# This is Why I Don't Own Anymore



## DougH (Oct 4, 2006)

I used to own at the Kauai Beach Club (2Br/2Ba oceanview), bought it during pre-sales for only $23k in early 1997.  The original maintenance fees were about $650/year.  As the maintenance fees grew and grew, and I learned more of the in's and out's of timesharing...I decided to sell.  I figured between the annual escalating maintenance fees that I'd now be saving, and the interest I could be earning on the money I made from selling it...I could easily get one week per year at the resorts I wanted.  So...Marriott bought it back from me, and after their commissions, I got a check of about $29k from them, which was a $6k net profit compared to my purchase price.

I put that $29k in a 'safe' investment, and after taxes have been realizing about 5-6% return.  So, that's about $1,600 per year, plus the approximate $1,200 in saved maintenance fees per year = $2,800 to spend on vacation rentals annually.

Now, here's a prime example of why I did so.

I just finalized the details of my next trip to Kauai - 12 nights at the Marriott Waiohai.  The total cost for 12 nights was approximately $1,800.  I got these days by renting an oceanview unit from an owner, and then getting a preview package from the Waiohai for an additional 5 nites (where they throw in the free rental car and the $50 in spending bucks at the resort).

Now I know everybody always says...the reason you own is so you can get the resort during peak periods.  Well, the timeframe I'm going is during my kids spring break..so that's a pretty peak time period I think.  Additionally I lucked out and was able to get 4 tickets using my frequent flier miles on UA.  So only have to purchase two tickets (total of 6 in our family).

So, my $2,800 in annual savings will pay for not 7 nights, but 12 nites at the Waiohai.  I'll have $1,000 left over to cover my mini-van rental (after I upgrade my free 'preview car', this will cost me about $400 for the 12 nites.)  That now leaves me with $600, which I'll use towards the purchase of one of the two airline tickets I'll be needing.

Bottom line...I have 5 extra nights at the Waiohai, I paid for my mini-van rental, and I bought a plane ticket to Kauai.

And best of all...I still have that $29k in my investment accruing interest for my next trip.


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## seatrout (Oct 4, 2006)

1.  You can't "preview" every year.  It also cost some of your vacation time to preview

2.  Same comment can be made for most realestate.   Thus you can rent rather than own your home.

3.  Please teach me how to consistently invest "safely" and still get 6% after tax.  I am in the 37% tax bracket.


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## m61376 (Oct 4, 2006)

What you said does make a lot of sense (although many of my investments haven't yielded that kind of profit post-tax:annoyed: ). I similarly crunched the numbers, deciding recently to enter the timeshare foray. There is the flip side to this too though- your calculations are based on a lot of good deals- a good deal on a rental and the availability of a timeshare presentation freebie during consecutive and desirable periods. To assume that will be available annually is not something one can count on. Admittedly, you did get a better deal for this year- but what about next?

Also, while on a practical basis there may not be a huge savings IF rentals are easily and cheaply available for what you want when you want to go, it is nice not to have to consider whether it is worth a few thousand dollars for the trip. I know, for us at least, the initial outlay will long be forgotten in a few years, and I will look at the week as costing the maintenance fees and the airfare; it will be a cheap week on the beach relaxing and I won't think about the expenditure. My guess is that, ultimately, it will mean an extra vacation for us. I also love the size and the lock-off flexibility and, as many others have, look forward to creating multi-generational family vacations. We have done that for years with my parents and kids on cruises and hotel rooms; I know we will enjoy the flexibility of a timeshare and that, for us at least, it will be money well spent.


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## myip (Oct 4, 2006)

OP does have a point.

With tax of 37%, the net saving is  ($1600 * 63%)  $1008 + $1200 = $2208.

Take away all the extra bonus of preview packages, if you can rent it less than $2208 per week (doeable), it doesn't make sense to tide up your capital investment.


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## DougH (Oct 4, 2006)

seatrout said:
			
		

> 1.  You can't "preview" every year.  It also cost some of your vacation time to preview
> 
> 2.  Same comment can be made for most realestate.   Thus you can rent rather than own your home.
> 
> 3.  Please teach me how to consistently invest "safely" and still get 6% after tax.  I am in the 37% tax bracket.



Actually I can preview every year...already been offered a preview of the Maui Marriott and the KoOlina.  It only takes 60 minutes of my time to preview at most.

As far as renting/owning a home and comparing that with a timeshare, that's apples and oranges.  Most homes are an appreciating asset (99% of timeshares are not).  You can write off the interest charged on a primary house mortgage (for the most part you can't do that with timeshares).

On my investments - I do mutual funds.  Year to date I'm at 9.18% growth.  Given a 37% tax bracket, that would be a 5.78% net yield.  Over the past five years my gross return has been 10.89%, which would be a 6.86% return after taxes.

Let's say I didn't do the preview, and just did the 7-night rental from the owner...I'd only have spent $1,200 for the one week at the Marriott Waiohai.  Which is what my maintenance fees would have been if I owned!  Which means I'd have an additional $600 to purchase my other airline ticket with, or to take a tour with, or to spend on whatever I wanted.

This isn't the 1st time I've pulled this off...I do it almost every year.  Just takes planning and patience.


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## DougH (Oct 4, 2006)

myip said:
			
		

> OP does have a point.
> 
> With tax of 37%, the net saving is  ($1600 * 63%)  $1008 + $1200 = $2208.
> 
> Take away all the extra bonus of preview packages, if you can rent it less than $2208 per week (doeable), it doesn't make sense to tide up your capital investment.



I actually am clearing at least $1,600 per year *AFTER* taxes, not before taxes.  See my previous note about the returns I've been getting.  And...I'm not in a 37% bracket...MUCH lower for me...but I still used the 37% tax bracket in my most recent example.  I conservatively have $2,800 of 'real' money available to spend annually with this method.

Not trying to argue...but I've been down both roads now..and this is far preferable for me as it gives me much greater flexibility.


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## Steamboat Bill (Oct 4, 2006)

Doug clearly has figured out the best use of HIS money. I am glad TUGbbs posters can appreciate this and offer constructive critisims. On other bbbs like DISboards, you would be flamed for such as post as this would be almost unAmerican...I know because it happened to me.

Here is my take:

$29,000 invested at 5% (conservative) = $1450
Minus 30% tax ($435) = $1015
Add in MF ($1200) = $2215 grand total.

If you can replace the vacation for less than $2215, then you are in a positive cash flow.

I like to think of TS as a short term investment (5 years max) that will hopefully allow me to spend quality family vacations at a cost effective rate. I have bought and sold several times and have not lost any money yet.

Clearly "cash is king" and allows the most flexible planing, but I find the security of OWNING my reservation worth the investment as I only have a few precious weeks per year to spend with the family. If I get a good deal on a rental and they screw me at the last minute...I will have to pay major $$$ to fix the problem.

Hawaii, ski weeks, Aruba, Palm Springs in Spring time, Disney (DVC) etc. all warrent a TS purchase if you like to return there on a consistant basis. If you are shy about returning to a certain location or want maximal variety, then keep on renting.

I have rented weeks and bought TS. Currently I like to own my prize locations and will rent at the areas I want to explore.


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## BocaBum99 (Oct 4, 2006)

Doug,

I think you are using the right modeling for your rent vs. buy decisions.  What you haven't done is used that model on enough timesharing alternatives.  Once you do, you will see that there are some tremendously great timeshare investments.

They tend NOT to be the branded hotel timeshares.  They tend to be the off brands.

It is possible to earn 25-50% return on invested capital (or MORE) if you purchase the right timeshares at the right price.

Then, when you add on the extra benefits of flexchanges, trade ups and access to cheap rentals available only to owners, then the savings really mount.  Those real savings ratchet up your return on investment.  And, I'm talking about real savings, not vs. rack rates.

In addition, if you are fortunate enough to be in the 37% tax bracket, then timeshares can be used in conjunction with residental real estate to capitalize on that tax bracket.  Buy a rental condo and you will accrue a bunch of tax losses that you will need to carry forward due to your tax bracket.  Use timeshare rental profits to offset those losses with profits thereby working down those carry forward losses and increasing the return of that residential condo purchase.


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## Steamboat Bill (Oct 4, 2006)

BocaBum99 said:
			
		

> In addition, if you are fortunate enough to be in the 37% tax bracket, then timeshares can be used in conjunction with residental real estate to capitalize on that tax bracket.  Buy a rental condo and you will accrue a bunch of tax losses that you will need to carry forward due to your tax bracket.  Use timeshare rental profits to offset those losses with profits thereby working down those carry forward losses and increasing the return of that residential condo purchase.



