# Developing a strategy for new timeshare rules



## getreal (May 30, 2006)

I think most TUG-gers leverage their money by 
- buy cheap on resale
- learn how to work exchanges to the maximum.   In this regard, we are like the people who stand in line from 2 am on the day after thanksgiving to get the only $20 TV in the store

But ... slowly and quietly the timeshare world is changing.   The good exchanges are harder and harder to get because owners do not bank them and/or RCI rents them.

I think Cendant will sell RCI and focus on its holdings in WM etc.   Instead of being the exchange conduit, they are moving to a more profitable market, where they control the exchange and supply of weeks also.   

The question now is to create a new strategy to leverage our vacation dollars.


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## Bill4728 (May 30, 2006)

getreal said:
			
		

> I think most TUG-gers leverage their money by
> - buy cheap on resale
> - learn how to work exchanges to the maximum.   In this regard, we are like the people who stand in line from 2 am on the day after thanksgiving to get the only $20 TV in the store
> 
> But ... slowly and quietly the timeshare world is changing.   The good exchanges are harder and harder to get because owners do not bank them and/or RCI rents them.


I agree with all of this


> I think Cendant will sell RCI and focus on its holdings in WM etc.   Instead of being the exchange conduit, they are moving to a more profitable market, where they control the exchange and supply of weeks also.



I do not understand what you're trying to say. Once they sell the  WM points they don't have control any more. Although they control the WM board.


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## BocaBum99 (May 30, 2006)

getreal said:
			
		

> I think most TUG-gers leverage their money by
> - buy cheap on resale
> - learn how to work exchanges to the maximum.   In this regard, we are like the people who stand in line from 2 am on the day after thanksgiving to get the only $20 TV in the store
> 
> ...



This is exactly what makes timesharing fun.  To me, the name of the game is trying to figure out which way it is going next and staying one step ahead of the moves by the big guys.  Then, you can reap a lot of benefit.


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## geekette (May 30, 2006)

I don't think they will sell RCI any time soon.  It's a cash cow.


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## getreal (May 30, 2006)

*What do we do next?*



			
				BocaBum99 said:
			
		

> This is exactly what makes timesharing fun.  To me, the name of the game is trying to figure out which way it is going next and staying one step ahead of the moves by the big guys.  Then, you can reap a lot of benefit.



Agreed ... two options that come to mind are

(1) forget about timeshare and start renting

(2) join a mini-system.  In some ways the mini's have been eating RCI's lunch, which is why Cendant is moving in that direction

What other options are there?  Anyone?


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## getreal (May 30, 2006)

geekette said:
			
		

> I don't think they will sell RCI any time soon.  It's a cash cow.



Yes, but it is declining and they will sell it while it still does well.

There are fatter cows elsewhere.   Why bother to make $149 on the exchange weeks only, if you can manage a mini-system and make huge profits on every week?


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## Dave M (May 30, 2006)

*Re: What do we do next?*



			
				getreal said:
			
		

> What other options are there?


There are numerous such options, depending on how one views the future and how one takes vacations. 

Examples:
Exchange through independent exchange companies.
Do direct exchanges with other owners, such as through the Marriott oriented ownertrades.com
Forget about exchanging and use the same timeshare every year, just as some people do with a vacation home.
Participate in one of the families of resorts, such as Marriott, which have special internal exchange policies for owners.
Own multiple timeshares, again skipping exchange companies, renting out those timeshares which you don't plan to occupy in a particular year.
Continue to use a major exchange company. Although exchanging will continue to change, as long as there are timeshare owners, there will be a need for major exchange companies. Like any big company, the major exchange companies might miss a beat from time to time, but they will adjust to keep the business of their members or other major exchange companies will take their place.


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## getreal (May 30, 2006)

*Re: What do we do next?*

Dave

All of these are great ideas. Thanks!   

My theory is that success in timesharing is determined by who gets their hands on the really prime weeks (aka the $20 TV).   There is a glut of non-prime weeks in many areas, and I expect a bigger and bigger share of those to end up on the rental market.   

As long as folks believe they can get the really good weeks from RCI, they will use RCI.   At the moment SFX is doing well, because they seem to get enough of the prime weeks.    I believe that over time the RCI bulk deposits will contain less and less of the really good weeks, because TUGgers will switch to use internal trading and grab them before they go to RCI.    

The management company gets their hands on inventory before anyone else, which is why the mini's are doing well.   And look out for new restrictions like "people who bought from the developer can reserve weeks before others".


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## Gadabout (May 30, 2006)

The other thing you have to consider is what the other players in the vacation business (hotels, vacation homes, etc.) are also doing in relation to cheap TS rentals. TS isn't the only game out there as far as vacation lodging goes.

I sort of see people bouncing back and forth between hotels and TS as the pricing goes back and forth and their needs change (e.g. children grow up). Hotels can be much more flexible with what they choose to offer as amenities, for one thing, and in many cases they win with location for some travellers. 

I see the lower-demand TS weeks in future as more of an option for people who are trying to do some event-planning on the cheap--say some people want to get together for a Ren Faire or something along those lines--not a huge event, necessarily, but then again, if you can accomodate 8 people in each TS unit....


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## Howard33 (May 30, 2006)

I've been wanting to comment on something and hope this is the relevant place.  We just returned from the Sheraton Buganvillas in Puerto Vallarta, Mexico and were surprised that effective May 06 they have a 1 in 4 rule against exchanging back to the resort (as they apparently want you to buy as HSI is marketing there is our guess)  
      Well, we go ito Mexico in shoulder season, Oct and May, so what if every resort took this same view, then no one would have any place to trade into.  Trading is part of why we enjoy our timeshares.  Also, the Sheraton has many empty rooms when we are there, so now we won't be there, spending dollars on meals and entertainment.  Seems like lose-lose unless it's a popular resort as for example in Hawaii.


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## tedshare (May 31, 2006)

Howard33 said:
			
		

> ....so what if every resort took this same view, then no one would have any place to trade into....



I think it actually could work quite well for the resorts *if we go along with their program*. 

Although you'll be shut out of places you'd like to return to, there'll be more units available to you in resorts you've not been to lately (and in many cases have no desire to visit) because the folks who exchanged into those resorts in the last 3 years will be shut out.  So there will be plenty of places for us to go and the resorts will be happy and occupied as long as we're willing to take the stuff :annoyed: that they offer us.

IMHO, the goal of the 1 in 4 rule is to provide a steady stream of fresh meat for the sales teams.  I'm not sure why the resorts would care if all the units are occupied, as long as the owners keep paying their maintenance fees.

Ted


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## PerryM (May 31, 2006)

*Really simple*

Timeshare ownership is simple:

Exploit the heck out of the strengths and weaknesses of various developers and exchange companies.  A balanced timeshare portfolio will maximize your vacations for the money you have invested.


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## getreal (May 31, 2006)

*Re: Really simple*



			
				PerryM said:
			
		

> Timeshare ownership is simple:
> 
> Exploit the heck out of the strengths and weaknesses of various developers and exchange companies.  A balanced timeshare portfolio will maximize your vacations for the money you have invested.



For example .... if you have a really good week, it is better to trade it via SFX than RCI, because SFX that will give you 3 weeks in exchange and RCI will give you only 1.


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## geekette (May 31, 2006)

getreal said:
			
		

> Yes, but it is declining and they will sell it while it still does well.
> 
> There are fatter cows elsewhere.   Why bother to make $149 on the exchange weeks only, if you can manage a mini-system and make huge profits on every week?



I don't think so, not from the recent numbers.  Each new or raised junk fee is one more tug on the teet.  

It's going well for them with Points and rentals, without having to manage the properties.  If it's not your inventory, it's less headaches (they don't have to try to get Collections to pummel $600 in late mfs from anyone, they don't have to bring a contractor in when the wind blows the roof off, they don't have to carry liability for little jimmy drowning in their pool).  

Besides, no way I'd buy into RCI's mini-system.  I've seen their nickel and diming and would not care to own it.


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## BocaBum99 (May 31, 2006)

*Re: Really simple*



			
				getreal said:
			
		

> For example .... if you have a really good week, it is better to trade it via SFX than RCI, because SFX that will give you 3 weeks in exchange and RCI will give you only 1.



Actually, that's not a good example.  SFX is a good exchange company, but it is much easier to extract more value in other places.  So, I don't use SFX much.  SFX is good for people who have been trading down for years.  Using SFX allows them to get a little more for their deposits.

Using Perry's timeshare portfolio approach and leveraging loopholes and inefficiencies in the timeshare market, the true timeshare guru should have free vacations as their objective.  It's surprisingly easy.  And, there are an unlimited number of ways to achieve it.

