May 20 2011 by Michael Gelfand
For some CEOs, the home away from home is the corner office. For others, it’s the VIP lounge at the airport, or perhaps the homogenous hotel suite out on the road. But when you’re Dick Friedman, CEO of the Boston-based real estate development firm Carpenter & Co., your homes away from home are the real deal—they’re the exclusive, to-die-for residences most people occupy only in daydreams.
Friedman is far from alone as a CEO with a passion for such residences. A host of notable CEOs, including Virgin Group’s Sir Richard Branson, J. Crew Group’s Mickey Drexler, IAC/InterActiveCorp’s Barry Diller and Revlon’s Ronald Perelman, just to name a few, have second homes that fashionistas, architects, interior designers and paparazzi go gaga over. But as an expert builder and developer who travels the world sizing up new real estate opportunities for his company, Friedman’s got a sixth sense for identifying and snapping up special locations when the mood and the deal are just right.
Individually his homes are all enviable, but cumulatively Friedman’s homes are a royal flush. For short weekend trips, there’s his place on Martha’s Vineyard, so sweet that it served as vacation central for former President Bill Clinton nine years in a row. Then there are the two townhouses in Aspen, Colo., where Friedman, an ex-ski racer and former coach, goes to channel his inner Jean-Claude Killy whenever fresh powder falls. And when the sun’s warmth beckons, Friedman’s got two island jewels on the west end of Tortola, British Virgin Islands that are outfitted for pure, unbridled relaxation (including a 15-room, 10,000 square foot plantation-style villa called Frenchman’s Lookout, which boasts, among every other imaginable amenity, idyllic, 360-degree views of the Caribbean).
Given the array of vacation choices at his disposal, you’d think Friedman’s got it made, but as he tells it, he’s got two problems. For starters, he says, he owns too many homes, likening his passion for collecting top-tier getaways to the way other people collect paintings. “My financial advisor recently told me he’d quit if I bought another one,” he says, recounting coming perilously close to purchasing yet another home on a recent trip to Rome. His second problem? It’s one familiar to many CEOs: He works and travels too much, meaning he doesn’t have enough time to spend at his homes.
Friedman’s practical side as a hotelier (he’s the owner of Boston’s Charles and Liberty hotels) informs how he uses and manages his current roster of homes. Given the sizable costs of owning, maintaining, and in some cases staffing the homes, he chooses to defray some of those costs by renting them, carving out specific blocks of time for his family at each one, and making them available the rest of the year. “I like to keep them occupied because I’m just not in any of them enough,” he says. “And I want someone to enjoy them.”
The home on Martha’s Vineyard is no longer available to outsiders, former Presidents or the general public—Friedman visits it on weekends, and it’s occupied year-round by one of his sons. Black Swan, his Aspen home (he only recently purchased the second one) is rented out in the warmer months, but is his exclusively during ski season because he’s always ready to jump on his plane to get there if the snow is falling. Similarly, he’ll swoop in to Tortola whenever he gets the chance—a recent business trip to nearby Haiti prompted a visit to Frenchmans Lookout. But getting there from the U.S. takes some doing, so he often opts to rent it out to travelers who crave its picture-perfectness.
As for a long-term plan for his personal real estate portfolio, Friedman confesses that he’s never given it much thought. “I’ve done well with all of them in terms of what I paid versus what they’re worth… but I don’t buy to sell,” he says. “Basically I look at them as something I want to have and appreciate, but I’m more interested in fixing them up nicely and just keeping them.”
Buy Without Regret, Travel Without Baggage
Friedman is, by his own admission, a serial acquirer, with all but one of his acquisitions based on love at first sight, and nothing more. “They were all unplanned,” he explains. “The second home on Tortola was the only anomaly, in that I was nervous about bad neighbors so I bought three lots around Frenchmans and then built a second home that I’m now trying to sell. But income and tax considerations are never on my mind when I buy homes, because renting is never profitable,” he says.
“By the time you have the staff it takes to keep up the house, the grounds, and the pool, all while you’re not there,” he says. “…We lose money, a lot of it, on all of them, so renting just offsets costs. It’s like when you own a plane. You can charter it out, but you’re not making money off it, it just pays for some of the gas.”
To Friedman, owning a home where you love to be is what matters most. “Vacation homes that work are the ones that you can just walk in and be there,” he explains. “I pride myself on being able to go to any of my homes without packing anything.” It’s a less-is-more approach built to work with a more-is-more appetite for home ownership, and it’s kept Friedman from vacationing anywhere other than his own homes for nearly 20 years. “The idea of packing and getting organized, that’s a big issue,” he says. “When you pack nothing, that’s what prevents traveling from being a chore.”
When Are We Going to Be There?
People in the market to buy second homes typically aren’t looking to retire off the investment, says Chris Smith, an agent at Coldwell Banker BVI in the British Virgin Islands, “They don’t want to lose their shirts,” he adds, “they simply want to enjoy it and have it make some financial sense, as well.” To realize that goal, he offers these tips to second-home buyers looking in exclusive markets:
Everyone dreams about beachfront—be practical. “Think about being up in hills with a breeze. It’s more civil and you’ll get more for your money.”
Smaller markets are less liquid. “If you insist on buying into one you’d better have a five-year plan. Make that a 10-year plan.”
Know whether you’re occupying or renting. “Even if you don’t want to rent now, you might later on. And if you live 3,000 miles away, you will need to hand it over to an efficient management structure.”
Residential or a house in the hills? “If you’re buying a house or land, you need to know what’s next door—and what could be next door. If you buy into development, find out the track record of the developer, what they’ve done before and what their current financial situation is.”
Access is everything. “The British Virgin Islands are hard to get to. Only small planes fly in here, runways are short, and insurance won’t cover charter jets. That’s good or bad depending on whether you’re looking for peace and quiet or nightlife.”
Don’t expect bargains. Sellers in exclusive, luxury markets aren’t giving anything away. Most sellers in these locations are selling third or fourth homes that they paid for with cash. In these areas the real estate market hasn’t collapsed, and sellers don’t have to sell.”