This quote cracks me up as it implies that you will lose money by purchasing a hotel/condo and for MOST people, this is probably true.

I have evaluated a dozen or more hotel/condos and passed on all of them except the Delta Whistler Village Suites in BC, Canada. It is not a home run purchase as the ROI (with no mortgage) is only about 3%, but I lucked out with the CAD vs USD conversion as the CAD had risen about 25% vs the USD. I will probably sell before the 2010 Olympics and HOPEFULLY turn a nice profit of 20% or more on the increased capital appreciation (fingers crossed)

If I had to take a mortgage, I would be in a negative cash flow (sad face) and 99.99% of hotel condos I have evaluated are great investments for the hotel condo builder only.

Thus, stick with a real condo/townhome if that is your thing or just use TS for the MOST cost effective vacation planning.


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## KenK (Oct 4, 2006)

FDIC CDs:

Wachovia unpublished CD (Neptune office) $5000+ min = 5.50%

Sun Trust Advertised 1000+ CD on web = 5.29%

Bank United (Fl) CD = 5.50% on web

Wash Mutual in office (Neptune) CD = 5.68%  ($10,000 min)

Ad in NYT Sunday (Forgot bank) CD = 5.69%  (forgot min)

But not tax free or tax exempt.


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## Steamboat Bill (Oct 4, 2006)

Remember the CD rates were less than 1% a few years ago.

It is funny how time changes things. That is why I suggest 5 years for a TS purchase.

I bought my first DVC contract and ultimately bought $80,000 worth of DVC between 2001 and 2003 and I used the example of 1% CD rates as an example of why DVC was a better buy.

Now with CDs at over 5% and DVC point rentals at the same $10pp...it is time to sell most of my DVC holding and have fun with Marriott, ski weeks, CDs etc. I will still maintain one DVC contract ($20,000) as I still have kids.


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## seatrout (Oct 4, 2006)

In reality, TS are poor investment as there are plenty of investment better. I can buy realestate that may appreciate, easier and less hassel to rent and better tax benefit.  TS, however is much better than my "vacation" home which I pay the mortgage, constant maintenance and only go 1-2 weekend a year.


I think of TS as a "toy" which commit me to take my family to vacation every year.   If I did not own the timeshare, it would be tough to convince my wife for us to take off work and go on vacation every one to two months.
In the end, it give us more time to spend with the family and have many good memories.  If you have to look at price and cost everytime then we would likely to go on vacation much less.

We all own many toys such as sport cars or boat or other that are very poor investment but are great fun to have.  I own a 911 porsche because I alway wanted one.  I only drive it maybe 1-2x/month.  But the insurance/tax and original cost was more than any of my timeshare.  It also depreciate rather than appreciate.


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## DougH (Oct 4, 2006)

seatrout said:
			
		

> I think of TS as a "toy" which commit me to take my family to vacation every year.   If I did not own the timeshare, it would be tough to convince my wife for us to take off work and go on vacation every one to two months.



This is interesting...I've read many many posts on TUG from people saying this same thing.  I've never had a problem convincing myself, my wife, or my 4 kids that we need to go somewhere on vacations !  The only tough part comes when trying to decide where to go !


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## seatrout (Oct 4, 2006)

Doug

try to do that every month or two and it may be tougher to convince everyone.  But when it is already prepaid-it is easier.  

Triet


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## Bootser (Oct 4, 2006)

For what its worth......... 
I think DougH has done a good analysis. It is the kind of thing we all should do and probably did do before buying.
BocaBum offers some good advice too. The analysis changes if the front end cost is much lower. Marriott's are expensive and you have to decide if the upfront cost is worth the benefits. If the upfront cost is $5000 it changes the economics. Whether it changes the qualifty can be a personal decision.
Taxes need to be left out unless you are going to include them for everything. In otherwords, I doubt that many of us paid for out timeshares or maintenance fees with pre tax dollars. If you're going to use taxes on the investment return side then you better include the fact that to pay that $1000 annual fee you will have to earn nearly $1400 before taxes to pay it. And even worse you will have to make about $36000 pre tax to pay for that $23000 timeshare.
I don't quite think of my timshare as a toy, but my timeshare purchase (based on DougH method) has been a breakeven. I did apply the analysis and it made economic sense. My real economic benefit has been from airline savings.However for me it is not just about payback. Vacationing is not the kind of thing that lends itself to easy economic analysis. Too many peronal things involved, sometimes as simple as going when you want to go, where you want to go and knowing you're going back again.


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## MOXJO7282 (Oct 4, 2006)

I agree with DougH.'s point for the most part, but it isn't that cut and dry, some can swing it the other way.

That's where the value of the prime location LOs can be huge. Many people split, rent half, and come away with not only covering their MF, but with money in their pocket.  

Let's take a Maui LO. I know someone who split and rented the studio for $1625, and are using the 1BDRM. They actually do it with multiple weeks.

So their equation is much different. It would look something like this:

$85K purchase * 5% =  $4250 after tax - $2975
Rental revenue - $4500
Maint              - $2650
1 week in Maui in 1BDRM - $1800 value

That looks like a solid ROI to me. I'm not a finance guy, so I can't extrapole these numbers, but I would think their ROI is as good or better than the historic mutual fund average over the years.  

Regards.
Joe


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## short (Oct 4, 2006)

*Math question?*



			
				MOXJO7282 said:
			
		

> I agree with DougH.'s point for the most part, but it isn't that cut and dry, some can swing it the other way.
> 
> That's where the value of the prime location LOs can be huge. Many people split, rent half, and come away with not only covering their MF, but with money in their pocket.
> 
> ...



I don't follow your math. Wouldn't it be.

Rent                     $4500
less MF                   2650
less forgone interest  2975

Net loss                  -1125

If they are getting use of a 1 bedroom for 1125 net cost thats an OK deal but not great.

Short


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## short (Oct 4, 2006)

*Tax fee munis are between 4-5 percent.*

Tax free muni bonds have are yielding between 4-5 percent currently and have not dropped much lower than 4 even when interest rates on CD's were at 1 percent.

I think 5% after tax is a reasonable return for most years.

Short


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## Eric (Oct 4, 2006)

Some people would rather pay for their vacations than "take advantage" of packages. In 20 years of timeshares I have never taken a preview package and never will. Using your logic, why don't you tour 4 or 5 resorts and get free food ?
To each his own but thats not for everybody. I go on vacation to relax, not talk to timeshare salesman. 




			
				DougH said:
			
		

> Actually I can preview every year...already been offered a preview of the Maui Marriott and the KoOlina.  It only takes 60 minutes of my time to preview at most.


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## DougH (Oct 4, 2006)

Eric said:
			
		

> Some people would rather pay for their vacations than "take advantage" of packages. In 20 years of timeshares I have never taken a preview package and never will. Using your logic, why don't you tour 4 or 5 resorts and get free food ?
> To each his own but thats not for everybody. I go on vacation to relax, not talk to timeshare salesman.



Fair enough...but if I only have to spend 60 minutes (and with Marriott, which is totally no pressure, I've been out in 30-45 minutes) to save $1,500 - 2,000...while my kids are still asleep in bed....I deem it a wise use of my time and money.

I think you're being a bit abrasive in your response, but I respect your viewpoint.


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## JimC (Oct 4, 2006)

I view it as a trade-off of many factors.  For some, having the ability to rent from other owners serves them well.  For some, having the abilty to just book is preferable.  Then there are those who have one week to trade and access II and the deals it offers.  There are many ways to vacation with timeshares and the choices are what make it such an attractive way to vacation.  It is a mutually beneficial system.


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## JimC (Oct 4, 2006)

Eric said:
			
		

> Some people would rather pay for their vacations than "take advantage" of packages. In 20 years of timeshares I have never taken a preview package and never will. Using your logic, why don't you tour 4 or 5 resorts and get free food ?
> To each his own but thats not for everybody. I go on vacation to relax, not talk to timeshare salesman.



I don't really see a problem taking a tour.  I tell them why I am there and what I want out of the tour.  Usually it is just an update and the incentive.  Marriott knows that going into it.  And like Doug, I have found that it is a quick and enjoyable hour (or less).

I do agree that one might be able to overdo it.  But an hour out of a week on a Marriott tour is no significant imposition on my time.


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## BocaBum99 (Oct 4, 2006)

MOXJO7282 said:
			
		

> I agree with DougH.'s point for the most part, but it isn't that cut and dry, some can swing it the other way.
> 
> That's where the value of the prime location LOs can be huge. Many people split, rent half, and come away with not only covering their MF, but with money in their pocket.
> 
> ...