It can be as simple as buying a timeshare really cheap, using the week and then selling it for an amount that covers your entire vacation costs.  With such a weak timeshare resale market, it is actually quite simple to do this.


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## PerryM (May 31, 2006)

*Exploit, exploit, exploit...*

Right now I could make an excellent case that timeshares have passed their prime and owning them is NOT the most efficient way to take premium vacations.  Timeshares are lumbering down the road to join the dinosaurs.

The Internet has allowed average Joe Timeshare to bypass the exchange companies and even the timeshare developer and stay at private condos and homes that offer peace and solitude for the family.

Spend some time on www.VRBO.com and drool over the homes and condos that you can rent direct from the owners.  No putting up tens/hundreds of thousands of dollars – no waiting for exactly 8 AM CST for reservations to open and god help you if you miss it by 5 seconds.  No yearly MFs and exchange fees and the hassle of learning dozens/hundreds of rules needed to get a nice condo.

No more dealing with sleazy salesreps that lie thru their teeth and have the stench of ignorance about them.  No more dealing with HOA’s run by dolts who are their own little thiefdoms.  No more dealing with exchange companies who care about their stock holders over you the consumer.

Renting timeshares, condos, and homes should now become the main focus of a new direction in vacation usage.

Timeshares are just a 45 year old experiment that has tremendous flaws and requires 50% of all monies involved to be spent on smoke and mirrors to make them work.  There are no guarantees that timeshares will be here in just a few short decades from now.  There’s just too much fat in the system to keep this up for a long period of time.

However, I don’t plan to sell our timeshares anytime soon – there are so many ignorant owners who make all this work to get out just now.  There are many weakness and strengths that still make timeshare ownership viable – at least as of today.

I can say that all the decisions needed to exploit the timeshare industry need to be broken down into cold hard cash.  If you are not using cash as the arbiter to make vacation decisions you are not exploiting the system enough.

And make no bones about it, exploiting the timeshare world means taking advantage of other owner’s poor decisions for your families benefit.  This maybe unsettling to some but that’s exactly what happens when you call in a 8 AM CST to the second, to reservations, because you bought one of those atomic clocks and another owner’s watch is off by 5 seconds.


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## getreal (Jun 1, 2006)

Great post Perry!   It is the first time I see the word "thiefdom".

I also see renting as a growing phenomenon.  I think the off-peak weeks will lose even more value as time goes on.   As you mention (in several posts) why buy a week and pay say $900 MF when you could rent for $600?

But what will the resorts do when owners wise up and dump their worthless off-peak weeks?    
- Go out of business?
- Buy back the weeks to push the resale value up?
- anything else?

So far we have seen hotels getting converted into TS.   Do you think we will start seeing the opposite?


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## boyblue (Jun 1, 2006)

*Re: Exploit, exploit, exploit...*

I'm going to be in for a rude awakening.  I just don't see it.  To me it seems like TS is on the upswing.  Increasing demand for rentals can only benefit owners (even blue week owners)

I have no complaints .  We do 6 weeks a year and book another 4 weeks for my sister and her family, and through RCI points I get all the trades I want at below Motel 6 pricing.

The associated maintenance fees for the 10 plus weeks (our current ownership gives us more points annually than we actually use) are less that we spent on our mothers this Past mothers Day.

TS is the best game in town for the knowledgeable owner.  For those that are currently getting the short end of the stick the solution is simple - Get knowledgeable.


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## spatenfloot (Jun 1, 2006)

I would not say that TS will disappear soon. After all, who would you rent them from if no one owns them? How could you exchange if no one deposits weeks?  To the experienced people, it seems that rentals etc are all over the internet for use but the people who know about these things are still only a small minority of overall TS users.


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## PerryM (Jun 1, 2006)

*The After Market of Timeshares*

BoyBlue,

I firmly believe that we are in a timeshare bubble – they are being built at breakneck speeds all over the place.  The funny thing about bubbles is that you don’t know about them until they burst – it’s a complete surprise – no one seems to be talking about the timeshare bubble.

If I wasn’t the lone voice crying “Timeshare Bubble” I would not believe it but since no one else, anywhere to my knowledge, is crying “Timeshare Bubble” I fear we are now in one – how close to the top I can only guess.

Timeshares have so many bad things about them that it wouldn’t take but a few negative articles about them in the financial papers to put the breaks on them.  (And we know how much the press loves to bring out the negative in things)  They really are sold when folks are on vacation – the average Joe doesn’t one day say “Martha, we need to buy a timeshare”.  That’s why the slick salesreps, the distortions, the intense sales pressure in 90 minutes, the vague vacillating rules, the secret formulas, the 50% fat needed to unload these things to an ignorant consumer.

In the mean time, all those new sales records provide us with the uninformed owner who makes many mistakes that we can take advantage of.  From initially buying them from the developer at bloated prices, to poor choices in usage, to poor choices in exchanges, to poor choices that finally lead to not using the timeshare and finally dumping them at fire sale prices so we can step in.

Did you know that 25% of all WorldMark credits expire worthless by the owners who make the maintenance payments?  They find so little value with the timeshare that they just expire worthless!  This was a shock to me, and a revelation.  Something is out of whack here; WM is one of the leaders in the timeshare industry.

Timeshares were originally created so the condo developer could find another scheme to unload his unwanted units – this time to 50 smaller owners instead of one.  I firmly believe that the Baby Boomers will change this – they want appreciating real estate and not timeshares who follow just a vague reflection of the surrounding real estate market.

It’s a great time for us - the “After Market” of the timeshare world – we will still have many good years.  Just be aware that another market, to rival timeshares, is gaining strength at the same time – the owner of ther second home, condo, RV, whatever directly competing with the timeshare and hotel industry via the internet.

My predictions stand and only time will tell if I was close to calling the top of the timeshare market.  Could I be wrong?  I’m only human.

P.S.
I don’t mean to insult any one person – my comments are geared at the mass of timeshare owners.


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## BocaBum99 (Jun 1, 2006)

getreal said:
			
		

> Great post Perry!   It is the first time I see the word "thiefdom".
> 
> I also see renting as a growing phenomenon.  I think the off-peak weeks will lose even more value as time goes on.   As you mention (in several posts) why buy a week and pay say $900 MF when you could rent for $600?
> 
> ...



I agree that rentals is a growing trend that will continue.  All we are talking about is various ownership products for real estate, exchanging and use real estate.

There will be as many offerings for vacation products as there are for stocks and bonds.  There you have individual stocks, mutual funds, ETFs, baskets, Hedge funds, you name it.

Timesharing has many attributes that are likely to continue in the future.  Tax free exchange is one of the biggest ones.  If you rent, you need to pay sales tax, federal and state and local income tax.  Since trading is tax free, it will continue.

Be careful interpreting and extrapolating on the wrong data.  Today, the timesharing market is one of the most inefficient markets in this country.  The standard deviation for the price paid for a timeshare or a rental is huge.  You have people paying $15,000 and others on the same day paying $1000.  That is by definition an inefficient market.  Because of those inefficiencies, there is tremendous opportunity to make money.  As more entrepreneurs enter the market, more information diffuses and the spreads or standard deviation of purchase price narrows.  A very narrow standard deviation of purchase price indicates an efficient market.

I am very confident that the demographics of the world and the growing middle class in countries like China will see them gravitating toward vacation products because it's most people's dream to travel the world.  Timesharing allows them to do that whether they are an owner, renter or exchanger.  And, the price points for timeshares are low enough to be a mass marketable product.

As the market gets momentum, many of the infrastructure issues holding it back and making high transaction costs will be reformed to handle the exploding demand.  It will take a while for these changes, but they will happen over time.

An example is the need for a recorded deed.  That really slows down the transfer process and increases the costs.  Some companies are already solving that problem by recording deeds to trusts.  Those that do have drastically lower transfer fees and transfer times.

So, I believe we are entering what will be known as the golden age of timesharing over the next 20 years.  I am extremely bullish on timesharing and its future.   And, all of it is being enabled by the internet.


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## BocaBum99 (Jun 1, 2006)

*Re: The After Market of Timeshares*



			
				PerryM said:
			
		

> BoyBlue,
> 
> I firmly believe that we are in a timeshare bubble – they are being built at breakneck speeds all over the place.  The funny thing about bubbles is that you don’t know about them until they burst – it’s a complete surprise – no one seems to be talking about the timeshare bubble.
> 
> ...



