# Big surprise



## ronparise (Dec 21, 2012)

On a whim, I just bought 2 fixed weeks at Wyndhams Riverwalk Suites in San Antonio. I really like the town and the location. The units I bought are really cool...2 bedroom, two story units, penthouse units, each with their own balcony overlooking the Riverwalk and a private hottub

Both of the weeks I bought are for the same week. I have lots of family in Texas and these two weeks (both are week 13) will be perfect for family reunions, but I know we wont do this every year, so that this place is in in the RCI program (id# C406) was important to me.

Imagine my surprise when I learned that in spite of this being a Wyndham property and Wyndham owns RCI, and in spite of this resort already being in the RCI system. I am not permitted to deposit my weeks into the RCI exchange program

I was told that the only way to get these weeks into RCI is to convert them to points (about $3500) and deposit the points

I fault myself for not doing a complete job of due diligence, but come on...a Wyndham property that is not welcome in RCI doesnt make sense to me.

The happy ending here is that Interval International will accept these weeks. Im now a member of II...I think thats going to turn out to be a good thing.


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## bnoble (Dec 21, 2012)

There are a handful of "Wyndham" resorts with primary exchange affiliations with II.  You might want to see if you can get your HOA to pursue dual enrollment.  I have a couple weeks that have dual affiliations, and the extra flexibility is nice.


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## lcml11 (Dec 21, 2012)

ronparise said:


> On a whim, I just bought 2 fixed weeks at Wyndhams Riverwalk Suites in San Antonio. I really like the town and the location. The units I bought are really cool...2 bedroom, two story units, penthouse units, each with their own balcony overlooking the Riverwalk and a private hottub
> 
> Both of the weeks I bought are for the same week. I have lots of family in Texas and these two weeks (both are week 13) will be perfect for family reunions, but I know we wont do this every year, so that this place is in in the RCI program (id# C406) was important to me.
> 
> ...



Can you still convert the two weeks to Wyndham Club Plus points for a fee?  Or, is that starting to become a thing of the past.


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## vacationhopeful (Dec 21, 2012)

You could look at depositing those weeks into SFX --- sounds like that might be an even better match.


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## ronparise (Dec 21, 2012)

Its not that there arent other options...its that I see this resort in the RCI book and on the RCI website. Its a Wyndham resort and Wyndham owns RCI... I assumed that if the resort was on the RCI website that I could deposit my week. Turns out that was a bad assumption 

And i think its strange


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## chriskre (Dec 21, 2012)

That's because this is one of those pre-Wyndham resorts.
There is one near me that is like that too.  Royal Vista.
Funny thing is that it worked out to my advantage cause there were quite a few units in II that I could choose from quite easily but hardly ever see it in RCI.

I've stayed at Riverside suites and really like it.  Great location and a nice quirky urban chic kind of place.  I liked it so much that I bought my Wyn points at Las Cascadas.  I think you will be just fine trading in II.


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## 55plus (Dec 21, 2012)

I was stationed in San Antonio several times during my 20 plus year military career. Many people know of the Riverwalk. The Riverwalk is a great place with great dining and great attractions. You shouldn't have a problem renting them yourself. I'd consider renting from you if need be...


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## ronparise (Dec 22, 2012)

chriskre said:


> That's because this is one of those pre-Wyndham resorts.
> There is one near me that is like that too.  Royal Vista.
> Funny thing is that it worked out to my advantage cause there were quite a few units in II that I could choose from quite easily but hardly ever see it in RCI.
> 
> I've stayed at Riverside suites and really like it.  Great location and a nice quirky urban chic kind of place.  I liked it so much that I bought my Wyn points at Las Cascadas.  I think you will be just fine trading in II.



I knew this was an equivest property (just like Avenue plaza, which is dual affliated) I know I made an assumption and Im kicking myself for the poor dual dilligence. And thats why I posted this...as a warning to others that they should never make assumptions with timeshare purchases...do your due diligence..and get your questions answered before the purchase. No one likes surprises

I bought here because as you say..."Great location and a nice quirky urban chic kind of place". and the units I got, have to be the best in the building. Both are 2 story, 2 bedroom penthouse units. top floor. each has its own balcony with private hottub, overlooking the Riverwalk itself...Im really happy with the purchase, .....now Im officially a member of II


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## jebloomquist (Dec 22, 2012)

*Maybe a Gift Horse*



ronparise said:


> .....now Im officially a member of II



Ron, this may be a gift horse. Don't look to closely into its mouth. Instead, learn how to ride it.

Jim


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## Angry_Bird (Dec 22, 2012)

Can you also use your WM Points on that II account ?


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## ronparise (Dec 22, 2012)

Angry_Bird said:


> Can you also use your WM Points on that II account ?



I know my worldmark credits can trade through II, but Im not sure if I need a dedicated account to do it...what Ill be doing with these weeks does involve my Worldmark account

At least for this year Ill be depositing these weeks to II and then using Worldmarks "exchange plus" program to convert them to Worldmark credits. 

Worldmark lets me do the same thing with RCI deposits. Doing it through II meant i needed an II account and the extra $89 annual membership fee was unexpected...(not a big deal, just unexpected)


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## Sandi Bo (Dec 22, 2012)

Thanks, as always, for posting Ron.  

It never ceases to amaze me how much there is to learn, and all the nuances involved.  This is yet another.  I am glad it appears to be working out for you.