Actually, this is an incorrect financial analysis.  You can do your analysis in one of two ways.

First, you can do the cost of capital method or you can use an equivalent investment comparsion.

Using cost of capital, you equate renting with what it would have cost you to borrow the money so that the capital required is actually the same for both alternatives.  In this case, zero.  The best rate available is the prime rate.  Today's WSJ has it at 8.25%.  That's what I would use as the lowest cost of capital number.

So, the cost of that 1 bedroom unit would be:

$85000 * $.0825 = $7012 for cost of capital
MF:                       2650
Split fees                 150
Advertising:               30
------------------------------
Total cost:           $9842
Less rental rev:       4500
------------------------------
Cost of 1br:          $5342   That is a whopping price for 1 week in a Marriott without a kitchen.

This is what the apples to apples comparsion would yield.

If you use the equivalent investment alternative approach, you need to assign a hurdle rate for the investment given it's risk.  So, risk adjusted return is what matters.  A Treasury return of 5%, for instance is great if the risk you are bearing with your capital is equivalent to this zero risk return.  A timeshare has lots of risks including the ability to sell it later, the risk of higher maintenance fees, the risk of not renting the unit, etc.  I believe the right hurdle rate would be around 15-20% before I would consider it a good investment for the risk incurred.

So, given the equivalent risk, you would need to return, let's say 15%.

So now, the analysis would be:

$85,000 * .15 = $12,750 required return given risk
MF                      2,650
Split fees                150
Rental                      30
---------------------------
total cash req'd  $15,580
less rental            4,500
---------------------------
Cost of 1br:       $11080  clearly very bad.

So, the investment decision would be to not buy since you could invest the money in other opportunities of equivalent risk and get a better return.

This is a more appropriate way to assess your financial decisions.

This purchase was really more of a luxury purchase where the upfront fee was used to buy something you wanted to spend disposable cash on.  That's fine.  We all have items we purchase for this purpose.  But, it doesn't make it a good investment decision.


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## OCsun (Oct 4, 2006)

Steamboat Bill said:
			
		

> I have rented weeks and bought TS. Currently I like to own my prize locations and will rent at the areas I want to explore.



Steamboat Bill,

Analyzing the initial cost of my time-share's plus maintenance fee's, is something I do frequently.  When I reflect on how much I love my prize locations, especially St. John, I know why I invested in timeshares.


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## fmr MVCI (Oct 4, 2006)

DougH said:
			
		

> Actually I can preview every year...already been offered a preview of the Maui Marriott and the KoOlina.  It only takes 60 minutes of my time to preview at most.
> 
> As far as renting/owning a home and comparing that with a timeshare, that's apples and oranges.  Most homes are an appreciating asset (99% of timeshares are not).  You can write off the interest charged on a primary house mortgage (for the most part you can't do that with timeshares).
> 
> ...




Marriott's internal rules limit packages to three in a lifetime.  If you have figured a way to scam the system, I would not loudly proclaim it in a public BBS.


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## Steamboat Bill (Oct 4, 2006)

OCsun said:
			
		

> Steamboat Bill,
> 
> Analyzing the initial cost of my time-share's plus maintenance fee's, is something I do frequently.  When I reflect on how much I love my prize locations, especially St. John, I know why I invested in timeshares.



If I owned in St John...I would consider it a highly prized possession. I have been to the USVI and BVIs several times and never tire of visiting. 

Last summer, I chartered a private catamaran (60 ft) with a captain and crew for a week in the BVIs...at about $1,000 per day....it was one of the MOST expensive vacations I have every had...but a wonderful experience. Peter Island and Virgin Gorda are great locations also.

No matter what anyone says, when someone spends more than $10,000 on a TS, they would be FOOLISH not to run the numbers. Even with a cheap TS purchase, the MF can add up fast...thus, all TS purchases should be shaken out before buying.


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## DougH (Oct 4, 2006)

fmr MVCI said:
			
		

> Marriott's internal rules limit packages to three in a lifetime.  If you have figured a way to scam the system, I would not loudly proclaim it in a public BBS.



Scam ?  I'm scamming nobody.  They send me the preview requests via e-mail and via snail mail.  Heck, they know I used to be an owner to boot. 

No scamming going on here.


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## Eric (Oct 4, 2006)

Still kind of a cheesy way to save on vacation dollars every year. Doing it once or twice is fine but to put it in the yearly vacation plan is a bit over the top. 





			
				DougH said:
			
		

> Scam ?  I'm scamming nobody.  They send me the preview requests via e-mail and via snail mail.  Heck, they know I used to be an owner to boot.
> 
> No scamming going on here.


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## Steamboat Bill (Oct 4, 2006)

Eric said:
			
		

> Still kind of a cheesy way to save on vacation dollars every year. Doing it once or twice is fine but to put it in the yearly vacation plan is a bit over the top.



I am not sure if I agree with this statement...I enjoy learning as much as possible about TS...and if they make you a good offer...I say enjoy the ride.


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## MOXJO7282 (Oct 4, 2006)

Admittedly, my analysis is too simplistic, because there are other factors that are in play, that aren't in my analysis or yours, for that matter.  I try not to get into the financial analysis too much, because you could go back and forth about how to analyze. 

For instance, here's a few things not in either analysis:
* Almost $1 million Marriott points that were acquired in the purchase. To  
   me that's easily $15K or more.

* Value of ownership. On the buy side they own something that would return a value if sold. In some cases, like DougH's in fact, they could walk away with a profit. Renter owns nothing. How is that factored in?

Also, again analysis with cost of capital figures make assumptions about the assigned value. Yes historically there is a certain rate of return, but what if you are someone who invested during a downturn, or just made a bad investment, the return could conceivably be negative.

Some use creative financing to pay minimum financing (0% credit card game), so in that case there is no cost of capital, because you are using someone else's money. 

And what about those that have disposable income to pay for the TSs without taking away for their investment portfolio. If they didn't buy TSs they would have both an RV, like a friend did, so the money was going to be spent on a luxury item anyway. In my opinion, the cost of capital, should be more a cost of "lost investment", and should only be factored in, when someone diverts funds from investments to pay for a TS, then I do agree it should be factored in, otherwise it shouldn't

I guess my overall point is, I do think that renting is better in most situations, but there are unique scenerios where buying is a viable option. 

Regards.
Joe


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## DougH (Oct 5, 2006)

Eric said:
			
		

> Still kind of a cheesy way to save on vacation dollars every year. Doing it once or twice is fine but to put it in the yearly vacation plan is a bit over the top.



Just for clarification...I never said I do this every year did I ?  I simply responded to a statement that said I couldn't do it every year by explaining that I could if I wanted to, as Marriott is always asking me to. 

But, it occurs to me these previews are almost comparable to coupons you find in the Sunday paper.  Is it 'cheesy' to only buy a product when the coupon is available, never intending to use this product all the time?

I'm beginning to wonder if these reactions are because people are getting upset when they realize it's possible to get a great resort, at a great time, for much less than the price of ownership?

Once again...I want to re-iterate...I've heard several good explanations for why some people own, and I'm good with that.  It's just that for me...a person that's not flush with lots of extra cash...this is the best choice.


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## Icarus (Oct 5, 2006)

We knew the MF's at KBC were subsidized for the first few years, right?

I agree, pretty much, with everything you said, Doug, in the way you did your comparison. You're comparing buying a relatively high end TS interval at list price from the developer at a place with high MFs vs renting. Plus you bought early enough that you were able to make a profit after selling it back to the developer.

If we learned anything from TUG, it's "don't buy from the developer". Depending on what we buy and how, the numbers can stack up differently.

-David


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## Eric (Oct 5, 2006)

That must be it. There goes the developer market as Doug has cracked the code. 

See, now you think YOU are smarter then the average bear and are basically saying people are jealous of what you figured out. One could take offense to that statement also. It is all about choices, you are not right or wrong. The guy with the Chevy Cobalt could tell the BMW owner he has a better system becuase he gets to work at the same place but saves money doing it. The MVCI customer in general will pay more to make it easier and have ownership and not try loopholes and things to save money. To each his own 


I'm beginning to wonder if these reactions are because people are getting upset when they realize it's possible to get a great resort, at a great time, for much less than the price of ownership?