If there is a timeshare bubble, it's only for the resort developers. There is no timeshare bubble in the resale market.  It's moderately better than it was 6 months ago, but nothing to write home about.

As you've mentioned in other posts, a timeshare is a form of pre-paid vacation.  The prices for timeshares over time do not reflect the underlying real estate values.  

So, the timeshare market should reflect the mood of the country and the world in terms of their desire to lock in vacations by pre-paying them.  That should be much more directly related to the strength or weakness of the global economy.  So, if anything, timeshares should be correlated more directly to the state of the economy than the state of any particular real estate market.

If anything, what will be created is the mutual fund equivalent of stocks.  You are a big advocate of the timeshare portfolio.  A timeshare mutual fund will be a vacation club that creates and balances that timeshare portfolio for you.  And, since the deeds will be in trust, they just need to sell you shares of the trust.  In can be in the form of a REIT or a vacation club.  Actually, I believe this type of owernshp will emerge once an investor class enters the timeshare market.

I do believe that timesharing's fate will be determined by whether or not an investor class ever enters it. There are strong reasons for them to NOT enter now.   Lots of reform in the industry needs to occur first.  The industry itself may want to keep it small and put up road blocks for entrepreneurs to enter it.  Time will tell.


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## PerryM (Jun 1, 2006)

*THE number one timeshare problem*

BB,

The only saving grace to the timeshare industry would be to solve its number one problem – it's not appreciating real estate.  If that problem could be addressed, the Baby Boomers would flock to buy timeshares.

The only solution that I’ve cooked up is the RTU timeshare that expires in 30+ years and the resort becomes condos again to be sold, in an orderly manner, and the proceeds split among the final owners.

I could see where this type of timeshare ownership would reflect the prevailing real estate values since it will be liquidated as a viable real estate entity.  (Over a year or so)

The folks who own on the last day split the sales and those sales could apply to actual ownership of the condos if they chose.

Beyond that I’ve not been able to cook up another scheme where the timeshare appreciates in value – THE Achilles Heel of timeshares.


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## Gadabout (Jun 1, 2006)

*Re: THE number one timeshare problem*



			
				PerryM said:
			
		

> BB,
> 
> The only saving grace to the timeshare industry would be to solve its number one problem – it's not appreciating real estate.  If that problem could be addressed, the Baby Boomers would flock to buy timeshares.
> 
> ...



Right, but as an RTU you don't own it to share in the appreciation (in other words, it would have to be deeded somehow, and if it is deeded it is no longer RTU....  

What you're saying is what seems to happen when people en masse decide to close down/tear down their TS and get out of it altogether. 

I mean, why would you do that deliberately if a building has been properly maintained/updated over the years--you're going to have much higher property taxes, for one thing. Aren't you making your own pre-paid vacations much more expensive that way?


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## boyblue (Jun 1, 2006)

BocaBum99 said:
			
		

> I agree that rentals is a growing trend that will continue.  All we are talking about is various ownership products for real estate, exchanging and use real estate.
> 
> There will be as many offerings for vacation products...


 I guess I don't need to repost the whole statement.

BB one of these I'm going to disagree with you...

Today is not that day.


Perry does raise a good point about finding a way to tie the underlying value into the TS ownership experience.  The developer that does that should experience windfall profits & should not have to resort to high pressure, high priced salesmen.


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## PerryM (Jun 1, 2006)

*More rambling thoughts*

Gadabout,

The deed to the resort is kept in a Master Trust and the RTU is based on that deed.  Hopefully weekly deeds are not needed.  Disney is a prime example of the RTU but at the end of the 20 – 30 years the owners profit from all the appreciation of a well kept resort, not the developer.

I could see 10 years a being something very interesting – most folks can think and use the resort for that period of time and then profit from hyper appreciation.

I suppose that the owners at that time could decide whether to liquidate or continue for another 10 years but no longer.  Going back to the same resort year after year just gets old and that’s why the exchange companies exist.  The resort could be RCI and II affiliated for 8 years and then stop.

The timeshare would sell just like any other timeshare – by those loveable timeshares salesreps would be doing what they do.  The owners, however, really are owners and know that by holding on they will profit from real estate appreciation.

Assuming that the normal formula of timeshare sales applies 50% is sales/marketing and is instantly lost if sold – this is the key – a 10 year RTU would have folks financing at 14.99% for the 10 years and then they immediately participate in the liquidation of the resort; in a timely manner.

Marriott’s Beach Place Towers in Ft. Lauderdale has a St. Regis right next door to it.  Selling BPT after 10 – 15 years would have meant that the building appreciated 2 – 4 times in value.  Our original owners would see their “investment” appreciate about half of that.  The building is in prime condition and the real estate market will gladly sell the villas for tons of money.


The next target would be the 50% sales/marketing effort to unload timeshares; cut that down by half and this scenario would really rock.  Perhaps the Washington politicians are finally good for something – they raise HUGE amounts of cash over the internet – why not the timeshare developers?

Imagine an interactive web site with all the live cameras of construction going on and live salesreps (Heck they could be in Bangladesh for all I care) answering questions and ways to just charge the purchase on your credit card.  Perhaps this violates state real estate laws – I don’t know.

The best approach would be for the web site to have you call a local real estate agent who gets 15% commission and its all done that way.

There is just too much fat in the current 50% marketing/sales expense for this to continue without some smart cookie (e.g. SouthWest Airlines did to the industry) making billions of dollars doing it differently and making ownership 25% less costly.

One can only hope.


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## Gadabout (Jun 1, 2006)

PerryM,

I guess I'm just not getting it.  

In your scenario, you propose changing the core principle of an RTU. To do that you would have to have some sort of yes, weekly (or fractional) deed granting ownership. At that point, by definition it is no longer an RTU but simply a deeded TS with a future sell date and a written contract that they will continue to be TS (as opposed to say sold for office space or anything else at the end of the term).

And, if you did buy to own and use, and wanted to still keep and use it, in a state like CA a new sale (and revaluation) would drive your taxes up, and why would you do that? And would you have to pay all of the appreciated price just to keep your TS? No thanks.

It's not like your house, where at least you can use that new value to get a 
HELOC or something.


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## getreal (Jun 1, 2006)

Perry - Actually TS resorts, just like other real estate, is appreciating, but the benefits somehow does not accrue for the owners.  

If that can be fixed, then TS will become a real investment, and people will eagerly participate with no need to resort to 50% marketing costs.   But there will be resistance, especially from the developers, exchange companies, management companies who benefit big time from the current situation.

Another reason why TS is a bad investment is because it is sold to the masses, not investors.    If the same resort is sold to 1000 people each putting up $100k, instead of 10000 people investing $10k, you bet it will be managed better.

In the RTU / master Trust example you mention.   Doesn't that start to resemble a REIT?


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## PerryM (Jun 1, 2006)

*Example*

Getreal hits on a great concept – the masses “Ma and Pa” versus investors – I never thought of it that way.

Condos and condo-hotels sell out in minutes – they attract investors and speculators.  Timeshares are sold to folks ambushed on vacation and need high pressure 90-minute wave after wave salesreps pounding away at our vacationers to sell the timeshare.

No due diligence is done in those 90-minutes and it is, of course, the buyer’s fault.  There are no government brochures or warning signs “Warning: Timeshares are just pre-paid vacations” to alert Ma and Pa.  The false, misleading, and inaccurate information spewed out in those 90-minutes go unrecorded and the impressions given Ma and Pa are false in may instances.

The investor, on the other hand, knows that timeshares don’t behave like appreciating real estate and never gobble up any ownership.

Gadabout, whatever mechanism needs to be in place to allow timeshare like usage for 10 – 15 years and then ends with current owners sharing in the spoils of real estate appreciation is what I’m for.   Be it a RTU or a club or whatever – adding in the real estate appreciation to the timeshare is what’s missing now and the reason it takes 50% of all funds needed to snooker Ma and Pa into timeshare ownership.

One such organization that does this now is www.bellehavens.com  There the deeds to the homes bought are placed in a trust that you profit from when you sell your membership with a 2 in /1 out rule.  You get to take fantastic vacations and if you sell your membership get *90% of the current membership dues*.  Those dues are directly tied to purchasing new real estate and thus reflect real estate appreciation.

There membership fee is basically 1/7 the cost of a home or condo that they are buying.  E.g. if they are now buying $2.5 M homes the current membership fee is $285,700.  5 years from now the home they are buying is going to be double that (hot resort areas) and current membership fees are $571,400.  You get 90% of that or $513,900 and you paid $285,700 for a profit of $228,200 (80% appreciation)  You get 5 weeks of usage per year and MFs are 8% of the current membership fees per year.  Anytime any villa is not used you simple reserve a week for just a housekeeping fee.

