Table of Contents
Written by: Bea Pablo
Our first fund, the Equity Villa Fund, was established in 2012 with a clear objective: to acquire vacation homes at deep discounts that offered substantial appreciation potential in the wake of the Great Recession, along with strong rental income opportunities. The Fund appealed to accredited investors who recognized the coming real estate rebound and wanted to participate not only through financial gains but also through personal enjoyment of the luxury residences owned by the fund.
From 2012 to 2016, the Equity Villa Fund strategically acquired short sales and foreclosures across Hawaii, Florida, California, and Utah. Through calculated renovations and disciplined asset management, each property was transformed into a high-performing luxury home that delivers exceptional investor and guest experiences plus consistent rental income.
In 2013, Equity Residences identified a rare investment opportunity in the heart of Utah’s world-class ski country. Just steps from downtown Park City and a short drive to the Deer Valley and Park City Mountain resorts, a 10-bedroom, 8,500-square-foot duplex had come on the market as a distressed, bank-owned residence. Built at the height of the real estate market in 2007, the residence had never received its Certificate of Occupancy and had sat vacant for years – an overlooked asset in a prime location.
Acquisition
After thorough due diligence, the Equity Residences teamnegotiated directly with the mortgage lender to purchase the duplex for $1.8 million, securing the home at roughly $0.30 on the dollar compared to peak values. At acquisition, the residences required extensive work due to water damage and structural issues that had occurred while the home was vacant. The Equity Residences team oversaw a full renovation and invested an additional $542,000 in improvements, bringing the total investment to $2.3 million.
Just 90 days after purchase, the improved Deer Valley residences were appraised at 36% above the Fund’s total investment, reflecting immediate value creation through strategic acquisition and renovation.
Remodel and Improvements
To transform the distressed duplex into two luxury ski residences, the Equity Residences team executed a comprehensive remodel that addressed both structural integrity and modern comfort. Following the renovation, the two sides of the duplex were designated Deer Valley A and Deer Valley B, each functioning as an independent, fully furnished luxury home.
Key improvements included:
- Installation of an interior staircase between the entry level and third floor to meet fire code requirements
- Addition of steel beams to reinforce the structure and correct deflection in the floors
- Hardscape landscaping to improve erosion control on the steep hillside lot
- Upgraded interior finishes, including new plumbing and lighting fixtures and hardwood flooring
- Installation of an elevator
- Completion of a radiant heat system for bathroom floors and a driveway sno-melt system
- Addition of a hot tub on the back patio and a sauna in the master bathroom
- Finalization of all city punch list items, leading to the Certificate of Occupancy in March 2014
These updates positioned both residences as high-end mountain retreats designed for luxury travelers and vacation homeowners seeking proximity to Park City’s slopes, restaurants, and shops.
Disposition
Over the years, Deer Valley’s luxury real estate market experienced significant appreciation. Equity Residences strategically timed the scale of each unit to capture peak market value and maximize investor returns.
Deer Valley A
- Listed during the height of the COVID-era mountain market boom for $4.5 million
- Sold directly to a previously interested buyer, avoiding brokerage commissions and requiring the buyer to cover all closing costs and repairs
- Net proceeds: $4.4 million to the Fund
- Return: 167% gain on book value and 2.7x return of capital
Deer Valley B
- Listed in September 2024 for $2.5 million
- Sold in under two months, also without a realtor, avoiding commission fees
- Net proceeds: $2.03 million to the Fund
- Return: 201% gain on book value
Results
Equity Residences acquired the Deer Valley duplex for $1.8 million in Q4 2013, investing a total of $2.3 million after completing renovations across both residences.
The investment delivered a 2.89x total gain on sale and a 14% IRR on the home investment, demonstrating the success of the Fund’s strategic acquisition, renovation, and timing approach.
In total, the Deer Valley investment returned $6.43 million in cash proceeds to fund investors.
Summary
The Deer Valley investment demonstrates Equity Residences’ proven approach to identifying undervalued assets in top-tier destinations, executing targeted renovations, and timing exits for optimal performance. By transforming a distressed duplex into two high-performing luxury homes, the Fund generated a 2.89x return and over $6.4 million in proceeds, delivering exceptional value to investors while contributing to the luxury landscape of Park City.
Interested in learning more about our investment approach? Contact us at info@equityresidences.comto explore how Equity Residences creates value through disciplined real estate acquisitions and luxury home management.