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## VVTrader (Oct 5, 2006)

Here is the  daily rate at the resort I own.
174.00 USD  * 	GOVERNMENT RATE--ID REQUIRED 
Rate requires deposit 	DLX RESORT CABIN/ 2BDRMS/ 1BATH/ 1QUEEN/ 2TWN/1SOFABED/KITCHEN/ FIREPLACE/674SQFT 

Weekly-     $1218 X 4 Cabins I reserved  for 4th of July week= $4872

Subtract my $2856 maintenance + $105 a week in housekeeping=$420 makes total outlay$3276.  Savings of $1596 - $200 approximately for getting the 4th week at RCI by trading another week. $1396 savings.
That's for one particular week ( July 4th) if I do this with other side of family and friends for Spring and Fall the savings multiply.

Plus since I've factored in the maintenance costs over that one week alone the costs would be for each additional vacation/holiday: 

$1218 X 4 =$4872 - $420 =$4472 -$200 approximate with RCI for the 4th week=$4272 savings



Plus the fact that I could rent the weeks or trade them for other resorts in other areas. 
 Plus my family and friends  think I'm a nice guy for giving them vacations. Priceless!

Of course if I didn't go on vacation or take friends and family, I could save all I spend and die with lots of money in the bank.  Choices.


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## Steamboat Bill (Oct 5, 2006)

MOXJO7282 said:
			
		

> I guess my overall point is, I do think that renting is better in most situations, but there are unique scenerios where buying is a viable option.



Looking at your profile, I assume that you found at least 5 unique scenerios???


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## fgauer (Oct 5, 2006)

*Money - in and of itself...*

This is a really great post - in fact most of my time spent reading posts on this forum are great!

I haven't purchased a TS yet - but I am really looking forward to do so during the next year or so (either DVC or Marriott). Once again this board is great!

As for the OP and the subsequent discussion, I've done (am doing) the investment thing. I have a nice sum of money piled up in an e-trade account and I watch it do about 8-10% a year (in good years). It's not a lot of money but it is a good sum for an emergency or to dream about.  It's definitely good to have a nice investment account going...

...but it leaves me wanting...

Yes we take vacations and spend $1000-3000/year when we can afford to on time away. I don't know - there is something intangible about the thought of owning some time somewhere however. My brother sinks a lot of money into his boat and cars. I really do nothing except watch my E-trade account.  Ho Hum - boring... There is enough there for an emergency, there is enough there for a little help with college etc. etc. etc. But what am I doing? Why am I watching this sum grow (and sometimes lose)? What is it for?

We splurged this year and went to Walt Disney World and WOW! Just some intangile and brilliant experiences. Even went through the DVC presentation and now I troll the DVC boards (DISBoards) waiting for the right time to strike on a DVC re-sale. 

I don't have tons of money - but I think a good strategy would be to do both: have something bought and an investment account to boot. Have the best of both worlds. There is something refreshing, cool, and inspirational about the thought of owning an opportunity to go somewhere every year. Being an 'owner' brings with it something intangible. (Can't quite put my finger on it but it feels good). To be honest - even though I don't have tons of money to spend on it - I don't really care about how much it costs (i mean within a reasonable tolerance of course) - I just want to know that all of this work and investing and $$ caution and whatever actually leads to something in my life...


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## Steamboat Bill (Oct 5, 2006)

fgauer said:
			
		

> I haven't purchased a TS yet - but I am really looking forward to do so during the next year or so (either DVC or Marriott). Once again this board is great!



You have the perfect TS attitude and you will be happy unless you get ripped off from a developer, but I think you will buy resale and look back on your purchase as a wise decision.

If you desire Disney, then you MUST buy DVC as nothing even comes close to recreating this experience. I would also advise RENTING points on DIS, rather than purchasing as the $10pp rental rates is only $1-2 more than the real cost if you buy. If you plan on trading II and want to visit other areas....forget about buying DVC and stick with Marriott.

If you are considering Marriott, there are a ton of good resale deals out there. You can always trade into Orlando easily and then explore the rest of the Marriott world as you see fit.


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## fmr MVCI (Oct 5, 2006)

DougH said:
			
		

> Scam ?  I'm scamming nobody.  They send me the preview requests via e-mail and via snail mail.  Heck, they know I used to be an owner to boot.
> 
> No scamming going on here.



I did not mean to offend, but seems like you are a bit defensive.  Sorry.

Have you done this more than 3 times?


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## DougH (Oct 5, 2006)

fmr MVCI said:
			
		

> Have you done this more than 3 times?



Nope - you didn't offend at all...didn't mean to sound defensive.  Just was saying I wasn't scamming anybody.

And nope - haven't done this more than 3 times.  I didn't even know there was a 3 time limit...but I guess I shouldn't be expected to know it since, as you state, it's an internal Marriott rule.  It would be up to them to enforce it.

But no sweat - no offense taken - no defense intended.


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## MOXJO7282 (Oct 5, 2006)

I do have mixed feeling about going on the previews without any chance whatsoever of buying, but I have to admit to doing it. 

I've never read the fine print, but if it doesn't restrict people from doing it multiple times, or express that you shouldn't do the tour if you aren't interest in purchasing. then I guess I shouldn't feel guilty.   

Regards.
Joe


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## rubycat33 (Oct 5, 2006)

*Cost of Money and Return on Investment*

I have probably said this before.  Actually, I should look it up.  I like to quote well informed money managers,  :whoopie:  HA! 
But when people start grilling me about timeshares, I compare it to my cars.  It is a standard of living.  And timeshares are similar to luxury cars.  If you are buying for investment, don't buy a timeshare.  It might hold it's value, but I bought mine for the FINE RIDE, not whether I could make money on them.  To do that I buy rentals.  Predictable, deductable and easy to sell.
Enjoy vacations.  That is why we take them.  Crunch the numbers for the other non vacation weeks of the year.


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## DougH (Oct 6, 2006)

rubycat33 said:
			
		

> If you are buying for investment, don't buy a timeshare.  It might hold it's value, but I bought mine for the FINE RIDE, not whether I could make money on them.  To do that I buy rentals.  Predictable, deductable and easy to sell.  Enjoy vacations.  That is why we take them.  Crunch the numbers for the other non vacation weeks of the year.



I whole-heartedly agree...I've just found that I can enjoy the same "fine ride" by renting from owners that I had when I owned.  Without some of the hassles (at least as perceived by me) that are associated with ownership.


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## rubycat33 (Oct 6, 2006)

*Point Well Taken*

You are absolutely right.  I has been surprisingly easy to rent timeshares.  The places I own I choose because I go there regularly.  I love the places and they were being taken off the "hotel" market.  But it seems to be easier to rent as sites RCI and MyResort seem to have more listings.


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## ciscogizmo1 (Oct 6, 2006)

rubycat33 said:
			
		

> I have probably said this before.  Actually, I should look it up.  I like to quote well informed money managers,  :whoopie:  HA!
> But when people start grilling me about timeshares, I compare it to my cars.  It is a standard of living.  And timeshares are similar to luxury cars.  If you are buying for investment, don't buy a timeshare.  It might hold it's value, but I bought mine for the FINE RIDE, not whether I could make money on them.  To do that I buy rentals.  Predictable, deductable and easy to sell.
> Enjoy vacations.  That is why we take them.  Crunch the numbers for the other non vacation weeks of the year.



Exactly...  I can't figure out why people are so hung up on MONEY...  Or who got the best deal.  You can't take it with you!  I think others just get jealous because other have more disposable income.  Not all of us have time to look for rentals on 20 sites or look for that best deal on ebay, etc...  The more time I spend looking for those things the less time I have to work thus making less money.  Everything in life is a trade off....


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## Steamboat Bill (Oct 6, 2006)

ciscogizmo1 said:
			
		

> Exactly...  I can't figure out why people are so hung up on MONEY...  Or who got the best deal.  You can't take it with you!  I think others just get jealous because other have more disposable income.  Not all of us have time to look for rentals on 20 sites or look for that best deal on ebay, etc...  The more time I spend looking for those things the less time I have to work thus making less money.  Everything in life is a trade off....



If I can save $10,000 on buying a Marriott TS (Manor Club), save about $20,000 on a Westgate Park City (ski week)...that is definatley worth the time I invest to figuring out what is a good deal. Perhaps I could have saved a few hundred dollars more....but with $30,000 savings by purchasing resale...I am WAY ahead of the game. Thanks TUG!


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## ciscogizmo1 (Oct 6, 2006)

Steamboat Bill said:
			
		

> If I can save $10,000 on buying a Marriott TS (Manor Club), save about $20,000 on a Westgate Park City (ski week)...that is definatley worth the time I invest to figuring out what is a good deal. Perhaps I could have saved a few hundred dollars more....but with $30,000 savings by purchasing resale...I am WAY ahead of the game. Thanks TUG!



hmmm... I wasn't talking about resales.  I was talking about rentals.  I'm saying it a harder effort to find a rental than a resale.   Definitely buy resale because you are saving tons of money but I don't see as big of savings for rentals for my effort.   Realize that is my situation, your situation may totally be different.