Whatever has to be done to allow timeshare owners to participate in real estate appreciation will attract the investors who will sell out a hot resort in hours and they won't have to spend 50% of the sales price beating a sale out of poor Ma and Pa.


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## spatenfloot (Jun 1, 2006)

*Re: More rambling thoughts*



			
				PerryM said:
			
		

> The deed to the resort is kept in a Master Trust and the RTU is based on that deed.  Hopefully weekly deeds are not needed.  Disney is a prime example of the RTU but at the end of the 20 – 30 years the owners profit from all the appreciation of a well kept resort, not the developer.


I'm pretty sure that DVC reverts to Disney after the RTU, not to the owners.


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## PerryM (Jun 1, 2006)

*Of course*

spatenfloot,

Sorry for the confusion - Disney, of course, reverts back to Disney.  Poor sentence structure on my part.

But if Disney can do it why can't the same mechanism revert to the holding company and it arranges the sale of the resort, over a proper length of time, and the last owners split the profits.

As I indicated, many timeshare owners might convert to condo owners.

Or better yet, turn the whole resort into a condo-hotel based on whole ownership of the entire resort (The condo-hotel model for Hawaii).  You become the owner who charges rent and makes a buck or two when you aren't using it for your own needs.


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## spatenfloot (Jun 1, 2006)

It would be possible to word the contracts so that the owners at the end of a specific time could sell the resort and split the proceeds.  I don't think allowing continued ownership as a condo would work though because you would still have to timeshare the units if too many people decided to keep it. In effect, it would just convert from a TS to a fractional.


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## PerryM (Jun 1, 2006)

*100% whole ownership condos again*

spatenfloot,

The plan I’m promoting is to have 100% of the timeshare resort revert back to whole ownership condos and on the day that happens the entire resort is put up for sale or individual condos sold just like any condo project or sell it as a condo-hotel.

The proceeds after the resort/condos have been sold are divided by the amount of ownership each owner has, e.g. 1BR, 2BR a simple ratio would be used when the timeshares are sold and thus each owner knows what their share of the proceeds are.

e.g. 200 2BR condos with 52 Red week owners would have each timeshare owner get 1/(200*52) or 1/10400 of the sale price of all the condos or the resort.  Real estate appraisers would indicate the worth of each condo and 10 packages of 20 condos are sold 1 per month for 10 months or quicker if demand dictated.

While this is going on unsold villas are rented to the public/past owners.

Local real estate agents would become involved since the villas are once again real estate that they will represent.


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## JeffV (Jun 1, 2006)

I love to see you guys come up with these schemes that don't have a snowballs chance in H--- of ever coming to fruition.   But if it keeps you out of the poolhalls, some good has come of it.  Keep dreaming.


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## timeos2 (Jun 1, 2006)

*Re: Exploit, exploit, exploit...*



			
				PerryM said:
			
		

> Right now I could make an excellent case that timeshares have passed their prime and owning them is NOT the most efficient way to take premium vacations.  Timeshares are lumbering down the road to join the dinosaurs.
> 
> The Internet has allowed average Joe Timeshare to bypass the exchange companies and even the timeshare developer and stay at private condos and homes that offer peace and solitude for the family.
> 
> Spend some time on www.VRBO.com and drool over the homes and condos that you can rent direct from the owners.  No putting up tens/hundreds of thousands of dollars – no waiting for exactly 8 AM CST for reservations to open and god help you if you miss it by 5 seconds.  No yearly MFs and exchange fees and the hassle of learning dozens/hundreds of rules needed to get a nice condo.



We have a big problem with renting - or even owning if we could - condos or homes in the areas we visit using timeshares. The problem is they are in neighborhoods and don't tend to have the features of a resort. Heck we are disappointed when we get a timeshare that is a home or apartment conversion as they also tend to be light on the resort type features we enjoy. It isn't just having a large unit but one fully equipped and with the overall amenities that makes a good timeshare great.  



			
				PerryM said:
			
		

> No more dealing with sleazy salesreps that lie thru their teeth and have the stench of ignorance about them.  No more dealing with HOA’s run by dolts who are their own little thiefdoms.  No more dealing with exchange companies who care about their stock holders over you the consumer.



Now that part about getting away from the sales weasels sounds good. Why developers see to feel they have a never ending right to bug guests and even owners to buy more is beyond my comprehension. I don't mind a quick "are you interested in hearing.." if they are then willing to take a no as a no.  Anything beyond that and they are infringing on my enjoyment of the time I bought and pay for so we don't even consider purchase from them and actually will go out of our way to make sure we equally inconvenience them.  If they pay us to do that all the better. You would think they would learn but, so far, they keep paying. As for the others there are good and bad HOA's. You should try to avoid the bad ones. We knew 4 or 5 years ago that RCI and II weeks weren't a good value and moved to either points or a real quality weeks exchange like SFX. We always watch to see if we need to make changes and do so rather than complain about old doors that close. 



			
				PerryM said:
			
		

> Timeshares are just a 45 year old experiment that has tremendous flaws and requires 50% of all monies involved to be spent on smoke and mirrors to make them work.  There are no guarantees that timeshares will be here in just a few short decades from now.  There’s just too much fat in the system to keep this up for a long period of time.



The right resort and/or system will most likely be around because the owners want them to be and support them.  I don't have the same feeling about the borderline resorts or the smaller systems as they may not have the support needed from the buyers. That is particularly true for the seasonal areas and many of the small, especially conversion type timeshares. The value long term just might not be there for the owners. 




			
				PerryM said:
			
		

> And make no bones about it, exploiting the timeshare world means taking advantage of other owner’s poor decisions for your families benefit.  This maybe unsettling to some but that’s exactly what happens when you call in a 8 AM CST to the second, to reservations, because you bought one of those atomic clocks and another owner’s watch is off by 5 seconds.



As always you have to watch out for yourself and your family. No matter what they may say no one else will do it for you. That goes double for any timeshare organization.


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## Howard33 (Jun 1, 2006)

We used SFX exchange co this year for the first time thanks to reading about it on this bulletin board and getting the 3 for 1 bonus.  We've booked the two bonus weeks, both in Mexico by our choice, at the Grand Mayan and Villa del Palmar in Oct and May.  Now we'll see what our trade week brings for next year in Maui as we banked Kona Coast II.  So far we are very impressed with the personal service Lisa provided at SFX and thank you Tuggers for the idea!  We do like to stretch our 1 week into three


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## PerryM (Jun 1, 2006)

*I'm confused (so what else is new)*

Consider this:

Just about the time Marriott started sales for their dual towers in Maui, Intrawest (aka Playground - it's a Canadian thing) announced a condo hotel 1 mile north of the Marriott Maui Ocean Club.  Link: http://www.honuakai.com/

The Intrawest sold all 318 units in 8 hours for $425 Million – they sold to investors/speculators.  There is a 3-year build cycle and Ka’anapali last year increased 35% in real estate appreciation.  Both projects are the same quality.

Marriott will slug it out for years selling 1 week at a time and 50% of the sales is to convince Ma and Pa that they need the 1 week in Maui.  Ma and Pa will be lucky to break even on their Marriott in 3-5 years.

I don’t understand Marriott, perhaps the resort is zoned timeshare and not condo-hotel is the reason they did not sell all their units in 8 hours too.

I don’t understand why developers are slugging it out for years with Ma and Pa when in 8 hours they could sell their resort to investors/speculators and make much more money.  The developer splits 50/50 ALL rentals for all villas until the place closes down.

P.S.
Many IntraWests are branded as Westins but since the Westin timeshare is right next door they aren’t using the Westin brand this time.  Maybe W?


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## getreal (Jun 1, 2006)

*Re: Exploit, exploit, exploit...*



			
				timeos2 said:
			
		

> We have a big problem with renting - or even owning if we could - condos or homes in the areas we visit using timeshares. The problem is they are in neighborhoods and don't tend to have the features of a resort. Heck we are disappointed when we get a timeshare that is a home or apartment conversion as they also tend to be light on the resort type features we enjoy. It isn't just having a large unit but one fully equipped and with the overall amenities that makes a good timeshare great.  .



Of course ... an even bigger nightmare is when you buy a nice property in a great location and your neighbor goes VRBO ... suddenly you have new people as neighbors every week, and while some could be pleasant, you have no recourse if somebody is loud, or litters or whatever.

My point is that proper resorts have staff that make sure the resort is good to the visitors and neighbors.  A VRBO unit has none of that.


