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[ 2014 ] Buy a Grande Ocean week....or just keep renting??

Fasttr

Fasttr

TUG Review Crew
TUG Member
Joined
Jun 26, 2013
Messages
6,614
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Location
Connecticut
Resorts Owned
Marriott's Grande Ocean (Enrolled)
MVC Trust Points
Just curious what others think of this opportunity. I have an acquaintance (friend of a friend) who owns a 2BR Gold OF at Grande Ocean. Gold is weeks 13-23 and 35-43). He is trying to unload it, and he would likely part with it for around $8-9K. It appears to be in the range of prices that a couple of recent Gold OF’s at GO have sold for, and passed ROFR (at least the higher end of that range has passed). First question to you all, do you think that is a poor, decent, good or great price?

I have always thought that spending a fall week nearly every year on HHI would be nice, and I can even see myself potentially retiring down in that neck of the woods at some point (so could even use the day privileges on occasion if that were the case). For now and the foreseeable future, I “could” drive there if I had to, should, God forbid, my financial situation change for the worse, but as I currently sit, flying there annualy would not be a burden....nor would the $8-9K purchase price or the annual MF's.

I currently only own a smaller Trust points package in the DC and I rent excess points every year to get to where I want to go. When I look at it financially, I can reserve a Gold season OF week in the DC for 4,000 points. Let’s put a rental value for me to snag the points needed for that ressie in the DC at $2K annually. If instead I owned the Gold week, the MF’s are currently approx. $1.2K annually. So the $800 annual “savings” if I owned the week, would pay off the initial purchase price in 10 or 11 years (without any time value of money calculation to muck up the easy math).

One of the great benefits of the DC is the ability to rent points needed for each incremental week you desire to "add to your portfolio", without the need to pay anything more upfront. Since I am already a member, I tend to lean towards just renting more points to add an annual spring or fall trip like this, but since this opportunity presented itself via a common friend, I figured I would at least give it a thought or two.

In your collective TUGger wisdom, am I better off to just rent the additional points when I want to go there, and not be married to the MF’s on the week in the years I may choose to do something else, or is this something that some of you would ponder, if not even perhaps recommend doing?

Anybody have any first-hand knowledge of DC availability of OF GO in late spring or early fall?

Any other issues worth pondering??
 
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Fasttr said:
Since I am already a member, I tend to lean towards just renting more points to add an annual fall trip like this, but since this opportunity presented itself via a common friend, I figured I would at least give it a thought or two.
Click to expand...

Todd,

I can't speak to the value of the Gold Grande Ocean OF, and that may be a great price. I think you are right to compare it to your cost to access the same reservation by renting points, and by renting points you're not wedded to that same week annually.

I think it is inevitable that you will buy a legacy week (perhaps more) and its only a matter of time. I would consider carefully what's the right home resort and what's the right season.

Personally, I like Platinum weeks for the personal usage (and to assure resale even if at a lower price), and then rely on the point systems (not just Marriott's but others too) for the "non-core" reservations. So my ownership is constructed around MOC weeks and lots of point systems.

Your ownership may also evolve into one (or several) legacy weeks at a favorite resort, plus your points, which you can scale up through renting.

I hope that helps!

Best,

Greg
 
good evening...

Todd..

from the other Todd...a.k.a puck

Remember, this isn't a lock off so you can't get those 2/1 II trades. Could you not rent fall weeks directly for close to MF's..?just curious!!!
 
I only read the first 3 sentences and rushed to answer you.

RUN over there and pay him cash------that's a great deal. You won't see that price much for the OF gold week anymore, and remember it includes the first 2 weeks of June, which is huge.

I bought one of those for 8.5 two years ago when a few weeks were still available on Ebay, and now wish I had searched for more. I also turned down another last year for 9, but now wish I had jumped on it.

It rents for $2500+ easily ----I know because we rented out all 4 of our weeks this year (2 Gold and 2 platinum). If my daughter had not just gotten married in May I'd take it myself. I haven't seen a Gold OF week for less than 9.5 in over a year....the weeks at GO have been creeping back up steadily, and they just don't appear as often as they did two years ago.

Gold season happens to be the very best time to be at HH, especially May, June. The only reason platinum is so popular is because kids are out of school, otherwise people wouldn't tolerate the heat and humidity.


.
 
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puckmanfl said:
good evening...