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## Bootser (Oct 6, 2006)

Couple of comments
fgauer
I agree you have a good attitude about TS. You are going to buy when you find the right one at the right price and place.
DougH
You've got it right as well. The economics were not in your favor. What you're doing now is working for you, meeting your needs and saving you money.
But not all timeshare situations will follow your analysis. Some of us have bought a at lower front end cost. As a result it changes the math much more favorably. We are vacationing where we want, when we want with the comfort of knowing that we've got this deal locked up. And you know going to the caribbean or Hawaii makes you want to try capture it and maybe own a piece of it. Timesharing allows that.
The other thing sometimes about timeshare collectors, excuse me buyers, self included, is that the purchase and ownership becomes a prize possession much like an antique car. It becomes the end and not the means.
That is okay it is my money. I'll also try not to take it personnally or get offended if renting is working for you. Because after all, it might be me you're renting from, making my economics work better yet.


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## turkel (Oct 6, 2006)

*Why we own*

I have been married 13 yrs.  I have 2 kids.  My honeymoon was 10 days long in 1993.  Since being married and then having kids my husband and I had only been on company paid "club trips".  Ocassionally we would take the kids on a 2-3 day trip to big bear or San Diego as we live in So Cal.  

 I begged my better half to buy us a timeshare. It took one presentation and 1 1/2yrs of constant nagging on my part to get him to agree.  

We bought Marriott resale a yr and a half ago.  Since then we have been on 3
vacations 2 have been to hawaii and 1 to our home resort in palm springs.  Although we bought at a good price (I am a bargain hunting nag) I don't regret the money we spent or will spend on Maintenance Fees.  

We now vacation as a whole family and thanks to our lock-off purchase we can now vacation 2 weeks a yr.  I know this would have never happened if I had to rent a place.  We are too conservative with our finances to shell out money to vacation consistently.  But we spent good money on our resale and the fees each year we won't waste that money either ,we will use it!  

For us this is the return on our investment and worth every penny!!!!!


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## m61376 (Oct 7, 2006)

Turkel- I couldn't agree more. I think owning eliminates some of the planning and indecisiveness over whether or not to go- if you have it and are paying MF, you're much more apt to use it.

We are in the process of buying our first one and have really learnt a lot from all these posts (and, yes, we bought resale thanks to everyone here  ). My only regret is that we didn't even realize rentals were available all these years and had never gone to one until this past summer. Although we travelled fairly extensively over the years while our kids were growing up, we were surprised at the improved vacation quality we all enjoyed when we stayed at Ko'Olina in July. My husband, who would not even step foot in a timeshare presentation, kept on saying, "would you ever want to travel any other way?" We generally travel with  3 generations and having a 2BR apartment was way more comfortable than 2 hotel rooms. Besides the spaciousness, the kitchen facilities were a big plus, esp. for breakfast, cold drinks for the cooler and snacks. I think it has spoilt us for more traditional travel arrangements.

And, yes, objectively I could rent a week in Aruba, where we bought, or in one of the locations I hope to trade into. I know it will probably take me 10 years or so of trips before my purchase price approximately equals my rental fees and, of course, I objectively know that I am losing potential investment income on that outlay. BUT- I don't have to think about whether I want to spend that money on a yearly basis, I don't have to search for a rental every year and try to bargain-hunt for the best price (which I would). I know that we can look forward every year to a relaxing week, spending time with our family, and it is something that the entire family can look forward to enjoying, in different configuration due to the lock-off flexibility. The truth is, even after getting a Tug education in rentals and having found all the sites to look, I would probably only rent once every few years if I didn't buy, because I would probably look at cheaper alternatives...but that's me, of course.


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## MLC (Oct 7, 2006)

Bootser said:
			
		

> Couple of comments
> fgauer
> I agree you have a good attitude about TS. You are going to buy when you find the right one at the right price and place.
> DougH
> ...



I agree with you a 100%.  We all have different ideas on how we vacation(some stay in hotels, rent timeshares or own timeshares) but in the end, as long as it works for you, that is all that matters.  All I would suggest is that if you buy a timeshare, you pay cash or if you can not pay cash, rent until you have enough disposable income.  If you buy a timeshare and borrow the money and if that does not hurt you financialy, then go for it.Both ways of vacation can work,and in the process you will make a memory.


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## Steamboat Bill (Oct 7, 2006)

MLC said:
			
		

> I agree with you a 100%.  We all have different ideas on how we vacation(some stay in hotels, rent timeshares or own timeshares) but in the end, as long as it works for you, that is all that matters.  All I would suggest is that if you buy a timeshare, you pay cash or if you can not pay cash, rent until you have enough disposable income.  If you buy a timeshare and borrow the money and if that does not hurt you financialy, then go for it.Both ways of vacation can work,and in the process you will make a memory.



This is good advice...I do not know of any justification for financing a timeshare. Perhaps that should be a new thread...ok I will creat one now.


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## MOXJO7282 (Oct 7, 2006)

BocaBum99 said:
			
		

> Actually, this is an incorrect financial analysis.  You can do your analysis in one of two ways.
> 
> First, you can do the cost of capital method or you can use an equivalent investment comparsion.
> 
> ...



Bocabumm99 or any other financial analyst out there,
                  I really don't think the above is an apples comparison, as suggested. I'm really curious about finishing the analysis above, with the Marriott rewards value and the ownership value factored in. I remember there was a calculator out there that did factor it in, but I can't seem to find anymore. Not factoring those into the equation makes the above analysis incomplete.

Regards.
Joe


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## Judy999 (Oct 7, 2006)

*Savings -*

KenK

One other option I found to save money is w/emigrantdirect.com

Currently - the rate is 5.05% - not tax free but it is very flexible.

No restrictions on minimum $  or length of time.

Judy


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## Pit (Oct 7, 2006)

MOXJO7282 said:
			
		

> I really don't think the above is an apples comparison, as suggested. I'm really curious about finishing the analysis above, with the Marriott rewards value and the ownership value factored in.



I beleive the analysis is accurate, with the exception of the Marriott points' value. That should be included. I don't know the correct valuation for those points. Even so, I doubt it would change the results significantly.



			
				MOXJO7282 said:
			
		

> Value of ownership. On the buy side they own something that would return a value if sold. In some cases, like DougH's in fact, they could walk away with a profit. Renter owns nothing. How is that factored in?



Actually, it is factored in. In the case of the OP, the renter owns his $29K investment. That investment is returning cash to him every year, as opposed to a TS "investment" which sucks cash from the owner each year in the form of m/f and depreciation.




			
				turkel said:
			
		

> We now vacation as a whole family and thanks to our lock-off purchase we can now vacation 2 weeks a yr.  I know this would have never happened if I had to rent a place.  We are too conservative with our finances to shell out money to vacation consistently.  But we spent good money on our resale and the fees each year we won't waste that money either ,we will use it!



No offense intended, but I don't quite follow this logic. It sounds like your saying, "If we had the choice, we would choose not to go on vacation. But since we've sunk our money into a t/s and have to pay annual fees, we feel obligated to use it."




			
				DougH said:
			
		

> I whole-heartedly agree...I've just found that I can enjoy the same "fine ride" by renting from owners that I had when I owned.  Without some of the hassles (at least as perceived by me) that are associated with ownership.



I think your analysis is on target. There is little or no difference between the "fine ride" enjoyed by the renter vs. owner, just as there is little or no difference in ride quality between developer vs. resale purchase. It all comes down to getting the vacation experience you want at the best available price. 

I own timeshares because it is the most economical way I have found to book world-class accomodations for my vacation time. If I could rent for less, I would. I am not emotionally attached to my t/s.


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## Steamboat Bill (Oct 7, 2006)

Pit said:
			
		

> I own timeshares because it is the most economical way I have found to book world-class accomodations for my vacation time. If I could rent for less, I would. I am not emotionally attached to my t/s.



Amen brother...that is EXACTLY the way I feel. 

I am tired of paying over $500 per night to stay at an overpriced Ritz, Grand Waileah, Four Seasons, Broadmore, NYC Plaza, etc. for a SMALL hotel room. I now have two kids and it is tight in a single room. Thus, I have been gravitating to the nicer TS properties and have not regreted it since. Thanks TUG!


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## MOXJO7282 (Oct 7, 2006)

Pit said:
			
		

> Actually, it is factored in. In the case of the OP, the renter owns his $29K investment. That investment is returning cash to him every year, as opposed to a TS "investment" which sucks cash from the owner each year in the form of m/f and depreciation.