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## tschwa2 (Dec 22, 2012)

Ron, If you want to trade through II with Worldmark you will have to have an account but you can add other resorts on the account.  The good news is worldmark is just about the only group that consistently gets 2 for 1 offers with Interval.  So you would be looking at $89 for 2 years.  If you set up an account make sure you add any units that would be II eligible even if you don't plan on exchanging them at this time, otherwise you will need to pay to add the later or add them when you are extending your membership.


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## Angry_Bird (Dec 22, 2012)

The Same WM Points can be associated with RCI and II

Adding additional floating weeks to the II acccount is easy, just be sure your talking to the WM desk or you might end up with two accounts


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## LLW (Dec 24, 2012)

ronparise said:


> I know my worldmark credits can trade through II, but Im not sure if I need a dedicated account to do it...what Ill be doing with these weeks does involve my Worldmark account
> *
> At least for this year Ill be depositing these weeks to II and then using Worldmarks "exchange plus" program to convert them to Worldmark credits. *
> 
> Worldmark lets me do the same thing with RCI deposits. Doing it through II meant i needed an II account and the extra $89 annual membership fee was unexpected...(not a big deal, just unexpected)



Exchange Plus is _not_ a good deal:
http://www.wmowners.com/forum/viewtopic.php?t=6079

You would only get 8K credits for a 2BR. Plus there is an $129 Exchange Plus fee. That plus your Riverwalk Suites MF would make those WM credits quite expensive. You might want to consider alternatives, e.g. deposit into an independent exchange company that allows rental of exchanges that you might get, or post a direct exchange ad on wmowners.com 
http://www.wmowners.com/forum/viewforum.php?f=70

for WM credits.


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## Tia (Dec 24, 2012)

To join II was there a new membership cost or just the annual fee?


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## ronparise (Dec 24, 2012)

LLW said:


> Exchange Plus is _not_ a good deal:
> http://www.wmowners.com/forum/viewtopic.php?t=6079
> 
> You would only get 8K credits for a 2BR. Plus there is an $129 Exchange Plus fee. That plus your Riverwalk Suites MF would make those WM credits quite expensive. You might want to consider alternatives, e.g. deposit into an independent exchange company that allows rental of exchanges that you might get, or post a direct exchange ad on wmowners.com
> ...



Thanks for your advice, but you are flat wrong, or more to the point you arent looking at the whole picture(at least not the corner or the picture I see. and you dont know the deal I got on the weeks i bought.

lets look at all the numbers

Worldmark credits cost 30-40 cents so 8000 credits would cost me about $2800, add the transfer fee of $299 and you get $3100. My World mark mf this year (after the increase, will be  about $0.06 per credit or for the 8000 credits we are talking about $ $480...

if i amortize my purchase costs over 5 years that means an 8000 credit reservation will cost me right at $1000 for my first 5 years of ownership (3100/5) + $480 = $1000

now lets compare that with what im doing

The week i bought cost me $53, and the seller paid the costs to close, and the wyndham transfer fee and the the 2013 maintenance fee, if, like I did above i amortize my purchase costsover 5 years and add the maintenance fee, my cost for my first year will be $10

if i convert that week to Worldmark credits the exchange fee is  $129, which means the cost for an 8000 credit reservaton my first year is $139

My mf for this week is $850. if i look out 5 years like I did above and if I concert to worldmark credits each year, Ill pay a total of $3400 in maintenance fees and $650 in exchange fees or $4050 for the 5 years ($810 a year) still better than buying and using the Worldmark credits directly.

No doubt, if you are looking for additional Worldmark credits to your account, there are better and cheaper strategies than what im doing here.(ie you can rent one time use credits)  but if you own a week that you intend to exchange anyway; this works, especially if your intent is to rent for profit. Remember you cant rent an II or RCI exchange.

You may be right if you warn against this strategy for the guy that doesnt consider the costs to purchase...or for the guy that has fully amortized his purchase, but thats not me. .... So, you'll forgive me if I ignore your advice


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## ronparise (Dec 24, 2012)

Tia said:


> To join II was there a new membership cost or just the annual fee?



Just the annual fee


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## Culli (Dec 24, 2012)

I think you will like having the choice of II inventory in addition to your other TS options.  For one the Marriotts are in there, or at least for now they are in II.  I miss having the options in II, but not willing to take on any more inventory to just get this option.


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## Beefnot (Dec 24, 2012)

ronparise said:


> Thanks for your advice, but you are flat wrong, or more to the point you arent looking at the whole picture(at least not the corner or the picture I see. and you dont know the deal I got on the weeks i bought.
> 
> lets look at all the numbers
> 
> ...



Why would you pay only $3400 in MFs rather than $4250?


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## ronparise (Dec 24, 2012)

Beefnot said:


> Why would you pay only $3400 in MFs rather than $4250?




because the seller paid year 1


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## EileenL (Dec 24, 2012)

Ron - very good that you are happy with this and thanks for sharing - you enrich us with your learning so we don't have to - thank you


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## karentrimmer (Dec 24, 2012)

I think you can deposit those weeks (since they are fixed) to RCI thru the weeks program.  You may not be able to do it thry the Wyndham website but I wonder if you can make the deposit directly with RCI?  You actually have a weeks account with them.


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## BocaBum99 (Dec 24, 2012)

ronparise said:


> Thanks for your advice, but you are flat wrong, or more to the point you arent looking at the whole picture(at least not the corner or the picture I see. and you dont know the deal I got on the weeks i bought.
> 
> lets look at all the numbers
> 
> ...