Todd..

from the other Todd...a.k.a puck

Remember, this isn't a lock off so you can't get those 2/1 II trades. Could you not rent fall weeks directly for close to MF's..?just curious!!!
Click to expand...

Good point, Puck, but redweek shows those OF weeks renting for about the same 2000.00 as the points rental. However, if the OP isn't married to OF the priced to rent drop down to about MFs.
 
Fasttr said:
So the $800 annual “savings” if I owned the week, would pay off the initial purchase price in 10 or 11 years (without any time value of money calculation to muck up the easy math).QUOTE]


Sorry, but there's no way for you to make a financial decision such as this without giving consideration to the time value of money. First off, there is no $800 dollars annual "savings". Keep in mind that you are paying $8K upfront in 2014 dollars for this supposed $800 annual savings. Using 5% as an average rate of interest over a ten year period, $8K has a future value of around $13K. If you also take into account an average increase in maintenance fees of 5%, you'll be paying close to $2K/yr in ten years. However, if rental rates increase at the same rate as the maintenance fee, which is a reasonable assumption, it will be a wash.

I think you should look at it in terms of how much each option would cost you over a 10 year period. If the MF and rental rates increase at the same amount, I'm thinking your options would look something like this;

Purchase: $13k + 10yrs(1200 mf) = $25K


Rent: $2K x 10 years = $20K


So, purchasing appears to be more expensive at first. However, if you can sell the property for $5K, you'd break even. If you can sell it for more then buying may be your best option.
Click to expand...
 
As an owner you will also open up other options via the exchange company (Interval International). You will be able to deposit and exchange into other locations as your travel needs change. You can also gain a 2 for 1 exchange or an extra Accommodation Certificate. Just something else to think about if you want to be a weeks owner. I think it is a great price.
 
Grande Ocean buy vs rent

Todd, I use roughly the same calculation for the value of owning as you are using. Another way of looking at the $800 saving is a rate of return on your capital investment of $8,000. Where can you get a 10% return today? I think the 10 year T-bill is less than 2.5%. If you are certain you are going to use the week every year, it is a sound investment.

However, you can pick up fall rentals at Grande Ocean for quite a bit less than a rental in May or early June. You usually would have to pay $2,000 or more in May. But the fall is less expensive for some reason. I just rented an OF week in September for $1,250 which is roughly the maintenance fee. Will I ever get that deal again? Doubtful. But that rental price would certainly lower the value of a purchase. You might also want to own if you wanted to run multiple weeks together. You get a higher priority and a better view.

I also doubt you would have any difficulty selling it for at least the same amount as your purchase price 10 years from now. Marriott keeps the property in great condition. So I would recommend a purchase if you were vacationing in May. But I would just continue renting for September or October. I have heard from other owners at Grande Ocean that it is very difficult to use destination points to get into OF units there. We deposit our OS weeks for points but never our OF weeks. Just my opinion.
 
If you're interested in comparing Gold vs Platinum, we recently purchased MGO Platinum Oceanfront for $14k.
 
I think that other than those first two weeks in June you are better off renting from individuals or trading in. I'm a huge fan of GO, and go every summer, but 8k seems too much when you add the maintenance fees each year.
 
GNS said:
If you're interested in comparing Gold vs Platinum, we recently purchased MGO Platinum Oceanfront for $14k.
Click to expand...

And on the other end I bought a silver ocean front for $1250, all in, transfer, closing, etc.
 
I would look at it this way. Do you think its a good price and do you think the unit will hold its value after say 10 years. Also, do you feel comfortable with the annual MF's each year. From what I know about the resort I personally think its a good price and will probably be worth 8k moving forward. If you buy, you have the option of using a great week at GO for around $1200 per year. If you want to stay longer, you could always use points to extend your stay. If you cant or don't want to use it in certain years, you can always reserve a good spring week and rent it out for around 2x MFs.So if you alternate years between staying at your unit and renting it out, you are essentially subsidizing your stay with your rental income and paying basically nothing out of pocket for the MFs. If you sell after 10 years for basically the same as you paid for it, I would call that a good deal. I know this may be an over simplification and there are also tax and other financial considerations as well as some risk involved, but I think this line of thought is worth further exploration. Just my 2 cents.
 
EKniager said:
But with Silver, you could probably rent for less than annual MFs.
Click to expand...

