Timeshares is good investment or not.

We seem to be going off on a tangent. I started a new thread under "General Discussion"

If "investment" is defined as a financial return, the prediction that buying a timeshare will produce a profit is an illusion. If the "weeks" are utilized as structured by resort owners and travel agencies, a case can be made that timeshares offer reasonable services for a buyer's money. However, as time passes and conditions for the buyer changes, the alternatives for obtaining a release for the obligation of owning timeshares often is difficult. The timeshare buyers often lose weeks and maintainence fees. For obvious reasons, resort ownes and travel agencies leave the timeshare owners to agencies that are not wholly ethical or regulated. Timeshares are NOT a good investment.

This topic probably doesn't actually belong here in the "Timeshare Exchanges" forum in the first place, but since it was initially placed here instead of in the more appropriate "Buying, Renting & Selling" forum, I'd like to reply in specific regard to the post above by "clifforddw".

I agree with much of the statement by "clifforddw" above; viewed solely from a FINANCIAL investment perspective (i.e., seeking a monetary "return on investment"), timeshares are certainly a very poor choice indeed. I would note, however, that when viewed instead from the perspective of guaranteed vacation reservations at chosen desirable locations, timeshare ownership certainly has an intrinsic value; one which differs considerably from one person to the next. Busy people who have neither the time nor the inclination to "vacation shop" can (...and do) just pack and go to their guaranteed, pre-scheduled vacation. Buying at low prices in the resale market, at the right locations and seasons (...and avoiding developer-direct price gouging) can (...and does) provide access to great vacations at good value. That said, however, there may be a point in the future at which maintenance fees could increase to approach (even potentially exceed) the cost of rental without ownership. I have certainly not yet seen anything even remotely close to that development occuring yet in any of my particular timeshare ownerships, but that day could certainly arrive at some point.

My real point in responding to the post above by "clifforddw" is that I am truly puzzled by the multiple references to "travel agencies" within that particular post. I've owned several timeshare weeks for several decades now. Never once has any "travel agency" ever figured into or been in any way connected with, involved with, or associated in way with any of my timeshare ownerships (or my usage of same). If I may ask, what exactly leads you to state an apparent belief that "travel agencies" actually have anything whatsoever to do with timeshares and/or timeshare ownership or timeshare use?

carvana wrote:

Jayjay says "the estate is responsible for all liens and maintenance fees until the estate can sell the property. An estate includes 'heirs', I would assume."

Jayjay's assumption is wrong. An estate is a separate entity from an heir just as a corporation is a separate entity from the stockholder.

My point was that the estate cannot be finalized until all liens and fees are paid or the timeshare is sold.

When I say 'heirs' I mean what is granted to 'heirs' listed in the deceased's will after the estate is probated and finalized.

Timeshare can be decent investment if bought at the right resort.

The key is that the rental rates for the hotel be very high all yr. long and that the hotel be very sought after. If you are able to offer a suite for a lower price than a regular room-- you will rent.

We paid $42,000 for Harborside Resorts at Atlantis Timeshare--2/2 for high season ( platinium ).

Maintenance was $1300 and we rented it for $5500 over Winter break week.

Therefore, we neted $4200 last yr. = 10% cash on cash return.

howardg19 wrote:

We paid $42,000 for Harborside Resorts at Atlantis Timeshare--2/2 for high season ( platinium ).

Maintenance was $1300 and we rented it for $5500 over Winter break week.

Therefore, we neted $4200 last yr. = 10% cash on cash return.

So assuming you paid cash for your unit and not taking into account loss of earnings on the $42K, it will take you 10 years to break even. Of course, hopefully when it comes time to sell your unit, you'd be able to recoup some or all of your original purchase price.

Capital Costs of $42k at 5% is $2100 per year. Your cash flow results were therefore $2100 or 5%/year. Your resale value is probably zero since the secondary market for TS's is almost non existent and the benefits you receive are stripped from the original owners benefits. My opinion...a bad investment.

One big number you are not including in your 'investment' analysis is the initial cost of the timeshare that you paid the developer. The inclusion of this will significantly lower your return.

Timeshares are not a good monetary investment from a real estate perspective.

davidj166 wrote:

Investment by definition is - the investing of money or capital in order to gain profitable returns, as interest, income, or appreciation in value.

A time share unit is absolutely NOT and should never be viewed as an investment.

Before you sit with a sales associate and sign a sales agreement for a new timeshare unit (being sold by a developer) do yourself a favor and check the resale/secondary market for similar properties. You will be SHOCKED.

If you choose to believe that you are getting something in return that exceeds the amount that you paid for your unit - that is a personal choice - you're probably trying to convince yourself you made a good decision - I did the same thing.