It may be factored in on the renters side, but not on the owner's side. When an owner sells he get X amount back. In the case of the Maui units, they would could sell for $30K plus per unit=$60k. So how is that factored in? I don't see that it is, and it's a big factor.  The right way to analyze would be to look at a 5 yr, 10yr, 15yr intervals, with the units being sold at the end of each time interval. I guanrantee the equations end result looks a whole lot different.  

Regards.
joe


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## Pit (Oct 7, 2006)

MOXJO7282 said:
			
		

> It may be factored in on the renters side, but not on the owner's side. When an owner sells he get X amount back. In the case of the Maui units, they would could sell for $30K plus per unit=$60k. So how is that factored in? I don't see that it is, and it's a big factor.  The right way to analyze would be to look at a 5 yr, 10yr, 15yr intervals, with the units being sold at the end of each time interval. I guanrantee the equations end result looks a whole lot different.
> 
> Regards.
> joe



There is an implied assumption in Boca's analysis. The assumption is that the owner will recover his investment, dollar for dollar, upon resale. Thus, there is no gain or loss included, only the cost of capital. 

In reality, there are very few developer weeks that can be resold at cost, much less a profit. The vast majority of owners who buy developer end up with a substantial loss when they resell. (The OP cites an exception, not the norm. Compare ebay resale vs. developer pricing.  )

If the analysis included a provision for resale loss, the result would be even more skewed in favor of the renter. If you can consistently buy t/s and resell them for profit, then obviously, your results may differ.


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## MOXJO7282 (Oct 7, 2006)

This always happens when this discussion comes up, and the "financial analyst " make blanket assumptions to just aren't always relative. Cost of capital is one of them. There are just times when it doesn't apply or is much lower than what many say. 

I would imagine there are many many people that bought from dev or even resale, and then at some point refinanced, and locked in to a rate of 5% or less for 15 yrs. So no cost of capital, just finance interest, which was much lower than WSJ cost of capital, and is also time based, perhaps 15 yrs.

I know someone who bought 10 weeks at the Aruba Surf in one shot, when it was in pre-construction and refinanced his home, locking it at a rate of 4.75% for 15 yrs. So in his case, he's using the banks money, at a really low rate, , with a tax refund, which he plans on paying off in about 11yrs. 

So no cost of capital, just the interest he's paying. He tells me he is renting for $2000 above MF and fees on average, sometimes more.  After 11 yrs he will be free and clear of the loan. He also got a ridiculous amount of reward points, which he figures will get him over 10 1st class trips to Aruba for his family of four. I so wish I would have thought of this, or I would have done the same. He bought preconstruction, like I did, but he knew Aruba, and was convinced they would be hugely popular, and bring in great rental income. He is in a very rich social circle, so he has no problem renting for great premiums. 

So what's the equation on the scenerio? This guy is a bigwig at Smith Barney, so he must know what he's doing. 


I also know someone who used creative financing to pay for their portfolio. They have used credit cards to pay off their TS costs. They have the bulk a 1.99% life of loan, more on 2.99% less on a 3.99%. They are paying them down significantly every month so it will not be an indefinate payment. So again no cost of capital, and at some point they will be free and clear and own outright. Last year they had a positive cash flow of over $8K, beyond any finance costs, MF and fees.

So I think these are good examples that at the very least, that make the cost of capital argument not relative in all cases.

Regards.
Joe


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## turkel (Oct 7, 2006)

No offense intended, but I don't quite follow this logic. It sounds like your saying, "If we had the choice, we would choose not to go on vacation. But since we've sunk our money into a t/s and have to pay annual fees, we feel obligated to use it."

Pit,
 No offense taken.  The fact of the matter is my husband would rather not vacation as we have enjoyed many a trip on the company dime.  But children are excluded from these trips.  Hence we did not vacation as a family.  As children grow up they want to spend less time with the folks I figured vacationing together would bring us closer as a family. 

 Also my father died quite young 6 yrs ago at the age of 58.  It brings me great comfort when I think of him to know he travelled the world and took the time to enjoy life. He owned a Marriott timeshare.

My husband works a stressful job in sales as my father did.  I wanted the timeshare my husband did not.  After almost 2 yrs my husband gave in. He often says "A happy wife, a happy life."  If we did not buy this timeshare my husband would not go.  Now he has to because as I said we don't waste money.

I also used our 2004 tax refund to purchase the timeshare.  I know it is not finacially logical but I viewed it as found money.  It wasn't a paycheck and it never made it to our savings account and I didn't need to withdraw money from our other goals to pay for it.

Our timeshare was an emotional purchase not a financial one.  However I run the money in our house and I figured out it made both emotional and fiscal sense.  I paid lessthan a third of what the OP paid, I got a 2bed lockoff which allows us 2 weeks a yr.  I calculated exactly what it will cost me per night over the next 10 yrs.
Purchase price $7000=$700/yr over 10 years
MF $771
Taxes $134
Split fee $75
Exchange fees $89x2=$178
total=$1858
Divide this by my 14 nights vacation= a cost of $132.71 per night

Also I have complete confidence that I would make my money back if I were to sell today.  On ebay this summer my resort and season sold for $1000 to $3000 more than I paid.  I also got 5 yrs of II and a yrs use included in the deal so I actually did better than the above rate I quoted.

$132.71/night is a great rate for a family of four in a 1 bed minimum suite(we won't exchange for a studio, we use our studio in flexchange).  If I assume a return on my capital if sold I actually pay $82.71/night.  I couldn't get 2 rooms at Motel 6 at that rate let alone Marriott quality.

I am sorry for the long winded response.  My point being a timeshare can make good fiscal sense as well as emotional sense.


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## Steamboat Bill (Oct 8, 2006)

Turkel:

I would NOT include the cost of the TS ($7000) into the equation as you can easily get this back today, nad probably turn a profit when you decide to sell. However, I would deduct $350 per year for LOST income opportunity (5%) for the $7000 purchase. Take away taxes of 30%, and this leaves you with only a $245 per year loss.

Thus, your true yearly cost (IMHO) is only: $1403 = $100.21 per night


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## akantro (Oct 8, 2006)

*Feedback on Aruba Surf TS purchase analysis*

Folks,

I did analysis after returning from Aruba Surf club vacation. I am curious to hear feedback on this way of analyzing a TS purchase. I have listed my assumptions below along with a table of yearly ROI. 

*An extremely important point is that you are comparing the timeshare purchase versus an equivalent vacation (7 nights in 2 bedroom in Aruba) every year*. ($2,100 is actually pretty low for weekly 2 bdrm rental in Aruba, as i have seen the hotel charge up to $600 per night in peak season).  This point makes all the difference in the math because it you are comparing TS versus going on vacation once every few years, it changes around the numbers dramatically.  

So, based on the point above and the math below, my conclusion is:
If you plan to go on a vacation every year to one of these places, a timeshare is actually a good way to go.  If you don't plan on this vacation lifestyle, then a TS probably doesn't make sense and investing your money would be better. 

From this analysis it seems that you lose money in the first few years with my assumptions but breakeven after 18 years. 

Assumptions:
Interest Rate on money invested:    *5%*
Time Share Maintenence Inflation:    *4%*
Hotel Inflation:    *2%*
Cost of renting 2 bedroom in Aruba, 7 nights: *$2,100*
Initial Cost of Timeshare: *$33,600*
*NOTE:* I am not factoring in any dollar value from points or incentive from getting to TS and i am not factoring in any resale value either 

Definitions of Columns:
1. *Year* = year of analysis
2. *Initial *= the amount of initial lum sum.
3. *Opp Cost *= The money that you would have earned by investing
4. *Main* = Maintenence Cost of TS (assuming TS inflation rates above)
3. *TS*= The Opp Cost + the Mainenence cost
4. *Rental* = The cost of renting similar property (assuming rental inflation rates above)
5. *Value*= Rental - TS Cost (value of TS versus renting)

So if you have a negative Value, it would be cheaper to rent that year.
A positive Value, would be better to have the timeshare.