Maybe. The ones on Redweek go higher than member fees. Marriott rents them for more, at least for the weeks we like. Silver hits college spring breaks and Thanksgiving, Even an occasional Easter.

In any case, it's the seasons we will want to use ourselves.
 
jme said:
I only read the first 3 sentences and rushed to answer you.

RUN over there and pay him cash------that's a great deal. You won't see that price much for the OF gold week anymore, and remember it includes the first 2 weeks of June, which is huge.

I bought one of those for 8.5 two years ago when a few weeks were still available on Ebay, and now wish I had searched for more. I also turned down another last year for 9, but now wish I had jumped on it.

It rents for $2500+ easily ----I know because we rented out all 4 of our weeks this year (2 Gold and 2 platinum). If my daughter had not just gotten married in May I'd take it myself. I haven't seen a Gold OF week for less than 9.5 in over a year....the weeks at GO have been creeping back up steadily, and they just don't appear as often as they did two years ago.

Gold season happens to be the very best time to be at HH, especially May, June. The only reason platinum is so popular is because kids are out of school, otherwise people wouldn't tolerate the heat and humidity.


.
Click to expand...

I would probably second this sentiment.

A Gold HHI unit is likely in our future at some point, once our youngest goes off to college in about 3 years. I think the Gold season is the best time of year in HHI. We were there in late June Platinum season this year for an Encore package return visit and the heat and humidity were not something I enjoyed. We live in hot and humid Charlotte, so after I'm freed from the school calendar, if I'm going to go somewhere in June-July-August, I want it to be less humid, not more.

We're going to be closing soon on our Silver Barony week that we bought as part of our small points combo package. I could easily see that Silver week providing Thanksgiving, Christmas and nice mid-to-late March weeks in HHI (when not converted to DC points). Paired with a Gold GO, that could be perfect.

On the time value of money issue, I've always been an advocate of including that in the calculation, but with one caveat: Not everyone invests to the ideal ROI, so whatever rate you use should be based on how that cash would have been invested. That's not necessarily the theoretical way an economist would do time values, but I think it better reflects reality. If you are the type of person that would have likely kept that $8-$9K in a Money Market account, then using a 5% rate would not be right for you. In that case, something under 0.1% might be right. If that money would have been in an actively managed account, then something in the 3% to 5% range might be OK. I've been able to manage my mom's retirement funds to keep her annual yield around 5% despite the current rate environment, but it's taken A LOT of work. The S&P 500 and Dow have returned about 3% over the last 15 years, but with both now at or near all-time highs, will we see that kind of return over the next 10? Who knows?

An extreme example of where using a standard ROI for time value of money would not reflect reality is when we analyze our 16 year Kaanapali Beach Club ownership. We sold Bank of America stock at a split adjusted price of about $30/share in late 1998 to buy our KBC week. We kept most of the rest of our BAC stock until we finally threw in the towel a few years ago at just under $10/share. So in our case, had we NOT bought the KBC, that money would have lost almost as much value as it has being "invested" in a timeshare. YMMV.
 
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GreenTea said:
Maybe. The ones on Redweek go higher than member fees. Marriott rents them for more, at least for the weeks we like. Silver hits college spring breaks and Thanksgiving, Even an occasional Easter.

In any case, it's the seasons we will want to use ourselves.
Click to expand...

There isn't a silver week that I cannot trade into with a net of less than half the annual fees, but admittedly it would unlikely be Ocean Front.
 
Saintsfanfl said:
There isn't a silver week that I cannot trade into with a net of less than half the annual fees, but admittedly it would unlikely be Ocean Front.
Click to expand...

But we picked the place we wanted to be. To me there is some value in a sure thing.

When I first started thinking about buying a resale I was all about "the trade." But when I thought about it more, if there is someplace we want to go, we go. I don't need to depend on getting what I want through II. In the end the buy was based on a place we knew we liked and could drive to at the time we wanted.
 
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GreenTea said:
But we picked the place we wanted to be. To me there is some value in a sure thing.

When I first started thinking about buying a resale I was all about "the trade." But when I thought about it more, if there is someplace we want to go, we go. I don't need to depend on getting what I want through II. In the end the buy was based on a place we knew we liked and could drive to at the time we wanted.
Click to expand...

I totally understand. I have some fixed weeks in New Orleans specifically for this same reason. Ocean Front is also a nice perk of owning.
 