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## BocaBum99 (Jun 1, 2006)

JeffV said:
			
		

> I love to see you guys come up with these schemes that don't have a snowballs chance in H--- of ever coming to fruition.   But if it keeps you out of the poolhalls, some good has come of it.  Keep dreaming.



For every 1000 ideas, there is a good one out there that can dramatically change an industry.  I remember vividly the day I saw the first Mosaic demo in February 1994 in Concord, CA at an eCommerce software company called Premenos before anyone had ever heard of the worldwideweb.  And, Oct 8, 1996 when the CEO of my fortune 500 company announced my internet service to the world and it made the front page of the Wall Street Journal the next day.  Even that day I ate dinner with John MacFarlane, then CEO of software.com well before they merged with a company called phone.com and became openwave technologies.  He earned $400M making POP3 messaging products for internet carriers.  He told me clearly that night at dinner how he was going to pull it off and he did it.  I only wish I had gone to work for him in sunny Santa Barbara, Ca.  So, I wouldn't necessarily say that these ideas would never come to fruition.  Not many do, but some just may change everything.  It's the dream of every high tech employee to be part of something that can change the world.  So, let us dream....


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## PerryM (Jun 1, 2006)

*I like VRBO*

I told a student of mine about our timeshare adventures.  He decided he didn’t want to get involved with all the knowledge you need to know about timeshares so I suggested that he go the VRBO route.

He is a skier (although I’ve since convinced him to snowboard) and they love Breckenridge.  He did some searching and they found a 4BR townhouse for rent 200’ from a ski lift and it included 4 lifetime ski passes.  When he factored the passes in the cost for his family of four, the rent was about the same as a Motel 6.  I saw pictures and the townhouse puts timeshares to shame.

We have used VRBO to rent our Marriott ski weeks 51 & 52 and they rented in hours.

When we visit Maui, I always check VRBO and find what rentals go for on the beach.  Some of them are unbelievable – on the beach with their own swimming pool, entertainment centers, bars, etc.  We drive by and see just in case we take the VRBO route next time – which we are seriously considering.

I’m positive about VRBO.  I do, however, understand a house or condo "Going VRBO" it would bother me too if I were a neighbor.


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## timeos2 (Jun 1, 2006)

getreal said:
			
		

> Great post Perry!   It is the first time I see the word "thiefdom".
> 
> I also see renting as a growing phenomenon.  I think the off-peak weeks will lose even more value as time goes on.   As you mention (in several posts) why buy a week and pay say $900 MF when you could rent for $600?
> 
> ...



The smaller, individual resorts highly in seasonal areas are at a great risk IMHO.  Unless they are part of a bigger multiresort group that can spread the low demand times around more than just the local owners they have depended on RCI/II using weeks exchanges to create value for those times. That system is collasping before our eyes and cannot be depended on for much longer. 

Some will (and have) go out of business while others will push the costs to the better weeks and maybe survive by renting the poor weeks to help offset costs.  Some may revert to hotel type use.  In any case those resorts face a real challenge.


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## getreal (Jun 1, 2006)

timeos2 said:
			
		

> The smaller, individual resorts highly in seasonal areas are at a great risk IMHO.  Unless they are part of a bigger multiresort group that can spread the low demand times around more than just the local owners they have depended on RCI/II using weeks exchanges to create value for those times. That system is collasping before our eyes and cannot be depended on for much longer.
> 
> Some will (and have) go out of business while others will push the costs to the better weeks and maybe survive by renting the poor weeks to help offset costs.  Some may revert to hotel type use.  In any case those resorts face a real challenge.



You are right here.   Anybody that disagrees with you should buy a fixed off-peak week in Minnesota.

We often compare hotels with TS.   One factor that makes them different is easy to overlook.   Take your example of a seasonal resort.   Hotels in that area will make huge profit in the busy area, and use that to subsidize them through the slow times.

On the other hand, TS charges the same MF for every week.   So the popular times sell out quick, and the resort does not get any extra money to subsidize the slow times.  Hence the non-peak MF higher ends up more than a hotel rental.

Regarding "thiefdom".  I laughed when I saw it.  But in reality it is simply their version of "Exploit, Exploit, Exploit".   In TS all the players (including ourselves) are exploiting the others as much as they can, yet everybody can do better if we co-operate just a little bit.   Does anybody know Game Theory?


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## geekette (Jun 1, 2006)

timeos2 said:
			
		

> The smaller, individual resorts highly in seasonal areas are at a great risk IMHO.  Unless they are part of a bigger multiresort group that can spread the low demand times around more than just the local owners they have depended on RCI/II using weeks exchanges to create value for those times. That system is collasping before our eyes and cannot be depended on for much longer.
> 
> Some will (and have) go out of business while others will push the costs to the better weeks and maybe survive by renting the poor weeks to help offset costs.  Some may revert to hotel type use.  In any case those resorts face a real challenge.



Yep.

They'll have to rent, if they don't already, and learn to live on what they can get.  You can't take it out on the owners because they'll leave, too.

I don't think CHEAP rentals to the general public are a good thing because it's very bad for wear and tear  (^MF, special assessments!!).  I believe it's very bad for owners and the resort and just a cheap sleep for Joe Igotabuck.  Hang what it does for the market, it can be physically and financially damaging to a resort to cater to (oh boy) "that element."   This practice will close a resort a lot faster, or get it bought quickly and hopefully injected with new life (and penicillen).  

No, they have to aim higher to survive.  I think the smaller ones need to be more of a country club than an impersonal hotel.  You've got to enlist the locals.  Silverleaf is doing good, and I like their bold stand against PFD, but I'm sorry for those of you it affected.  I like the niche they're creating themselves - frequent family getaway.  That's not a bad target, if you hit it, and I think they have.  Forget whether you, yourself, want to stay there, consider all those middle America young families - this is actually affordable (resale).

You get people to invest in it personally and get them coming back.  A LOT.  House their inlaws a few weeks a year.  Put their drunk friends up occasionally at Rack Rate.  Host their kids' weddings.   Family reunions.  make em feel like family ~ um, well, mostly ; )   Get in on the new wealth now and put your hand in the pocket of their kids.  

exploit exploit, right?


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## AwayWeGo (Jun 1, 2006)

*What's Up With Developers Buying Old Resorts?*




			
				geekette said:
			
		

> This practice will close a resort a lot faster, or get it bought quickly and hopefully injected with new life


I'm unclear on how a whole resort can get bought, unless it's still developer-controlled & the developer bails & a new developer buys in.  (There are lots of things about timeshares I'm unclear on -- that's just 1 thing.) 

See, the way it looks to me, once a timeshare is over the hump so that most weeks are in the hands of individual owners, leading to management takeover by an owner-controlled rather than devloper-controlled HOA, what is there to buy (other than remaining unsold inventory)? 

I mean, once a resort is sold out, it belongs to the invidaual owners (collectively), no? 

Even if by law & custom there has to be a "developer of record" for a sold-out timeshare, what's the advantage to being the developer unless (a) you're in charge, calling all the shots & (b) most of the units are still in your for-sale inventory ("new," for full freight)? 

For example, what's up with the WestGate folks "buying" or whatever they did  to add their name to the Blue Tree timeshare resort down in Orlando FL (across the street from Cypress Pointe)?  

Just from the looks of the place, I'd say Blue Tree is not 1 of your newer Orlando timeshares -- not that there's anything wrong with that.  Blue Tree just seems unlikely at this point to be run by a developer-controlled HOA -- actually seems more likely to be owner-controlled judging by the apparent age of the place, & for the same reason seems unlikely to have much left in the way of "new" inventory for sale.  So why would Mr. WestGate or anybody else want to buy it -- or be able to buy it at all if it really does belong to all its individual owners collectively?  What's the advantage to WestGate?  Why wouldn't a developer prefer to untangle from the mature timeshares & concentrate instead on the new ones? 
-- Alan Cole, McLean (Fairfax County), Virginia, USA.​


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## Gadabout (Jun 2, 2006)

*Re: Exploit, exploit, exploit...*



			
				getreal said:
			
		

> Of course ... an even bigger nightmare is when you buy a nice property in a great location and your neighbor goes VRBO ... suddenly you have new people as neighbors every week, and while some could be pleasant, you have no recourse if somebody is loud, or litters or whatever.
> 
> My point is that proper resorts have staff that make sure the resort is good to the visitors and neighbors.  A VRBO unit has none of that.



Normally one calls city code enforcement or the police for that sort of thing if it's people.