*An important point is that your initial column does not stay the same from year to year. The inital sum changes based on the assumption that you rented as seen below:*

For example, if you do a normal rental vacation:

Year 1, you have +$33,600.
You put your 33,600 it in the bank and earn +$1,680.
Your vacation rental costs -$2,100

*$33,600 + $1,680 + $2,100 = $33,180*

So, in year 2, your initial number is $33,180 

Here is the yearly breakdown of ROI: (sorry, copy and paste from excel didn't retain column spacing but the last column (ROI) is the important one)

Year,	Initial,	Opp Cst,	Main,	TS,	Rental,	Value
1	33,600	1,680	811	2,491	2,100	-391
2	33,180	1,659	843	2,502	2,142	-360
3	32,697	1,635	877	2,512	2,185	-327
4	32,147	1,607	912	2,520	2,229	-291
5	31,526	1,576	949	2,525	2,273	-252
6	30,829	1,541	987	2,528	2,319	-210
7	30,052	1,503	1,026	2,529	2,365	-164
8	29,190	1,459	1,067	2,527	2,412	-114
9	28,237	1,412	1,110	2,522	2,460	-61
10	27,188	1,359	1,154	2,514	2,510	-4
11	26,038	1,302	1,200	2,502	2,560	58
12	24,780	1,239	1,248	2,487	2,611	124
13	23,408	1,170	1,298	2,469	2,663	194
14	21,915	1,096	1,350	2,446	2,717	270
15	20,294	1,015	1,404	2,419	2,771	352
16	18,538	927	1,461	2,387	2,826	439
17	16,638	832	1,519	2,351	2,883	532
18	14,587	729	1,580	2,309	2,941	631

*Sum of ROI after 19 years (+$500) Essentiallly Breakeven* 

19	12,376	619	1,643	2,262	2,999	738
20	9,996	500	1,709	2,208	3,059	851
21	7,436	372	1,777	2,149	3,120	972
22	4,688	234	1,848	2,082	3,183	1,100
23	1,739	87	1,922	2,009	3,247	1,238
24	0	0	1,999	1,999	3,311	1,313
25	0	0	2,079	2,079	3,378	1,299
26	0	0	2,162	2,162	3,445	1,283
27	0	0	2,248	2,248	3,514	1,266
28	0	0	2,338	2,338	3,584	1,246
29	0	0	2,432	2,432	3,656	1,224
30	0	0	2,529	2,529	3,729	1,200
31	0	0	2,630	2,630	3,804	1,173
32	0	0	2,736	2,736	3,880	1,144
33	0	0	2,845	2,845	3,958	1,112
34	0	0	2,959	2,959	4,037	1,078
35	0	0	3,077	3,077	4,117	1,040
36	0	0	3,200	3,200	4,200	999

*Sum of ROI after 36 years, (about +$20K)*

thoughts ??


----------



## MOXJO7282 (Oct 8, 2006)

akantro said:
			
		

> Folks,
> 
> I did analysis after returning from Aruba Surf club vacation. I am curious to hear feedback on this way of analyzing a TS purchase. I have listed my assumptions below along with a table of yearly ROI.
> 
> ...




This is the analysis that the old timeshare calculator used, and to me is the most accurate. I would, however, include these adjustments;

* rewards point value should be in there, especially for some of us who got a 
   boat load when we purchased. I bought my Aruba SC for $20K, got 450K points, easily $8K or more value, my 2 Mauis over 900K)

* cost of rental is way more than $2100 for Aruba during primetime. A base  
   number of $2400, is more accurate. And even higher if you need to travel 
   during prime holiday weeks. 

* The 5% "rate" is also offset by a tax credit, if as expected a loan is in play, 
   so that is not in there either.

* If you lock-off and can get value from that, that can be a huge offset. In 
  theory the maintenance cost goes up by only the $75 split fee, but the  
  cost to rent the same number of days, just about doubles. If you split and 
  reserve back to back ( as I did for Maui Pres week '07) you're get 14 days 
  of vacation for MF plus split fee. How much would that cost to rent? Over $4K for sure during prime time.  

* Hotel inflation should be equal to MF inflation. Over the last few years, I believe it has even exceeded MF inflation. 

Including these into the ROI makes it much less than 18 years, IMHO.

No offense intended, but obviously those that espouse this gloom and doom of ownership are:

* Financial wizards that make tremendous return on investments, more than 
   the norm

* don't need to travel holiday weeks, or even prime time

* don't use frequent flyer miles

The truth is, if you do fit this profile, then for you, ownership doesn't make sense. For those that don't, ownership CAN make sense. 

Regards.
Joe


----------



## akantro (Oct 8, 2006)

Joe,

comments below . .



			
				MOXJO7282 said:
			
		

> * rewards point value should be in there, especially for some of us who got a
> boat load when we purchased. I bought my Aruba SC for $20K, got 450K points, easily $8K or more value, my 2 Mauis over 900K)



I agree that the points do add up but to be conservative, i didn't put it in the equation.  I guess you could change the first value from 2100 to a bigger number to represent additional value gotten from incentive.



			
				MOXJO7282 said:
			
		

> * cost of rental is way more than $2100 for Aruba during primetime. A base
> number of $2400, is more accurate. And even higher if you need to travel
> during prime holiday weeks.



True but again i wanted to put a conservative estimate because you aren't guarenteed to get a prime week.




			
				MOXJO7282 said:
			
		

> * The 5% "rate" is also offset by a tax credit, if as expected a loan is in play,
> so that is not in there either.



Can you elaborate on this.  I put an assumption of 5% after taxes.



			
				MOXJO7282 said:
			
		

> * If you lock-off and can get value from that, that can be a huge offset. In
> theory the maintenance cost goes up by only the $75 split fee, but the
> cost to rent the same number of days, just about doubles. If you split and
> reserve back to back ( as I did for Maui Pres week '07) you're get 14 days
> of vacation for MF plus split fee. How much would that cost to rent? Over $4K for sure during prime time.



I agree. (and am doing this in Hawaii in Jan) but again didn't want to put this into a base assumption.  Also kind of hard to quantify



			
				MOXJO7282 said:
			
		

> * Hotel inflation should be equal to MF inflation. Over the last few years, I believe it has even exceeded MF inflation.



I dont have the history on this but it looks like the maintenence went from 811 to 880 in 2 years.




			
				MOXJO7282 said:
			
		

> Including these into the ROI makes it much less than 18 years, IMHO.
> 
> No offense intended, but obviously those that espouse this gloom and doom of ownership are:
> 
> ...



I still think the big issue of determining value is whether or not you would have used this money for vacations anyway.  If Yes, then it seems to be worth it (assuming you quantify the value of having to plan in advance and deal with all of the TS annoyance.)  But if you instead would go camping locally one year or not take vacations at all, and are just looking at this from an investement point of view, your money would be better of somewhere else.

thks,
ak


----------



## MOXJO7282 (Oct 8, 2006)

Originally Posted by MOXJO7282
* The 5% "rate" is also offset by a tax credit, if as expected a loan is in play, 
so that is not in there either. 


If you refinanced to a fixed 5% home loan, (I don't believe this rate is currently avail, but was this or lower for years) you can then write-off the interest in your tax return.

Regards.
Joe


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## Steamboat Bill (Oct 8, 2006)

I believe that the hotel inflation is WAY MORE than 2%

I believe a resale is WAY LOWER than $33,600


----------



## Pit (Oct 8, 2006)

turkel, 

Given your alternative is to not vacation at all, I’d agree its money well spent.
--------------------------------------------------------------------------


Joe,

No offense taken. No gloom and doom either. Just the numbers.

Suppose I’ve got $85K burning a hole in my pocket. Low interest credit card loan, inheritance, home refinance, sold the family business….. it doesn’t really matter where the money came from. The question is how best to use it?

For many people, the “best” use of that money is to pay down high-interest debt. Assuming the prospective buyer is not in that boat and their goal is to secure future vacations, there are several options. One option is to buy a timeshare. Another option, as the OP correctly points out, is to invest the cash and use the investment returns to finance those vacations. IMHO, it's foolish to ignore this alternative.

Consider too, you can leave your heirs with a healthy addition to their nest egg, rather than a t/s they may neither want nor be able to use. Not to mention the increased flexibility one has with cash. 
--------------------------------------------------------------------------

akantro,

Using your assumptions, here is the invest and rent alternative to a purchase. You can vacation annually for 20 years and accumulate a $45K investment account at the same time. Compared to the purchase option, this result is breakeven if you could resell your t/s, after 20 years, and net $45K after taxes. Net more than that, you come out ahead. Less, you're better off renting. 

View attachment 192


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## pwrshift (Oct 8, 2006)

Earlier this year, going on memory, I read in a hotel 'trade magazine' that hotel rates went up about 35% over the last two years.  This was after a few years of very little increase after 2001.  Same with airfares...there aren't many $99 return deals out there these days?  Timeshare maint/taxes (in most cases) haven't seen these kind of increases.

For me timeshares got me away from running my businesses...and forced me to take holidays, which I didn't do before timesharing.  I missed a lot by not taking holidays.