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GreenTea said:
But we picked the place we wanted to be. To me there is some value in a sure thing.

When I first started thinking about buying a resale I was all about "the trade." But when I thought about it more, if there is someplace we want to go, we go. I don't need to depend on getting what I want through II. In the end the buy was based on a place we knew we liked and could drive to at the time we wanted.
Click to expand...

There's no better reason. :)
 
My .02 as an owner and renter of GO Gold OF weeks. Its a very good to deal at $9k and great deal at $8k. (pass him my way if you don't want and owner will sell at $8k).

Platinum is only more expensive because of the demand from school age kids families because the best time of year weather wise is the fall gold season.

OF units are very nice at the GO because the resort is older and therefore was built closer to the ocean than the newer resorts that were forced to be pushed back.

When you don't use they rent very easily for me at $2k plus if I get a good Sept week.

The way I look at it my GO Gold OFs will be something my family will own for some time. We used it for many years and now with my daughter in college its been harder but sooner enough we'll have full yearly access when we kids are older and it will a resort we use for many years to come.

In the meantime it rents every year and a very nice premium to MFs.
 
zfw4609 said:
Sorry, but there's no way for you to make a financial decision such as this without giving consideration to the time value of money.
Click to expand...



"time value of money".........an interesting concept.

and it's brought up a lot when analyzing and weighing timeshare purchases, as it should be.

and yes, I get it...the argument isn't lost on me.

but I'd be lying to myself if I didn't throw into the discussion a variation of the term "time value of money", and that would be
the "value of what money can do with your time".

And the best example I can possibly think of would necessarily include a couple of fantastic vacation options which would always be present for any family, year after year, so that there is something concrete that brings you all together at one time and in one mind on a consistent basis. Something everyone can hang onto through all the family members' age changes.

Our "fantastic options" were owning a few weeks at Grande Ocean, and as things have panned out, it's been priceless. Our kids have grown up there, and the memories would have been nonexistent had it not been for that.

To the OP: Do whatever you can to gain that time with your family, and don't neglect it. And don't discount it altogether by always opting instead for traditional investments alone, at the EXPENSE of precious family time.

If renting does it for you, rent.....Or if buying a great resale opportunity, go for it. Then go invest separately.

Both are necessary. They are different kinds of investments. I'm frankly tired of the argument that always states you should not buy a timeshare because you can invest that money so much better from a financial standpoint. Well sometimes, how about just forgetting the meager $9K and just placing it on the table for your family to enjoy now. Someday you'll get that full sum back, "with interest".

Nowadays, with Grande Ocean weeks in particular holding their value strongly, there is minimal risk, imho. Like I said, you'll get it back. If you place that same money elsewhere, there is an inherent risk factor.

Family vacations contribute to shaping our children into the kinds of people we wish them to be. The children may have a serious and private discussion with you while on vacation, something that may never happen otherwise, and they will remember it forever, and take action on your advice in remarkable ways. So allow a little wiggle room in your "investments" to include that. Time flies, and you can't regain it. I would never even consider doing anything different than what we did.

A Gold OF week at MGO for $9K range (or similar option anywhere else) is not a wasted sum. You'll only come to understand after a few times there, and even more so after two decades. I view it as a fantastic and necessary adjunct to a separate traditional investment portfolio. There are investments and there are investments.




.
 
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jme said:
"time value of money".........an interesting concept.

and it's brought up a lot when analyzing and weighing timeshare purchases, as it should be.

and yes, I get it...the argument isn't lost on me.

but I'd be lying to myself if I didn't throw into the discussion a variation of the term "time value of money", and that would be
the "value of what money can do with your time".

And the best example I can possibly think of would necessarily include a couple of fantastic vacation options which would always be present for any family, year after year, so that there is something concrete that brings you all together at one time and in one mind on a consistent basis. Something everyone can hang onto through all the family members' age changes.

Our "fantastic options" were owning a few weeks at Grande Ocean, and as things have panned out, it's been priceless. Our kids have grown up there, and the memories would have been nonexistent had it not been for that.

To the OP: Do whatever you can to gain that time with your family, and don't neglect it. And don't discount it altogether by always opting instead for traditional investments alone, at the EXPENSE of precious family time.

If renting does it for you, rent.....Or if buying a great resale opportunity, go for it. Then go invest separately.