Hey Ron,

You do come up with some clever business models.  Certainly out of the box.  If more people looked at timesharing the way you do, they would be a lot happier.   In case people didn't understand what you said, let me say it a different way.

1) You like the Wyndham Riverwalk Suites, so you thought it would be nice to own it for 5 years to use, exchange through II, convert to WorldMark credits or rent.

2) You got a great deal by having the owner essentially pay you to take it by covering the 2013 maintenance fees.  Assuming the resort is worth the cost of the maintenance fees for you to stay at it, this is the real source of your economic gain in the purchase unless you can sell the timeshare for more than $0 in the future.   This is about $800 (The maintenance fees less the purchase price) and assumes you could give it away for $0 as well.

3) At the beginning of your purchase, you start off with an $800 gain.  If it were me and I knew I could move this for $0, I would probably use the week and give it away to lock in the $800 gain.  But, that's me.

4) Every year beyond the first year you use it, you will either add to that gain or subtract from it.   Your options are:  use it, exchange it, convert it to WorldMark credits, rent it.  Let's talk them one at a time.

a) Use it.  Whatever you can rent this unit for on the open market is what it is worth for that year.  Take that value and subtract the maintenance fees of $850.  If you can rent it from someone else for no less than $850, then you add to your gain of $800 by the difference between what it will rent for and the maintenance fees.

b) exchange it.  Every time you exchange this unit through II, you reduce your gain by $250.  That is because you can use 10000 credits in your WorldMark account to get the same exchange.  The cost of renting those credits is roughly $600.  Since your maintenance fees are $850, you lose $250 every time you do that transaction.

c) convert it to WorldMark credits.  If you use exchange plus, you will receive 8000 credits and 1 HK token.  That would nominally cost you about $490 to rent from another owner.  So, that is what it is worth to you.  So, you lose $489 ($850 + $129 - $490) every time you do this transaction.   If you do this 2 times in 5 years, you end up losing money on this deal unless you can make rental profits or capital gain on the sale.   This should be your usage of last resort.

d) rent it.   If you can rent it for more than your maintenance fees, then you will add the difference of the rental rate less rental fees less maintenance fees to your gain.

5) You can also make a capital gain or loss after 5 years.  Add that to or subtract it from your gain.

6) Lastly, you need to take into account your time and effort in doing these rentals.  If it is for sport and/or entertainment, then your can assign a zero cost to your time. However, if it is a business, I have found that return on invested capital is a good measure.  My threshold is I don't do anything unless I have at least a 50% return on invested capital.  For $850 MF, that would require an expected rental of around $1275.   If I thought I could rent the unit for $1275, I would keep it and rent it.  If not, I would cash in the $800 gain on my $53 investment.

Your method of looking at 5 year cost of ownership is flawed economically because it fails to consider all alternatives available to you.  You are in essence not considering other options you have available to you and are therefore not including all of your opportunity costs.


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## stevio99 (Dec 24, 2012)

Could try to make a deal with the weasel salesman too.

When they call to try to conert you to points, just throw a number like $700-1000 at em. Tell em take it or leave it.  It only costs them $399.  THey might bite.  DOnt know if that makes it worth it though.


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## BocaBum99 (Dec 24, 2012)

Ron, 

I forgot to mention that you used a false comparison when considering the purchase of the Riverside Suites relative to the purchase of a WorldMark account.   That is because your lowest cost of acquiring additional WorldMark credits over a 5 year period is by renting them, not by purchasing another account.  That is the major flaw in your analysis.


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## Rent_Share (Dec 24, 2012)

To all of you that are impressed with "Salesman Ron's" verbose postings

Boca's forgotten more than Ron will ever know


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## BocaBum99 (Dec 24, 2012)

Rent_Share said:


> To all of you that are impressed with "Salesman Ron's" verbose postings
> 
> Boca's forgotten more than Ron will ever know



Ron is smart.  He is way up there on the timeshare IQ front.  Definitely top 1%.  He just needs a few more years experience and some help in doing the analysis.  His instincts and ideas are right on.


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## ronparise (Dec 24, 2012)

BocaBum99 said:


> Ron,
> 
> I forgot to mention that you used a false comparison when considering the purchase of the Riverside Suites relative to the purchase of a WorldMark account.   That is because your lowest cost of acquiring additional WorldMark credits over a 5 year period is by renting them, not by purchasing another account.  That is the major flaw in your analysis.



I agree completely that it makes no sense to buy this or any timeshare with the intent to use the Worldmark exchange plus program but now that i do own it, its an option.  Of course once you own a Worldmark account it makes little sense to add to it either, . As you point out why not just rent the onetime use credits as you need them.