Just some "real world" data here - my wife and I bought a 1 BR unit in Myrtle Beach at an "upscale" resort in 2001. Sale price - $10,000. We sold the unit in 2007 for $1,000. When you factor in the maintenance fees, assessments, membership fees to either RCI or II and the exchange fees - these all add up to well over $1,000/yr.

My wife and I could have banked the original $10,000, and used this amount to take similar vacations over the six year period we owned the TS.

Timeshares are NOT an investment. They are a convenience - and an "encouragement" to try to coordinate an annual vacation - nothing more.

Do not enter into to this type of transaction thinking that you will come close to seeing a return on your investment or a positive NPV should you decide to sell your unit. It just DOES NOT happen that way.

We had the same scenario ... bought from developer in 2000 for $11,000, nice gold crown resort in Kissimmee, FL .... decided to sell in 2004 ..... started out asking $5000 with no takers, finally sold it for $2800 ..... at a loss of $8200 which is typical for resales (1/3 to 1/4 of developer price) if the week can be sold at all in this market.

If we still had the week today with all the $1 timeshares on Ebay, I doubt it could be sold at all. We got out of timesharing just in time as we also sold several other resales that we had purchased before the postcard companies and their $1 timeshares hit Ebay.

Postcard companies along with the current economy have devalued ALL TIMESHARES. I don't know if the industry will ever recover.

jayjay wrote:

... What may have worked for you in the past will no longer work for you in the future as any type of travel, including timeshare travel, is in the tank. People are concentrating on the big 3 for survival (roof over head, food, transportation to work) not travel and/or renting/buying timeshares...

Just the opposite is true, although I suppose it is perspective. I own about 350 annual weeks right now and make a living at selling/renting. Granted, 2008 will not be a very good year, but I'm still making money and not losing. Didn't hurt that Jan-Mar 2008 was my best quarter ever before everything went chaotic. But I digress ... While this is a terrible time to sell your timeshare it is even more a fantastic time to buy. OK, a lot of people have better uses for their money. Even I am a bit tight on cash, but that's a little more due to the roughly $150,000 in maintenance I'm going to pay in January, not as easy to pay the big bill in advance as normal. That doesn't detract from the fact that if you buy good timeshares now for a third of what they were selling for a year ago, you will sell the unit (if you desire) in 1-3 years and make money on it even if you don't rent it for the maintenance. I've gone into closing on eight timeshares this month and if my stocks don't sink me I hope to buy 5-15 timeshares/mo until the prices rise.

BTW,

Vacation travel is most certainly not in the tank. Timeshares nearly always book out before any other lodging and even though numerous hotels have a lot of vacancy, people are calling me for timeshares which are near or at their reservation limit. Apr-Jun 2008 were indeed terrible, those three months combined were lower than any month I booked in 2007. But then people began making inquiries just as much as in Jan-Mar, the primary difference is that they want to pay less. November is going to be another strong month for me. That's bookings in November, not the dates people are staying. I'm still discounting pricing, making less per unit, but a lot more people are booking now than in Apr-Jun, Sep, or Oct. That's probably due to lower airfares now that fuel is lower and my Christmas / New Years bookings (as always) are higher now since it's less than 2 months away (I wish people would book farther in advance so I have more to offer!). But I'm also booking Spring Break units at a good clip and some of them are close to "normal" pricing.

mnop wrote:

Just the opposite is true, although I suppose it is perspective. I own about 350 annual weeks right now and make a living at selling/renting. Granted, 2008 will not be a very good year, but I'm still making money and not losing.

My mind can't even comprehend owning and managing 350 timeshare weeks and owing $150,000 in maintenance fees in January.

I believe until this economy straightens out that the future will be negative for timeshare rentals and sales. Actually, I think the entire timeshare industry will be in major trouble in the future (timeshare bubble has burst).

What happens to the weeks you can't rent out?

You have 350 timeshares and pay only 150,000 per year for maintenance!!! That's 35$/week avg...not likely in today's market.

I'd sure like to see your P/L analysis and breakeven income. I don't doubt your word, I just envy your ingenuity and entreprenuership. I do doubt your economic analysis.

The initial investment is accounted for in the Capital cost of $2100 per year at 5%. I doubt one could get 5% in today's market disaster.

raymondl17 wrote:

You have 350 timeshares and pay only 150,000 per year for maintenance!!! That's 35$/week avg...not likely in today's market.

My math may be a bit fuzzy, but doesn't $150,000 divided by 350 TS average about $430 per TS?

mike1536 wrote:

My math may be a bit fuzzy, but doesn't $150,000 divided by 350 TS average about $430 per TS?