Both are necessary. They are different kinds of investments. I'm frankly tired of the argument that always states you should not buy a timeshare because you can invest that money so much better from a financial standpoint. Well sometimes, how about just forgetting the meager $9K and just placing it on the table for your family to enjoy now. Someday you'll get that full sum back, "with interest".

Nowadays, with Grande Ocean weeks in particular holding their value strongly, there is minimal risk, imho. Like I said, you'll get it back. If you place that same money elsewhere, there is an inherent risk factor.

Family vacations contribute to shaping our children into the kinds of people we wish them to be. The children may have a serious and private discussion with you while on vacation, something that may never happen otherwise, and they will remember it forever, and take action on your advice in remarkable ways. So allow a little wiggle room in your "investments" to include that. Time flies, and you can't regain it. I would never even consider doing anything different than what we did.

A Gold OF week at MGO for $9K range (or similar option anywhere else) is not a wasted sum. You'll only come to understand after a few times there, and even more so after two decades. I view it as a fantastic and necessary adjunct to a separate traditional investment portfolio. There are investments and there are investments.




.
Click to expand...

jme, I totally agree with your overall point that there are certain aspects of these decisions that just cannot be captured in even the most detailed financial analysis. The years of enjoyment that we've provided our families will no doubt provide a lifetime of good memories.

With the above being understood, the question at hand is "Would it cost less to rent or buy over a 10 year period?". If it's less expensive for the OP to get the "same" experience by renting, as opposed to buying, then why buy? The difference is not found in the product, it only resides in the cost. Time value of money is a consideration that all of us must consider if we are to make sound financial decisions.

Assuming an $8K payment will result in an $800 annual savings over a ten year period is a financial illusion. A deal like that is a bankers dream. If anyone in this forum would be kind enough to give me $8K today, I'll beat the deal and pay them $900/yr for the next ten years. And in the end, I would have made a decent profit.

Again, we are in total agreement as far as the experience staying at these resorts has provided for our families. However, in order to determine the most cost effective way to obtain that experience, the time value of money must be a consideration. Timeshare salespeople always discard this important fact. Please don't fall for their hype.
 
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jme said:
"time value of money".........an interesting concept.

and it's brought up a lot when analyzing and weighing timeshare purchases, as it should be.

and yes, I get it...the argument isn't lost on me.

but I'd be lying to myself if I didn't throw into the discussion a variation of the term "time value of money", and that would be
the "value of what money can do with your time".

And the best example I can possibly think of would necessarily include a couple of fantastic vacation options which would always be present for any family, year after year, so that there is something concrete that brings you all together at one time and in one mind on a consistent basis. Something everyone can hang onto through all the family members' age changes.

Our "fantastic options" were owning a few weeks at Grande Ocean, and as things have panned out, it's been priceless. Our kids have grown up there, and the memories would have been nonexistent had it not been for that.

To the OP: Do whatever you can to gain that time with your family, and don't neglect it. And don't discount it altogether by always opting instead for traditional investments alone, at the EXPENSE of precious family time.

If renting does it for you, rent.....Or if buying a great resale opportunity, go for it. Then go invest separately.

Both are necessary. They are different kinds of investments. I'm frankly tired of the argument that always states you should not buy a timeshare because you can invest that money so much better from a financial standpoint. Well sometimes, how about just forgetting the meager $9K and just placing it on the table for your family to enjoy now. Someday you'll get that full sum back, "with interest".

Nowadays, with Grande Ocean weeks in particular holding their value strongly, there is minimal risk, imho. Like I said, you'll get it back. If you place that same money elsewhere, there is an inherent risk factor.

Family vacations contribute to shaping our children into the kinds of people we wish them to be. The children may have a serious and private discussion with you while on vacation, something that may never happen otherwise, and they will remember it forever, and take action on your advice in remarkable ways. So allow a little wiggle room in your "investments" to include that. Time flies, and you can't regain it. I would never even consider doing anything different than what we did.

A Gold OF week at MGO for $9K range (or similar option anywhere else) is not a wasted sum. You'll only come to understand after a few times there, and even more so after two decades. I view it as a fantastic and necessary adjunct to a separate traditional investment portfolio. There are investments and there are investments.




.
Click to expand...

This is a fantastic post -- well said and I hope to be the lucky beneficiary of that spontaneous, unscripted conversation with my children (or my spouse) -- and countless priceless memories.

Thank you for summarizing these thoughts.

Best,

Greg
 
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