My purchase at Riverside suites was not made with any business use in mind. As I said in my original post, I bought this on a whim...I like the town, I saw the mayor interviewed on tv and learned that ther are liberal democrats in Texas. . i like the quirky urban properties and i have family in Texas that Id like to visit...All this came together so when I sall these for sale, I bid..really low bid by they way...and I won

I didnt buy this stuff to deposit into  Worldmark, Exchange Plus....But now that I own it Exchange Plus is an option that will work for me


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## BocaBum99 (Dec 24, 2012)

ronparise said:


> I agree completely that it makes no sense to buy this or any timeshare with the intent to use the Worldmark exchange plus program but now that i do own it, its an option.  Of course once you own a Worldmark account it makes little sense to add to it either, . As you point out why not just rent the onetime use credits as you need them.
> 
> My purchase at Riverside suites was not made with any business use in mind. As I said in my original post, I bought this on a whim...I like the town, I saw the mayor interviewed on tv and learned that ther are liberal democrats in Texas. . i like the quirky urban properties and i have family in Texas that Id like to visit...All this came together so when I sall these for sale, I bid..really low bid by they way...and I won
> 
> I didnt buy this stuff to deposit into  Worldmark, Exchange Plus....But now that I own it Exchange Plus is an option that will work for me



I know you did it on a whim.  It's also helpful to know the economics behind the purchase as well.   It will help you mange your portfolio.

Given the analysis, I would keep it as long as it can rent for anything above the MF because every time you use it, you make money.

If you just like being an owner, then print off the recorded deed and frame it.  It would like nice in the Wyndham wing of your mansion in Naples.


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## Beefnot (Dec 24, 2012)

Rent_Share said:


> To all of you that are impressed with "Salesman Ron's" verbose postings
> 
> Boca's forgotten more than Ron will ever know



Maybe so, but Ron has also demonstrated a depth of knowledge greater than most other owners here on TUG, present company included.


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## Beefnot (Dec 24, 2012)

ronparise said:


> because the seller paid year 1



So then apples to apples, for the Worldmark purchase example, I think you would want to assume the seller paid year 1 also and back out $480.  But the logic still makes sense.


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## lcml11 (Dec 24, 2012)

A toe in Wyndham Club Access would not hurt.


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## pacodemountainside (Dec 24, 2012)

lcml11 said:


> A toe in Wyndham Club Access would not hurt.



If you bother to read prior posts , I think you will find Ron has a foot in  CWA!


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## ronparise (Dec 24, 2012)

Rent_Share said:


> To all of you that are impressed with "Salesman Ron's" verbose postings
> 
> Boca's forgotten more than Ron will ever know




I am a student at the Boca Bum school of timesharing
I would say that Boca has forgotten more than I know now, but Im a fast learner.  Ill be applying for an apprentice position next year


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## ronparise (Dec 24, 2012)

pacodemountainside said:


> If you bother to read prior posts , I think you will find Ron has a foot in  CWA!




Two feet in fact

CWA as well as Wyndham fixed weeks, Converted fixed weeks, Wyndham UDI,  and Worldmark credits...Theres not much in the world of timesharing that I dont have at least a little of

If experience is the best teacher, Im learning a lot ... fast


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## ronparise (Dec 24, 2012)

BocaBum99 said:


> I know you did it on a whim.  It's also helpful to know the economics behind the purchase as well.   It will help you mange your portfolio.
> 
> Given the analysis, I would keep it as long as it can rent for anything above the MF because every time you use it, you make money.
> 
> If you just like being an owner, then print off the recorded deed and frame it.  It would like nice in the Wyndham wing of your mansion in Naples.



There really wasn't  any economic analysis before the purchase...I just liked the pretty pictures

The point of my original post was that I didnt do my usual due diligence and I should have...I was posting my mistake in the hope that others might learn form it


Now that I own it I am trying to force some sort of rationalization and figure out a way to make a buck or two or at least break even....i think ill do ok


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## LLW (Dec 26, 2012)

I was just trying to be nice (as you had been nice in offering San Antonio suggestions for me) and suggesting options other than Exchange Plus. I was just talking about this 2013 week, and also against Exchange Plus in general. Exchange Plus is for other people. 

My training is in financial analysis, but I wasn't analyzing your purchase at all. 

As Boca said later, Exchange Plus should be the last resort. 8K credits less $129 fee nets $311. You could easily net much more ($800-$1000?) by renting an exchange (there is a sticky by Denise on which companies allow rental of exchanges) or the reservation itself. 

Merry Christmas and Peace to All. 






LLW said:


> Exchange Plus is _not_ a good deal:
> http://www.wmowners.com/forum/viewtopic.php?t=6079
> 
> You would only get 8K credits for a 2BR. Plus there is an $129 Exchange Plus fee. That plus your Riverwalk Suites MF would make those WM credits quite expensive. You might want to consider alternatives, e.g. deposit into an independent exchange company that allows rental of exchanges that you might get, or post a direct exchange ad on wmowners.com
> ...





ronparise said:


> Thanks for your advice, but you are flat wrong, or more to the point you arent looking at the whole picture(at least not the corner or the picture I see. and you dont know the deal I got on the weeks i bought.
> 
> lets look at all the numbers
> 
> ...





BocaBum99 said:


> Hey Ron,
> 
> You do come up with some clever business models.  Certainly out of the box.  If more people looked at timesharing the way you do, they would be a lot happier.   In case people didn't understand what you said, let me say it a different way.
> 
> ...





ronparise said:


> There really wasn't  any economic analysis before the purchase...I just liked the pretty pictures
> 
> The point of my original post was that I didnt do my usual due diligence and I should have...I was posting my mistake in the hope that others might learn form it
> 
> ...