Pets, maybe animal control. I don't know how staff at TS are about really enforcing "no-pet" rules to the point of removing someone from the TS and they forfeit whatever they paid for the unit.


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## dmharris (Jun 2, 2006)

I recognize this thread is about the almighty dollar, but that is not why we bought a time share.  We hadn't taken a vacation in four years as a couple, 5 as a family until this past December when we went to Orlando and the Marriott Grande Vista.  This was the second time we visited a time share sales pitch and the key thing that my husband and I said to each other is that a time share will force us work-a-holics to schedule a vacation and not worry about the money.  It was a sigh of relief from me that we would have an annual vacation (actually two with our lock off; one family; one couple) and I love adventure, but as I get older, less physical and more mental.   

So looking for the spot to go this year has been an adventure and waiting to see if we get it is part of the fun.  And most important - we're going away and not sitting in our offices!  That's worth something to me and I don't care about resale at this stage as I'm hoping we have this timeshare for years and years and that our children will enjoy it when we're gone.  Pollyanna?  Maybe?  Hopeful mother?  Definitely!  

Cheers!


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## timeos2 (Jun 2, 2006)

Alan - In most cases your theory of "nothing to buy or control" would be correct. Unfortunately Blue Tree has a very checkered history and was ripe for a takeover.  It is now basically two resorts much like CP1 & CP2 except it's all one development.  There are two factions and they actually control different parts of the resort. King David evicted the owners from the front desk / clubhouse as the documents gave it to the developer (which he bought out) rather than the individual owners. The whole thing was built as an apartment project that didn't sell so it was turned into timeshares that didn't sell well and went through I think four different "developers" before Westgate bought out the last one - a Japanese firm that went into bankruptcy.  Apparently the documents were not well written and the owners got little more than the residential buildings. They even had to build their own checkin area after two years in a trailer. Westgate now operated some (1/2?) of the units and the owners have a different management to operate the rest.  It is a real mess and one that could have happened elsewhere if the projects were poorly planned or the developer hung around too long.  It's only made worse that the king of sales sleeze in timeshares bought in and really screwed it all up. To think we actually liked that resort at one time and are owners at the real Westgate. That is the one and only timeshare that, if i did it over again, I wouldn't choose to own.


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## PerryM (Jun 2, 2006)

*Evolution*

Diane,

Reading your post brought me back to our first timeshare and why we (I) bought it:
1)	Force us to vacation
2)	Family memories
3)	Pass the timeshare on to our son for his family’s use
4)	An adventure

If in Orlando you might take a tour of Orange Lake Country Club – there they sell fixed weeks in fixed condo buildings at a fixed campus of condo buildings.  This, to me, represents the “Base level” of timeshare usage.  You can proudly point to a condo and say “We own New Years Week there”.  Marriott's Maui Ocean Club now offers the same ability.

Your reasons for buying were exactly the same as our reasons.  But, a funny thing happened after our second vacation to the timeshare – things became abstract.  Since this thread is about the evolution of timeshare usage here is a brief history of our 6 and a half years of usage:

*Fixed holiday weeks at a Marriott:*
Our first adventure into timeshares for the reasons outlined above.  Although weeks fixed the units floated – seems that only once in 3 years could we get a view of the ski slopes; what to do?  We rent some units for cash to pay for all the MFs on the 5 Marriotts.

*Marriott Reward Points:*
Got a bunch of MRPs with the new Marriotts and turned some usage in for more - went 5 times to Maui and stayed at the Wailea Renaissance instead of our units.

*Exchangers bought:*
We have more vacation time and we bought units (one was Grande Vista) to use and exchange to other resorts.

*South Africans bought:*
TUG was a blaze with folks buying units to trade in RCI from South Africa that cost a few hundred dollars but exchanged into Gold Crowns – bought a bunch of these guys.  Never plan to visit South Africa.

*RCI Points:*
Our South Africans could be now be deposited into RCI Points and the points have gotten us many Gold Crowns and mostly now we just exchange them for airline tickets – save about 10% over Orbitz and still control the weeks.  Many times we use the RCI Points to stay where we already have reservations and rent our reservations for cash.

*WorldMark Credits (Points):*
Why buy a week at a Marriott when we can buy credits in WM that will get us there for 1/10 the price of buying from Marriott?  Our retirement plans were to buy a 40’ RV and tour the US – we put that money into WM and TrendWest fractional units at South Lake Tahoe and plan to vacation 25 weeks a year in 5-star resorts.  Rent out WM units for cash and pay for all the above.  Sold all our Marriotts but one and those profits put into WM credits.

*Rental weeks bought:*
Bought ski resort weeks to use but mainly rent for cash - found a great deal with rent equal to 5 * MF for peanuts.  Resort, was however, in financial trouble which has since been corrected.

*Condo Hotels:*
Every year the places we visit on vacation are up 25%+ in real estate appreciation from the last year – why are we not participating in this?  We also want to stay 1 month at a time instead of 1 week at a time.  We buy 2 condo hotels to do this.

*VRBO:*
Why be limited to timeshare resorts – use the above to generate rental income and stay at million dollar homes and condos; the rental market is completely different than the ownership market.  Maui is an example of million dollar homes renting for peanuts.

That’s our timeshare evolution – from fixed weeks to cold hard cash.  Our vacations increase both in frequency and quality and we are very “happy campers”.  Maybe some of you can find yourself in the above evolutionary process – hope this gives insight to our “vacation mindset”.  I think the above shows how we have become more abstract with timeshare usage.

How will timeshares fit into all this?  They are still part of our vacations but becoming less important in the overall scheme of our vacations.  I’m sure that as long as half of all dollars spent on new timeshares is used to beat sales out of poor Ma and Pa, timeshares will lumber along.


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## AwayWeGo (Jun 2, 2006)

*We Got Into Timeshares So Recently That Our Total Experience Is New-Rules.*

Then again, maybe we just never expected we'd _always_ be able to exchange into _any_ resort in the whole Dream Book _whenever_ we wanted.  In any case, we caught on quick that timeshares in some places & certain seasons are less available, generally speaking, than at timeshare hotbeds like Branson MO, Orlando FL, & Massanutten & Bryce & Williamsburg & Virginia Beach VA -- & even "overbuilt" destinations like those have their own easier & harder seasons for exchanging in. 

The harder-to-get timeshare destinations are where there are fewer & smaller resorts, where the prime seasons are shorter, & where more of the owners use their own weeks instead of depositing them for exchange. 

So far, however, the exchanges we've wanted are the exchanges we've been able to get -- all Florida, all off-season.  That's what we were aiming at going in & that's what we've been able to do. 

Shucks, maybe we're not really Timeshare People.  Maybe we're just Orlando Timeshare People. 

-- Alan Cole, McLean (Fairfax County), Virginia, USA.​


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## dmharris (Jun 2, 2006)

Perry,

WOW, your post has taken my breath away!    Six years and all that!  I cannot imagine putting that much energy into this.  I will be curious to see how we do when we go to Aruba Surf Club July 23 for our week trade and to Newport Coast December 15 for our second week.  Will I get bit by the Perry-bug?  Time will tell.

Thanks for the story; fascinating!

Have a great weekend!


----------



## geekette (Jun 2, 2006)

*Re: What's Up With Developers Buying Old Resorts?*



			
				AwayWeGo said:
			
		

> I'm unclear on how a whole resort can get bought, unless it's still developer-controlled & the developer bails & a new developer buys in.  (There are lots of things about timeshares I'm unclear on -- that's just 1 thing.)
> 
> See, the way it looks to me, once a timeshare is over the hump so that most weeks are in the hands of individual owners, leading to management takeover by an owner-controlled rather than devloper-controlled HOA, what is there to buy (other than remaining unsold inventory)?
> 
> ...



I don't know the Ins and Outs, I only know that my beloved Bluegreen continues to buy up resorts.


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## getreal (Jun 3, 2006)

*Belle Havens*



			
				PerryM said:
			
		

> One such organization that does this now is www.bellehavens.com  There the deeds to the homes bought are placed in a trust that you profit from when you sell your membership with a 2 in /1 out rule.  You get to take fantastic vacations and if you sell your membership get *90% of the current membership dues*.  Those dues are directly tied to purchasing new real estate and thus reflect real estate appreciation.
> 
> There membership fee is basically 1/7 the cost of a home or condo that they are buying.  E.g. if they are now buying $2.5 M homes the current membership fee is $285,700.  5 years from now the home they are buying is going to be double that (hot resort areas) and current membership fees are $571,400.  You get 90% of that or $513,900 and you paid $285,700 for a profit of $228,200 (80% appreciation)  You get 5 weeks of usage per year and MFs are 8% of the current membership fees per year.  Anytime any villa is not used you simple reserve a week for just a housekeeping fee.