I had to get my calculator out too :o) and Mike you're right, it does average out to $430 per TS, but I still can't even imagine juggling something like that in this economy (well, in any economy actually). And can you imagine how many special assessments he must have with 350 timeshares (I wonder if his 350 timeshare ownerships are in different resorts)? If so, that opens up a completely different can of worms.

MNOP

Your business model is to buy timeshares in the resale market and resell them at a profit in 1 to 3 years. The average $428 MF suggests the timeshares are somewhat less than average in quality and yet you manage to resell at a profit. You indicated you have eight timeshares sales that will close this month. Is that typical? You may consider it proprietary information that you prefer not to disclose but I think it would be very helpful to the many members of Redweek to know what venue (internet? - if so provide links) you use to purchase, rent, and resell these timeshares.

I suspect you buy foreclosed timeshares in bulk at a significant discount from resorts using an in-house closing firm and have a sweekheart deal with the resorts allowing you to utilize their services in renting and marketing the resorts. Right?

My apologies for my mis-statement. I've booked about 350 weeks in 2008 from my owned units (I've made more than 350 bookings, not all are 7 night stays, not all the units are owned by me), the vast majority are sub 60 day reservations with Resort dicounted point reservations and a significant portion are "free" upgrades due to my Platinum Status with DRI and WVR. This of course means I "own" less than 350 weeks but since so many of my contracts are points based rather than unit based it makes it a bit difficult to define (350 studios off season at undesireable resorts are easy to compare to 350 2BR units in HI, but how many units/weeks is an 80,000 point DRUSC contract worth? - 80 studios off season sub 60 day, or not quite two 2BR Presidential units at DRI KBC?). Technically I own 2.3 Million pts WVR, 350k pts DRI on a few dozen contracts, about 50 DRI contracts in weeks, about 20 units in misc resorts, 7 of which provide about 600,000 RCI Points. Nearly all my ownership not in points are lockoff units, also allowing me to "create" more weeks than I own. My effective booking of 350 weeks does in fact set my weekly unit cost below $500, although it is possible I'm off in my $150k statement - if anything, I've overstated my annual maintenance. I have indeed pre-booked units which go unrented and have fixed week units which at times go unrented but I am very paranoid about this and lost weeks are very rare for me.

carvana wrote:

MNOP

Your business model is to buy timeshares in the resale market and resell them at a profit in 1 to 3 years. The average $428 MF suggests the timeshares are somewhat less than average in quality and yet you manage to resell at a profit. You indicated you have eight timeshares sales that will close this month. Is that typical? You may consider it proprietary information that you prefer not to disclose but I think it would be very helpful to the many members of Redweek to know what venue (internet? - if so provide links) you use to purchase, rent, and resell these timeshares.

I suspect you buy foreclosed timeshares in bulk at a significant discount from resorts using an in-house closing firm and have a sweekheart deal with the resorts allowing you to utilize their services in renting and marketing the resorts. Right?

Quality is in the eye of the beholder. Are DRI Greensprings, Powhatan, Kaanapali Beach Club, Sedona Summit, and Scottsdale Villa Mirage lower quality? They are all superior to most timeshares, but not the best. I believe my ownership definition in terms of weeks rather than units makes a big difference in the maintenance calculation.

My business model is to buy timeshares and rent them, selling units is secondary. My point about reselling at a profit in 1-3 years pertains to buying units now during this crisis, treading water renting them out, and selling for a profit when the economy improves. Some people buy stocks, others buy real estate. Some real estate people specialize in residential, others do commercial, you might consider timeshares!

I'm not selling 8 units per month (I wish!), I'm buying. This is a pretty bad time to sell. I troll listings and do what I've despised others for doing - rediculous low ball offers. I also bid on multiple auction sites. I have not moved to forclosed bulk purchases yet as I'm more focused on buying and renting than buying and selling. I just sell when the price is right ... none in the last two months. Since most units I buy are high point value or lockoff, my ave maint per unit is more like $900-$1,100. I just lower my cost per "week" to under $500 thru resort discounts, upgrades and splitting lockoffs.

I haven't been crass enough to suggest an owner pay me to buy their timeshare but a few I've taken for $0 purchase. I bought a DRI Powhatan wk 22 and 50 from an owner for $0 and sold the Wk 22 for $3,000 and Wk50 for $1,000 earlier this year. My last sale was a DRI Powhatan Wk27 for $7,500 two months ago, although I don't expect that to happen again for some time. I have indeed begun to close my own units in some cases. I can do it faster and of course for a lot less money.

I must say that in my 25+ years of timeshare ownership, the above is the first time I've ever heard anyone openly claim to actually be "making money" on resale timeshares. I'm certainly skeptical (...to say the least) but it may actually be true. If so, it's definitely a statistical rarity and, I would think, nearly a full time job in and of itself!