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## stoler527 (Dec 27, 2012)

Hi
This problem is really confusing me. I am a long time member of II and have a decent grip on how it works. RCI seems vastly complicated to me. I just bought a one bedroom at wyndham Kauai beach villas, which used to be pahio. I didn't worry too much about trading it because I intended to stay in the unit. EOY Even. Now I am looking for a second week because of the high airfares. I found one that I like, but it is annual. If I buy it can I join RCI, deposit the odd week and trade it? Kauai beach villas are not II affiliated.
I also own marriott desert Springs I. Someone said that it can go either II or RCI. Should I drop II and stick with RCI? The Desert Springs unit is a lockoff and always was a strong trader in II. Will it also trade OK in RCI?
This thread seems to be about Wyndham weeks that won't deposit into RCI. I don't understand how that is possible. Maybe my KBV new week won't go into either RCI or II. I can't afford to be paying thousands to convert it to points. II seems straightforward and simple now that I am trying to understand RCI. Help!!!


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## tschwa2 (Dec 27, 2012)

LLW said:


> As Boca said later, Exchange Plus should be the last resort. 8K credits less $129 fee nets $311. You could easily net much more ($800-$1000?) by renting an exchange (there is a sticky by Denise on which companies allow rental of exchanges) or the reservation itself.



There aren't any exchange companies that allow exchanges.  Redweek exchanges no longer exist and the other two say yes its technically prohibited but we don't seek you out and penalize if you do but if there is a problem with the renter you are responsible.  

So what the OP wants to do is convert his weeks to Worldmark Points so he can reserve something he can rent out.


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## LLW (Dec 28, 2012)

tschwa2 said:


> There aren't any exchange companies that allow exchanges.  Redweek exchanges no longer exist and the other two say yes its technically prohibited but we don't seek you out and penalize if you do but if there is a problem with the renter you are responsible.
> 
> So what the OP wants to do is *convert his weeks to Worldmark Points so he can reserve something he can rent out.*



For those who didn't know, the exchange company info we were talking about is here:
http://www.tugbbs.com/forums/showpost.php?p=521615&postcount=1

WM also holds booking owners responsible for damages and liabilities caused by renters. The OP would be in a similar situation renting out a WM reservation or an exchange from the 2 companies. He is actually better off with most exchanges from them, because most resorts take a credit card imprint from the renter, whereas WM does not (at least with owners' guests), relying entirely on reimbursement from the booking owner.

As the OP is in the rental business, he might have already solved that problem (or it might not be a problem for him).

Exchange Plus credits are very expensive: the Riverwalk MF of $850 added to the Exchange Plus fee of $129, divided by 8K credits, would yield 12.2 cents per credit, whereas he can rent the same credits on Wmowners.com for 5.5 cents each. 

As I suggested, Exchange Plus is for other people - those who are not trying to get a good value from their week.

(This is just an analysis of how to get the best value from here on, not an analysis of the past purchase. And it is just an opinion which I am stating for  WM owners' purpose - I don't mind if this advice is not taken in this specific case. )


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## ronparise (Dec 28, 2012)

LLW said:


> I was just trying to be nice (as you had been nice in offering San Antonio suggestions for me) and suggesting options other than Exchange Plus. I was just talking about this 2013 week, and also against Exchange Plus in general. Exchange Plus is for other people.
> 
> My training is in financial analysis, but I wasn't analyzing your purchase at all.
> 
> ...



I dont understand the 8k credits less $129 fee =$311..you are assuming that the 8000 credits are worth just $0.055 each. I dont intend on selling my 8k credits for just $440

I know I could rent credits for that amount, but I dont have the luxury  of going back in time to decide to  rent credits or or buy these weeks.... ...That ship has sailed, I already own the weeks and I have just 3 months to do something with it. 

My choices it seems to me are to use the week myself, rent it to others or exchange it for another week to use myself or rent

One possible exchange is Worldmarks exchange plus.....lets see how that might work for me.....my weeks (I have two of them)  with $258 will give me 16000 Worldmark credits. 16000 credits will get me four Jazz Festival weekends in New Orleans (Worldmark by Wyndham  calls the second week of Jazz fest a "white week" (go figure) so I can make 3 night reservations.. Last year I rented Jazz fest weekends at $250 a night, I think I can do the same in 2014 (2013 is already booked)...so taking out the calculator..four 3 night weekends = 12 nights x $250 = $3000 - $258 = $2724 first year return.

In future years if I do the same thing my costs will be $850 maintenance fees x 2 = $1700 = 258 exchange fees. So Ill net only about $700. I own weeks where I do better and weeks where I do worse, and when I use a week myself I lose money.  

I learned a long time ago,  working at one of  JW Marriott's Hot Shoppes restaurants, that a person could make a lot of money, a little bit at a time. On average, weeks I own make me about $500 each. Not a lot you might say. I have no training in finance, and Im certainly  no financial analyst, but I do know how to add.  To paraphrase Everett Dirksen..(and remembering my days at Hot Shoppes) $500 here and $500 there, pretty soon you are talking about some real money. 

In any case, $500 makes me happy. Buying this was not the best decision Ive ever made, (the point of my original post) but there are ways to make it work. Exchange plus might not be the best solution, but its one way to deal with my purchase, and for better or worse, the one I chose.


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## ronparise (Dec 28, 2012)

BocaBum99 said:


> Hey Ron,
> 
> 
> 
> 6) Lastly, you need to take into account your time and effort in doing these rentals.  If it is for sport and/or entertainment, then your can assign a zero cost to your time. However, if it is a business, I have found that return on invested capital is a good measure.  My threshold is I don't do anything unless I have at least a 50% return on invested capital.  For $850 MF, that would require an expected rental of around $1275.   If I thought I could rent the unit for $1275, I would keep it and rent it.  If not, I would cash in the $800 gain on my $53 investment.