Perry

Good link! Thanks

It was interesting to read their website.   It is a big positive step, and I think that they definitely address two important issues, 
(1) the capital appreciation goes to the owners
(2) only 10%, not 50% capital loss to pay for marketing

On the maintenance side, they still run a thiefdom.

Take your example above.  Assume the property costs $2.5M.   7 Investers each pay $357,142.   The ripoff is that annual MF for each investor is $28,571.   Multiply by 7 owners and you see they collect $200,000 per year to manage the property!!

Another way to look at it is ... The annual MF of $28,571 gets you 5 weeks in a great place.   But that is $5714 per week.   For that money you could have stayed in a wide range of really nice places too!

One reason Mom and Pop buys TS because they are average, just like a bazillion other people, and their vacation dollars compete with a bazillion others.  Their vacations are a very competitive market, and in peak seasons it sells out and often becomes unavailable.

The owners at Belle Haven will not have the same constraints as Mom and Pop, and quality accomodations at their price point is almost always available.  Sure, the prices go up and down, but they tend to stay available until the last minute.   And at the last minute, when it becomes clear no rich guy wants the fancy suite in the hotel, then some lucky couple gets a "special upgrade" that they never stop talking about.


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## taffy19 (Jul 9, 2007)

I had several windows open and replied in the wrong thread.     This one is very interesting.


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## bnoble (Jul 10, 2007)

> But if Disney can do it why can't the same mechanism revert to the holding company and it arranges the sale of the resort, over a proper length of time, and the last owners split the profits.


It could, but what's in it for the developer to do this?  In Disney's model, Disney retains the appreciation value of the land.  Why in the world would they cede that value to the purchasers?


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## JudyS (Jul 10, 2007)

bnoble said:


> It could, but what's in it for the developer to do this?  In Disney's model, Disney retains the appreciation value of the land.  Why in the world would they cede that value to the purchasers?


I think that's the problem.  It would be good for owners to vote, after some time, on whether to continue as a timeshare or sell the underlying real estate, but why should a developer set things up that way?   They are selling deeded timeshares as vacations "forever." They don't want to say, "This is timeshare is forever, except if it gets too run down in 20 years and the owners are sick of the place, they can dissolve the timeshare and sell off the condos."  That's not going to help sales any. 

Developers _could_ try selling timeshares as real estate so they can focus on appreciation, but that's a whole different approach.  Probably, the last thing developers want is for potential buyers to start thinking about the underlying real estate value of timeshares.  (Hmm, $18,000 per week times 50 weeks is $900,000 for a two-bedroom condo that cost maybe $150,000 to build....)

North Carolina requires that all timeshares be for a period of 40 years only.  After that, owners must vote, and can either dissolve the timeshare or can vote to extend it for 10 years, after which time they vote again.  I feel that this is a good system, but I'm not sure any other states do this.


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## JMAESD84 (Jul 10, 2007)

*Timeshare Bull Market*



BocaBum99 said:


> I agree that rentals is a growing trend that will continue.  All we are talking about is various ownership products for real estate, exchanging and use real estate.
> 
> There will be as many offerings for vacation products as there are for stocks and bonds.  There you have individual stocks, mutual funds, ETFs, baskets, Hedge funds, you name it.
> 
> ...



I couldn't agree with this more.  I too am very bullish about this industry.  After attending dozens of timeshare presentations over the years and having never purchased from a developer....I'm buying now.  I'm a boomer.  I'm internet savy, a shopper of discount vacation products and have been for years.  I've taken advantage of the excess inventory in timeshares, used priceline, skyauction, hotwire, airline miles, etc. to stretch my travel dollars.  

I've learned from family, friends and the on-line community about those wasting tens of thousands of dollars on unwise purchases.  The kids are finished college and those bills are now history.  Now it's time to really take advantage of the timeshare inventory.  I'm buying resale, I'm buying prime and I'm not buying just one, or two, or three....

I'm not alone.  I'm a boomer.  We are coming and we are buying everything that's worth owning.


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## Hoc (Jul 11, 2007)

People above are talking about developers "buying" resorts.  Technically, I don't think that they do exactly that.  Rather, they buy the remaining unsold inventory and other developer assets.  Many developers have term management contracts for their resorts.  The rights and obligations under such a contract, unless prohibited under the contract, can normally be bought out by a new management company.  Thus, what was previously a "Podunk" resort now becomes a "Bluegreen" resort until the existing management contract expires and is not extended or renegotiated, or until Bluegreen sells out its interest under the contract.

The money made by a management company who manages a timeshare can be obscenely lucrative, as Marriott has proven time and time again.


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## talkamotta (Jul 11, 2007)

PerryM said:


> BB,
> 
> The only saving grace to the timeshare industry would be to solve its number one problem – it's not appreciating real estate.  If that problem could be addressed, the Baby Boomers would flock to buy timeshares.



I guess you dont own in Maui.     Too bad we dont get the increase in the real estate that is reflected in our tax increase this year.  

My son is one of those people that is being talked about in the rental of condos market.  He rents out his 3 bed/3 bath condo w/2car garage during prime winter ski weeks for over $2K for the week. $1500-1800 for other ski weeks and under $1000 for the rest of the year.  Easy access to bus lines for all the resorts in Salt Lake and easy drive to Park City (not ski in and out by any means).  Over the year he covers his expenses and repairs and makes under $10K profit.  Gets a good tax write off.  The big deal comes in that he bought the condo for $150K and will sell it for over $300K.  

Too bad we cant double our initial purchase price in timesharing.  

On the other hand, my expectations arent very high.  I didnt buy a timeshare as an investment for money.  I bought it to be able to afford the vacations I want to take.  Its been working pretty good for me so far and very great to perfect for the grown adults that I give them to.  So far I have been lucky enough to stay in GC 2 bedroom timeshares in places I want to see  for about $100 a night.  

Getting back to the timeshare rules:    

Success in getting the timeshare you want to trade for will be in the ability to be flexible and length of time till the next vacation.  I will be doing more shoulder seasons (which in some cases, shoulder season is prime for me) because I dont like crowds and Im not locked to a school schedule.  

Get to know which exchange companies have a greater availability in certain areas.  Ex.  HSI has greater Mexico availability.  SFX maybe is better in Hawaii  II - Marriott exchanges  RCI - more resorts.  

Everything in our world changes.... How you use your timeshare will change in 10 or 20 years.  Thats why we keep learning to find out how to best use our timeshare.  

Thanks for starting this thread.


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## JMAESD84 (Jul 11, 2007)

talkamotta said:


> Too bad we cant double our initial purchase price in timesharing.
> 
> Everything in our world changes.... How you use your timeshare will change in 10 or 20 years.  Thats why we keep learning to find out how to best use our timeshare.
> 
> Thanks for starting this thread.



I believe that there is some doubling going on right now and probably more to follow as the deeply discounted resale market gets some legs.  When I say this, I am of course referring to keen resale purchases being made by some and then the flipping of those assets.

As stated in an earlier post, I'm very bullish on the industry right now and believe that those that have or are accumulating deeply discounted prime weeks resale will see a sharp increase in price in the years to come. 

Why? Because the demand from the boomers is coming and the supply of prime weeks in resale can't keep up with the demand.  :whoopie: 

I believe that Perry and perhaps some others I've read have suggested that the boomers demand that's coming might in fact show favor the shoulder seasons for the smaller crowd factor.  Personnally, I've enjoyed many shoulder season vacations for just this reason.  So this may also be an area of strength in the future, there is however, a much greater supply of shoulder season weeks in resale to meet this demand.


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## John Cummings (Jul 11, 2007)

Gadabout said:


> The other thing you have to consider is what the other players in the vacation business (hotels, vacation homes, etc.) are also doing in relation to cheap TS rentals. TS isn't the only game out there as far as vacation lodging goes.
> 
> I sort of see people bouncing back and forth between hotels and TS as the pricing goes back and forth and their needs change (e.g. children grow up). Hotels can be much more flexible with what they choose to offer as amenities, for one thing, and in many cases they win with location for some travellers.
> 
> I see the lower-demand TS weeks in future as more of an option for people who are trying to do some event-planning on the cheap--say some people want to get together for a Ren Faire or something along those lines--not a huge event, necessarily, but then again, if you can accomodate 8 people in each TS unit....



I agree with you 100%. The hotel indistry is also changing with many more suite hotels being built. The majority our stays are in luxury hotels by preference.

