen that you know, we can't handle.
You know, hurricanes come through and things like that are
of our control. We try and move people around best
we can and rechange some dates for people, but there
(21:31):
are certain things out of our control that we just
can't change. But we always try and make sure we
do the best we can to help accommodate our members.
Speaker 1 (21:38):
Okay, and just why before we run out of time,
you mentioned at the start you have a sort of
higher level. Again, you have this reserve level which is
fifteen million plus US level. So how many properties are in.
Speaker 2 (21:55):
That so we've got about I think cross about four
hundred properties in there right now. I think we'll end
up about five hundred at the end of the year.
We have a a fellow that's been working with me
since I started the club in twenty ten at London,
and his name is Giles Adams and Giles was the
(22:16):
star on Holiday Holiday Home Swap Millionaire Holiday Home Swap.
That there's a six hour TV show as you mentioned
that's running around the world. But he handles that it's
more of a white glove service too, so they do
a lot for those people going to the castles and
yachts and different things where they do a lot more
concierge service for those members.
Speaker 1 (22:34):
Right. Interesting. So yes, so you are moving it to
the extent that you are moving it even further upmarket
on that tier. Terrific. Well, it sounds like a great idea.
It sounds like it was very well executed. Lovely to
have you on the show. Very original idea. Best of
look with everything, Wade.
Speaker 2 (22:50):
Thank you very much and come visit us in the
United States whenever you get a chance. We'd love to
host you.
Speaker 1 (22:55):
I'd love to see some of those places in Aspen.
They sound very nice. Okay, thank you everybody. Now listen, folks,
James Gerard is back on Thursday with the Incentives Electric
Incentives sequel. We had so much correspondence I couldn't get
over about turning your home electric, the various grants that
are there, and of course electric cars in the mix
(23:16):
there as well, so we will be covering that on Thursday.
You still have time to send in questions for that
if you wish to do so the Money Puzzle at
the Australian dot com dot au. Talk to you soon,
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