I wouldnt consider the maintenance fees to be invested capital. The initial purchase price is invested capital, the maintenance fees are annual expenses...  

Gross annual income less annual expenses = net annual income
net annual income / invested capital = return on investment

this is tough to apply to timeshares because the purchase price is so low (less than zero in some cases)

The number you are using as a benchmark is cash flow or profit margin, which is what I look at as well. In a post above I outlined how I will probably use these weeks to generate a profit... $700 annual profit / $1700 annual expense = 41%...Not great but pretty close to your benchmark

As you know, Im moving from a hobby shop to a full time business, with the goal of working a few hours a day for a $100000 annual income. If I could do that with a few big deals a year, that would be great, but I think this is going to be a high volume operation, where I make a consistent little bit from each transaction. Just like my days at Hot Shoppes where as a 16 year old, I was making more money than most grown men in my neighborhood, one 25 cent tip at a time.


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## BocaBum99 (Dec 28, 2012)

ronparise said:


> I wouldnt consider the maintenance fees to be invested capital. The initial purchase price is invested capital, the maintenance fees are annual expenses...
> 
> Gross annual income less annual expenses = net annual income
> net annual income / invested capital = return on investment
> ...



Here is the single most important recommendation I can give you on this subject.  Invest some time with an accountant and bookkeeper.  You will need to decide how to structure your company and how it will report taxes.  

Here are some important decisions you will need to make.

1) LLC, C-corp with subchapter S, Sole Proprietorship.

2) Then, you will need to choose your accounting method.  Cash accounting or accrual accounting.  The easiest is cash accounting.  But, look closely and you will have a ton of tax savings using accrual accounting for your timeshare purchases.  See an accountant for details.

If you don't organize your business properly, you will be spending more than 2 hours per day on bookkeeping and inquiries from the IRS.


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## ronparise (Dec 28, 2012)

BocaBum99 said:


> Here is the single most important recommendation I can give you on this subject.  Invest some time with an accountant and bookkeeper.  You will need to decide how to structure your company and how it will report taxes.
> 
> Here are some important decisions you will need to make.
> 
> ...



already on it


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## BocaBum99 (Dec 28, 2012)

ronparise said:


> I wouldnt consider the maintenance fees to be invested capital. The initial purchase price is invested capital, the maintenance fees are annual expenses...
> 
> Gross annual income less annual expenses = net annual income
> net annual income / invested capital = return on investment
> ...



There are several problems with your analysis.

First, a timeshare ownership is capital.  Also, timeshare usage that comes out of timeshare ownership (i.e. a reservation) is capital.  Why is it capital?  Because you need to pay money upfront to purchase it.  Then, you get money later from a renter.   The time period in which you have money out of your pocket into maintenance fees and before you get your cash from a renter, that is capital.  In addition, when you meet with your accountant to do taxes, he/she will ask you what your change in inventory is year over year so that you can properly account for in year cost of inventory.  Inventory is on your balance sheet meaning it is capital.

Now that we have established the rental inventory is capital, the key question is how to evaluate performance?  Profit margin is NOT the most important measure.  In the case of your San Antonio unit, other than the first year, you have to pay the maintenance fees and there is time between when you paid your maintenance fees and the date you collect your rent.  If that period is one year, then your return on invested capital for that unit is rent/maintenance fees.   50% return on invested capital is $1275/850 = 50%.  

Since you can only get one week of usage per year, your maximum number of inventory turns of that ownership is 1 meaning one rental per year.  If you can rent it in 6 months and redeploy that $850 into another unit just like that one, then you have 2 inventory turns on your $850 capital investment.  2 rentals at $1062.50 for $850 in maintenance fees would also be 50% return on invested capital. 

So, what is important is not profit margin alone.  Inventory turns is just as important.  That is why renting hot event weeks is not necessarily the best investment of capital.  You tie up money for a long period of time before you get a return.  I prefer lower margin, higher turn rentals.  My dad always told me a fast nickle is better than a slow dime.  

As you scale up, you are going to run into lots of problems.

1) bookkeeping and tax reporting
2) you will run out of money before you run out of rental opportunities.  So, inventory turns will become extremely important.
3) you may run out of time before you run out of money.  So, scalability becomes extremely important.


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## Beefnot (Dec 28, 2012)

I would concur with Ron as to the definition of return on invested capital.  MFs are operating expenses, not capital.  What you are measuring is return on investment.  Important metric, yes, but different measurement.


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## pacodemountainside (Dec 28, 2012)

BocaBum99 said:


> There are several problems with your analysis.
> 
> First, a timeshare ownership is capital.  Also, timeshare usage that comes out of timeshare ownership (i.e. a reservation) is capital.  Why is it capital?  Because you need to pay money upfront to purchase it.  Then, you get money later from a renter.   The time period in which you have money out of your pocket into maintenance fees and before you get your cash from a renter, that is capital.  In addition, when you meet with your accountant to do taxes, he/she will ask you what your change in inventory is year over year so that you can properly account for in year cost of inventory.  Inventory is on your balance sheet meaning it is capital.
> 
> ...







You have my accounting professors turning over in their graves.

Businesses have two basic sets of documents. 

The Balance Sheet which is composed of asset, liabilities and ownership/capital.