We stayed 2 weeks at Homewood Suites ( A Hilton property ) last month in Wichita Falls Texas. There were 3 adults, My wife, son and I in a 1BR unit. It had a full kitchen, free in-room high speed Internet access, free local and 800 calls, 2 TV's ,etc. Daily housekeeping, free business center with free usage of their computers, copiers, etc. pool, fully equipped exercise room, etc. We were able to negotiate a rate of $85.00 /nt. This included free hot breakfast every morning and free dinner 4 nights a week. Hotels are generally much easier to deal with and go farther in trying to please their clients. With the free meals, the net cost is just as low as a timeshare cost for maintenance fee, exchange fee, etc. not to mention the purchase price.

We also stayed in a huge 2BR suite at the Homewood suites in Phoenix that was similar. The unit was larger than any timeshare I have stayed in.

I do NOT mean to imply that there are not cases where it is better to stay in a timeshare. It all depends on location and the resort. I will still take the Grand Mayans over anything else however they are only in a select few locations. Homewood Suites is growing like wildfire and just opened their 200th property.

My point is that there are definitely many options available to the traveler depending on their preferences.


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## PerryM (Jul 11, 2007)

talkamotta said:


> *I guess you dont own in Maui.*    Too bad we dont get the increase in the real estate that is reflected in our tax increase this year.
> 
> My son is one of those people that is being talked about in the rental of condos market.  He rents out his 3 bed/3 bath condo w/2car garage during prime winter ski weeks for over $2K for the week. $1500-1800 for other ski weeks and under $1000 for the rest of the year.  Easy access to bus lines for all the resorts in Salt Lake and easy drive to Park City (not ski in and out by any means).  Over the year he covers his expenses and repairs and makes under $10K profit.  Gets a good tax write off.  The big deal comes in that he bought the condo for $150K and will sell it for over $300K.
> 
> ...



We vacation in Maui several times a year - WorldMark Kihei.  We pay just $500 MF per year for a 2BR unit!  I'm not fond of paying $1,200 MF in Maui that many folks pay.


I'm waiting for a developer to use the Disney model - RTU, but with a twist.

Why can't a developer NOT sell the 52 weeks a year as individual deeds - sell a 40 year RTU and at the conclusion the resort reverts to whole ownership and is sold over a 1 year period - the proceeds are split among the owners at the 40 year mark.

That way the timeshare is really whole ownership with RTU ability for 40 years.  I'm guessing that it would behave like Disney - hold its value and appreciate over the years to match the underlying real estate value of the resort.

Is there a developer out there that is doing this now?  If not, why not?


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## timeos2 (Jul 11, 2007)

*Not on our land*



PerryM said:


> We vacation in Maui several times a year - WorldMark Kihei.  We pay just $500 MF per year for a 2BR unit!  I'm not fond of paying $1,200 MF in Maui that many folks pay.
> 
> 
> I'm waiting for a developer to use the Disney model - RTU, but with a twist.
> ...



Perry - Great idea but the mentality of developers isn't to maximize future benefits - especially not for the mere buyers. Even the one case you point at where they actually are planning to terminate the project at a known date - DVC - the value isn't going to the buyers but into Disney's pockets.  In fact the exact reverse of appreciation for buyers will occur. Rather than seeing a value rise as the eventual return on the property sale gets closer the DVC owners will see higher annual fees and a termination of the use rights.  So the resale value of what they bought will plummet as the end date nears. On the older DVC resorts that trend may already be starting. 

I think it's the Royals that have a plan similar to what you suggest where the RTU ends but the owners share in the project sale price.  I don't know if any of them have actually reached the end point yet or what return is anticipated when they do.  Having the buyers share is the fair way but that isn't the American Developer approach to timeshares.


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## PerryM (Jul 11, 2007)

timeos2 said:


> Perry - Great idea but the mentality of developers isn't to maximize future benefits - especially not for the mere buyers. Even the one case you point at where they actually are planning to terminate the project at a known date - DVC - the value isn't going to the buyers but into Disney's pockets.  In fact the exact reverse of appreciation for buyers will occur. Rather than seeing a value rise as the eventual return on the property sale gets closer the DVC owners will see higher annual fees and a termination of the use rights.  So the resale value of what they bought will plummet as the end date nears. On the older DVC resorts that trend may already be starting.
> 
> I think it's the Royals that have a plan similar to what you suggest where the RTU ends but the owners share in the project sale price.  I don't know if any of them have actually reached the end point yet or what return is anticipated when they do.  Having the buyers share is the fair way but that isn't the American Developer approach to timeshares.




True, I'm just presenting a new timeshare model that could address the Achilles Heel of timeshares - NO appreciation when a whole ownership condo is sliced into 52 owners each of which has different plans for their ownership.


As much as I love our timeshare ownership I'm very worried about an industry that does NOT respond to supply and demand pressures but where each Friday has a scheduled price increase - this is very troubling to me.


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## bnoble (Jul 11, 2007)

> Why can't a developer NOT sell the 52 weeks a year as individual deeds - sell a 40 year RTU and at the conclusion the resort reverts to whole ownership and is sold over a 1 year period - the proceeds are split among the owners at the 40 year mark.


They can.  The question is: why would they?

True, such intervals could be sold at an even higher premium, because they have more value.  But, you need an *educated* consumer (or, as Boca suggested, an investor-class) to be able to value the interval properly.

Timeshare developer sales right now depend on precisely the opposite---the _uneducated_ consumer.  A consumer driven by passion and emotion rather than rational valuation.  When's the last time you sat in a presentation where a front-line sales agent actually admitted that there could be something called the time-value of money?  

After all, the vast majority of timeshare developer sales are big losers compared to cash rental rates over the lifetime holding.  There are exceptions, but they are rare, and they require ridiculously long horizons for a payoff.

So, the question is: is it more profitable to sell to the uneducated customer, or the investor?

So far, the industry has answered resoundingly with the former.  It would take real out-of-the-box thinking for someone to try the latter, but it could come out of the condotel market.


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## PerryM (Jul 11, 2007)

bnoble said:


> They can.  The question is: why would they?
> 
> True, such intervals could be sold at an even higher premium, because they have more value.  But, you need an *educated* consumer (or, as Boca suggested, an investor-class) to be able to value the interval properly.
> 
> ...




NO investor, to my knowledge, has ever bought a timeshare.  I don't remember seeing stories about investors bought a timeshare for a quick killing - make 50% on their money in a year.  I am an investor and do look at our timeshares as investments but I don't confuse them with investments in whole ownership units we own.

Why Not?  Why not go after a 100% untapped market - investors.  Instead of paying millions for a single condo they buy a timeshare where the owners 40 years from now will split the proceeds of 40 years of appreciating real estate.

Would this keep the resale price, which is going to lose 1/2 initially, tracking whole ownership real estate?  I don't know to be honest but I'm guessing it would since the condo is never sliced into 52 owners.  It WILL be sold as whole ownership units in 40 years and the owners then split the proceeds - why wouldn't it keep up with real estate?


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## taffy19 (Jul 11, 2007)

timeos2 said:


> I think it's the Royals that have a plan similar to what you suggest where the RTU ends but the owners share in the project sale price. I don't know if any of them have actually reached the end point yet or what return is anticipated when they do. Having the buyers share is the fair way but that isn't the American Developer approach to timeshares.


Yes, one or so has and there have been many posts about it. I feel that this is one company that really has the interest of their timeshare owners at heart. Search *Ellis2ca*'s post and you can read a lot about it. I follow them as it is such a contrast from other developers in Mexico and in this country too.


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## wwiggins (Jul 21, 2007)

*where to learn the game*

I had been to Gatlinburg and bought a 7,000 point EOY Bluegreen for over 8000 plus closing and all other fees.  After getting home and looking at resale I wrote within the alloted time and cancelled.  After looking for a week I made an offer for and agreed to buy a 20,000 bluegreen points in St Augustine from Pinnacle with all the perks for $8,400.  I don't know if this is a great price but it was the best I could find and 2,500 less than their asking price.  

My question now is; How do I learn to play the game? Is there a newbie site that explains how to get the most out of Bluegreen?  This whole forum sounds like another language to me.

Wwiggins


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## wwiggins (Jul 22, 2007)

*found newbie help*

Ok, I've found the newbie help forum and the timesharing 101 page.  That really helps, but what I lack is the specific tips and tricks as they apply to Bluegreen. 

wwiggins


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## eal (Jul 22, 2007)

http://www.timeshareforums.com/forums/bluegreen-resorts/

This is the Bluegreen forum at Timeshare Forums


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