The Income or P & L which has cost of goods sold, operating expenses, other income and expenses and taxes.

When a business is created the people putting up cash, etc. get stock or other evidence of their ownership. An asset, cash, is debited on BS. This cash is then deployed to obtain  fixed assets, investments, etc.  which in turn will generate  merchandise to sell at a profit if they are to stay in business. An ASSET cash is exchanged for goods which are recorded as an ASSET, inventory! There is no effect on capital what-so-ever. It appears you are confusing  inventory cash lock up with  capital.  When WalMart buys inventory for resale it shows on BS   as inventory   and the building to sell is a fixed asset.. Most businesses when they  purchase inventory  have to front cash or  negotiate credit terms, but still "pay" upfront!


Fixed assets such as condos can be depreciated  over 27 and 1/2 years or amortized   under GAAP   recognizing if you do not recover your capital expenditures you cannot stay in business! Capital investment/ownership  cannot be depreciated.


When this merchandise is sold it shows up in the P & L under Cost of Goods sold. Depending on whether one is following clean or dirty surplus theory odd ball transactions  including capital show up in the ownership section of BS.

Yes, inventory turn is critical to any business and  when  one is doing more than competitors should be making great profit.

Likewise return on capital is critical. If one has $1 million capital and netting  2% on it he would be better off buying government bonds.


There are tons of ratios/measures of a company's performance. However,   if they are not  running a positive  cash flow  and paying investors  a return and the operators a reasonable salary they are doomed.

Take  a  look at IRS  Schedule E  and related instructions. There is no mention of capital in completing.

Clearly this is simplified but would be interesting in what accounting text book you are referring to. It sure is not in my Finney and Miller! 


 One of my professors favorite sayings was,    we are losing money on every sale , but making it up on volume?????


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## Beefnot (Dec 28, 2012)

Fixed assets are, or at least can be, considered capital.  The (in)ability to depreciate is not the barometer for defining something as capital.  I would include investment in the acquisition of a timeshare also to be a capital investment, though perhaps reasonable people can debate this.


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## BocaBum99 (Dec 28, 2012)

pacodemountainside said:


> You have my accounting professors turning over in their graves.
> 
> Businesses have two basic sets of documents.
> 
> ...



Has your professor ever made a million dollars?  I thought so.   Those who can do.  Those who can't, teach.

I learned Return on Capital investment when I first started using EVA to measure the performance of business.  I had to deal with NOPAT.  Taxes.  Amortization, depreciation, cash, etc.   All that is important to a big business.  It's all irrelevant to a small business.  At the end of the day, return on invested capital is a ratio between profits earned and capital deployed.   The rest of the exercise is determining which items are in which category and how much of it needs to be eliminated and added back into the formula.  But, the concept of return on invested capital expressed in a simply way is extremely useful in making management decisions.   In essence, what you are trying to do is determine for comparison purposes how much return you are generating for how much capital your are putting into the business.  In the case of timeshare rentals / resales, the biggest drivers of this are the maintenance fees and/or the purchase price of timeshares.   It may not fit the text book definitions, but the math works out brilliantly in coming to the proper business decisions.


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## BocaBum99 (Dec 28, 2012)

Chicken Holding Company, LLC. dba Chicken.  A timeshare holding company.  Our motto?  We are Not beef

I invest $100,000 into the LLC.  I get 100 units at $1000 per unit.

I open a business checking account in Chicklet merchant bank who has a special, open a business checking account with
$100,000 and get a free LLC set up and registered with your state along with a registered agent.  This happens on Jan 1, 2013.  Business checking account has no fees, but earns no interest.

Now, I have an LLC, with a business checking account with $100k.  There is a single member with 100 units.  Book value of the company is $100k.   Balance sheet has $100k in cash.  No liabilities.  No inventory or other assets.

There is $100,000 in capital in this company.  Anyone disagree?

The first thing Chicken Holding Company, LLC does is cut a deal with Ronco, LLC.  Ronco, LLC agrees to rent all of Chicken's units for $100/unit which includes everything including advertising, postage, telephone, commission, etc.

Chicken has an interesting Capital model.  It can get capital from its investors a moments notice.  If it needs $1000, it makes a capital call for $1000 and issues a new unit.   It also buys back units when ever it wants as well.  So, if it has excess cash, it simply uses it to buy back units at $1000 each.  Therefore, it never has cash balances.  It does not acquire debt.  It just invests in great opportunities as it sees them.

Chicken sees a great opportunity, it invests all $100,000 in 200 units at Final Four Timeshare Resort for $500 per unit.  Chicken Holdings instructs Ronco to sell all inventory at $850 to net it $750 after fees.  At the end of the year, it sells all units and leaves the cash in the bank for a month.  In Nov, it makes the same deal.  It buys 200 units at $500 and it distributes a dividend of $50,000 to unit holders.  Balance sheet on Dec 31, 2013 is Cash: $0.  200 units of inventory at Final Four Timeshare Resort acquired at $500.  Same 100 units outstanding.  Book value, $100k.

Please compute Return on Invested Capital for the 2013 Tax year.

Interestingly, in 2014, Ronco learns how to move the units faster.  He rents all of them in 6 months at which time Chicken distributes another $50k and purchases another 200 units at $500. Ronco rents all of them before year end and Chicken distributes another $50k with no additional capital calls.  Before year end, Chicken buys another 200 units at $500.  On Dec 31, 2014.  Chicken has $0 in checking account.  200 units of inventory at $500.  Book value of $100k.

Please compute Return on Invested Capital for the 2014 tax year for Chicken Holding Company, LLC.

What does the good professor say now?


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## pacodemountainside (Dec 28, 2012)

Beefnot said:


> Fixed assets are, or at least can be, considered capital.  The (in)ability to depreciate is not the barometer for defining something as capital.  I would include investment in the acquisition of a timeshare also to be a capital investment, though perhaps reasonable people can debate this.





YES!

Definition of 'Capital'

Money used to finance the purchase of the means of production, such as machines, or the machines themselves. 

The American Heritage® New Dictionary of Cultural Literacy, Third Edition
Copyright © 2005 by Houghton Mifflin Company.
Published by Houghton Mifflin Company. All rights reserved.
Cite This Source

Definition of 'Asset'


1. A resource with economic value that an individual, corporation or country owns or controls with the expectation that it will provide future benefit. 

2. A balance sheet item representing what a firm owns. 


Investopedia explains 'Asset'

1. Assets are bought to increase the value of a firm or benefit the firm's operations. You can think of an asset as something that can generate cash flow, regardless of whether it's a company's manufacturing equipment or an individual's rental apartment.

2. In the context of accounting, assets are either current or fixed (non-current). Current means that the asset will be consumed within one year. Generally, this includes things like cash, accounts receivable and inventory. Fixed assets are those that are expected to keep providing benefit for more than one year, such as equipment, buildings and real estate 


Read more: http://www.investopedia.com/terms/a/asset.asp#ixzz2GOAkdKmJ

A depreciable ass-et can be the "ladies"  who staff the bordello in Nevada or the Broncos football players contracts.


However, it cannot be the capital stock Pat Bowlin has denoting his ownership of the Broncos football franchise  players!.  This is a personal asset of his.


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## pacodemountainside (Dec 28, 2012)

BocaBum99 said:


> Chicken Holding Company, LLC. dba Chicken.  A timeshare holding company.  Our motto?  We are Not beefNo horse meat here!:deadhorse:
> 
> I invest $100,000 into the LLC.  I get 100 units at $1000 per unit.****Right on!
> 
> ...



Olde Bladder Buster Beer   look and tastes   more   gooder!  My treat!


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## LLW (Dec 28, 2012)

ronparise said:


> I dont understand the 8k credits less $129 fee =$311..you are assuming that the 8000 credits are worth just $0.055 each. I dont intend on selling my 8k credits for just $440
> 
> I know I could rent credits for that amount, but I dont have the luxury  of going back in time to decide to  rent credits or or buy these weeks.... ...That ship has sailed, I already own the weeks and I have just 3 months to do something with it.
> 
> ...



You are co-mingling 2 transactions into one, when they should stay as 2. Exchange Plus is the path of least work - that's why it offers the least, compared to use, straight rental, and rental of exchange. But since your decision has been made, I will stop talking on this.


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## ronparise (Dec 29, 2012)

LLW said:


> You are co-mingling 2 transactions into one, when they should stay as 2. Exchange Plus is the path of least work - that's why it offers the least, compared to use, straight rental, and rental of exchange. But since your decision has been made, I will stop talking on this.



Im done trying to defend myself too. I made a mistake buying this stuff ( no defence for that) and then took steps to make it work for me..The end result (a small profit) will be reached after 5 steps, as I see it, (the purchase, the deposit to II, the Exchange Plus exchange, the reservations, and the rental) But the five steps are in a straight line and one deal as I see it. In another couple of months Ill have an asset worth something (reservations for Jazz Fest 2013) in place of an asset worth very little to me at this time;  2 weeks in San Antonio. And as soon as I collect my rental dollars, Ill have the money to pay my 2014 maintenance fees and be ready to do something again with this ownership. (note to BocaBum...no invested capital)

LLW, I agree that if you look at Exchange Plus as a stand alone program trading weeks for credits, and compare it to buying one time use credits; it comes up short. But if you look at it as a tool to deal with other weeks you might own and compare it to the other options available to deal with those weeks. I think it (exchange plus) has merit

Every day I see posts here on TUG where folks find themselves in a use it or lose it situation, and are willing to rent their weeks for significantly less than mf. This is the situation I am trying to avoid for myself, and exchange plus is another arrow in my quiver to consider using.


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## ronparise (Dec 29, 2012)

Note to Boca and Paco

As interesting as your discussion of accounting definitions and business practices is; it's just an academic one. In the real world, or at least the world I live in, goals have to be made and adjusted, problems have to be solved and decisions have to be made on a daily basis, with the information at hand. I usually dont have time to appoint a committee or consult with the experts (you guys). And if a week down the road new information becomes available, and a better path becomes obvious; then I adjust

I have a plan and I have a direction, and I have goals for what Im doing with timeshares, and if at the end of any given day I am just a little closer to those goals, and if I have a little more money in the bank than when I started, its been a good day. You see, for me,  its all about cash flow...Im all about that fast nickle too.  As important as the other stuff is; its secondary


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## Beefnot (Dec 29, 2012)

At any point, if it becomes more of a headache than it is worth to you, you can always give it away or list it on ebay or both.


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## donnaval (Dec 30, 2012)

Edited out because I totally screwed up what I was trying to say!


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## ronparise (Dec 31, 2012)

donnaval said:


> Edited out because I totally screwed up what I was trying to say!



welcome to the club


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