Sure, paying off your mortgage or your Mercedes is probably better than buying a timeshare at 14% interest -- I buy into that.  But, I also believe if you have to finance a timeshare purchase you shouldn't do it.  But if you insist, I'm glad I'm a Marriott shareholder!    The happiest timeshare owners live debt free.  

Brian


----------



## turkel (Oct 8, 2006)

pwrshift said:
			
		

> The happiest timeshare owners live debt free.
> 
> Brian



Amen to that.  Our only debt is our mortgage.  As our friends suck out their equity we refied to a 15 yr.  We max out my husbands 401k and both our cars are 7 yrs old.  I pointed all this out to my hubby and convinced him that we needed to live a little NOW.  I may not have a new kitchen or pool or something else new in my house as all Californians seem to have these days but by gosh I am going on Vacation!!!!  No regrets and worth every penny!!

PS we're not as miserly as the above post implies we just believe in planning for retirement today as we know many others who did not and don't want to work till we drop dead


----------



## MLC (Oct 8, 2006)

akantro said:
			
		

> Folks,
> 
> I did analysis after returning from Aruba Surf club vacation. I am curious to hear feedback on this way of analyzing a TS purchase. I have listed my assumptions below along with a table of yearly ROI.
> 
> ...


I like what you did but if I understand your table, it seems like your break even point is 10 years(your rental income = TS is opp cost+MF).  Also if you rented the timeshare for 23 years it would pay for itself.  Take care and looking for your response.


----------



## myip (Oct 8, 2006)

*Confused in calculation.*



			
				akantro said:
			
		

> *$33,600 + $1,680 + $2,100 = $33,180*
> 
> So, in year 2, your initial number is $33,180
> 
> ...



I am confused why the 2nd year starting at $33,180

Shouldn't it be: 33600 + 1680 + 811 - 2100 = 33991

Since Initial Cost + Total Cost - Rental  (It costs more to buy in the first year than to rent).


----------



## akantro (Oct 9, 2006)

myip said:
			
		

> I am confused why the 2nd year starting at $33,180
> 
> Shouldn't it be: 33600 + 1680 + 811 - 2100 = 33991
> 
> Since Initial Cost + Total Cost - Rental  (It costs more to buy in the first year than to rent).




If you started with 33,600 and rented you would end up with 33,180 at the end of the year. 1,680 was interest earned and 2,100 was the cost of your vacation rental.  There is no need to add the 811 into this equation. Over time the 33,600 eventually goes down to 0.

33,600 + 1680 - 2100 = 33180


----------



## akantro (Oct 9, 2006)

Pit said:
			
		

> turkel,
> 
> akantro,
> 
> ...



Pit,

Why are you adding the 811 in the rental scenario? If you had 33,600 and you put it in the bank (earning 1680) and went on vacation (and spend 2100), you would have 33180 left at the end of the year.  The next year you would earn <1680 because you now had 33180 to start with and your hotel now costs (>2100 because its (2100 * some inflation number)  Over time this number goes down to 0.    Please explain why you keep adding in the maintenence cost back into your rental scenario.


----------



## myip (Oct 9, 2006)

Here is the senarios.

If you decide to buy:

33600 +( 1680 + 881) - 2100 = 33991
Initial   +  Cost  - Rental = 33991

It is so confusing.  This show buying is not cheaper.  The 2 doesn't match.


----------



## Pit (Oct 9, 2006)

akantro said:
			
		

> Pit,
> 
> Why are you adding the 811 in the rental scenario? If you had 33,600 and you put it in the bank (earning 1680) and went on vacation (and spend 2100), you would have 33180 left at the end of the year.  The next year you would earn <1680 because you now had 33180 to start with and your hotel now costs (>2100 because its (2100 * some inflation number)  Over time this number goes down to 0.    Please explain why you keep adding in the maintenence cost back into your rental scenario.



akantro,

The scenario I presented has the exact same cash flows one would have if they purchase a unit. That is, initial purchase + annual m/f.

I am making an apples-to-apples comparison of buying vs. renting. If you buy a t/s, you are obligated to pay the annual m/f. In the renting scenario, you use that cash to book a rental unit (in lieu of paying m/f). You cannot ignore these annual payments, otherwise you are not making a valid comparison.

If you reread the OP, this is the point. Instead of sending m/f to the resort each year, take that money and combine it with your investment returns to rent a unit. In this case, you end up with a surplus each year, which you can reinvest.


----------



## akantro (Oct 9, 2006)

Pit said:
			
		

> akantro,
> 
> The scenario I presented has the exact same cash flows one would have if they purchase a unit. That is, initial purchase + annual m/f.
> 
> ...



Pit,

I follow your math.  Even using your logic (and factoring the maintenence cost), if you make the TS inflation equal to the Hotel inflation  (lets say 4% each) you seem to break even after 17 years.  Please let me know if you agree.  Also, by the way, how do you add attachments to this board ?


----------



## grupp (Oct 10, 2006)

akantro said:
			
		

> Folks,
> 
> I did analysis after returning from Aruba Surf club vacation. I am curious to hear feedback on this way of analyzing a TS purchase. I have listed my assumptions below along with a table of yearly ROI.
> 
> ...



Since you asked, I will give my perspective. The break-even type analysis you use is not very good in comparing financial options, whether it be rent vs buy timeshare or other decisions. You would be better off use a Net Present Value analysis, which compares alternatives in today's dollars. For example, the maintenance fee payments can be viewed as an annuity that is paid every year for a specific period and valued in the same way. 

Using your assumptions as follows:

Assumptions:
Interest Rate on money invested: 5%
Time Share Maintenance Inflation: 4%
Hotel Inflation: 2%
Cost of renting 2 bedroom in Aruba, 7 nights: $2,100
Initial Cost of Timeshare: $33,600

Your analysis does not include any value of the timeshare at the end of the time period, so I went with the assumption that you could sell it for the same price at the end of the period. 

Here are the results (although I set this up very quickly and didn't have time to review)

*21 YEAR BUY VS RENT*

Purchase price                                  $36,600
Present value Maint fees                     $14,765
Present value $36,600 sale in 20 yrs     ($12663)
*NPV Cost of Purchase                               $38701*

Present value cost of renting              $31,917        

*10 YEAR BUY VS RENT* 

Purchase price                                  $36,600
Present value Maint fees                     $7,401
Present value $36,600 sale in 10 yrs     ($23593)
*NPV Cost of Purchase                               $20,408  *

Present Value Cost of Renting               $17,615  

So, based on your assumptions renting is cheaper than purchasing and this includes a value for the timeshare at the end of the period. However, in my opinion the financial aspect is only part of the decision. As others have pointed out there are many other factors to consider and each person will most likely come up with differnt answers. But if you going to do the financial analysis you should use a method that will give you usefull results and can be easily addapted to see how a change in your assumptions will effect the results. You can then weigh in all the other factors that are important to you and make a decesion that is in your best interest. 

Gary


----------



## Pit (Oct 11, 2006)

akantro said:
			
		

> Pit,
> 
> I follow your math.  Even using your logic (and factoring the maintenence cost), if you make the TS inflation equal to the Hotel inflation  (lets say 4% each) you seem to break even after 17 years.  Please let me know if you agree.  Also, by the way, how do you add attachments to this board ?



akantro,

If by "breakeven" you mean the investment account balance equals the t/s purchase price ($33,600), then yes I get the same result as you if I bump the hotel inflation assumption up to 4%. Actually, I get that result in the beginning of the 17th year, which is more correctly stated as "after 16 years of use." The conclusion then, with these assumptions, is if you can be assured a resale value of $33.6K or better, and if you use or rent out the unit each year for 16 years or more, you're better off buying.

Incidently, if you create the spreadsheet and plug in a purchase price of $25K or less, you're better off buying from year 1. You don't have to wait 16 years to come out ahead. Thus, if I were shopping for this unit using your assumptions, I would look for a resale at the best available price, with $25K as my upper limit. A quick check on resales shows a range of $15,750-$85,000 (depending on season, of course).

Also, I agree completely with the previous post by Gary. If you do the math correctly, you will come to the same result either way. However, the NPV approach gives you a very good way to compare alternatives using current dollars. Excel has an NPV function, so you can easily set up a spreadsheet for comparing alternatives based on NPV.

To manage attachments, click on the "paper clip" when writing/editing a post.


----------



## winger (Oct 11, 2006)

Can someone attach an Excel spreadsheet so I can plug in my own numbers?  

Also, I have not read through this entire thread...since Marriotts exchanges normally result in Accomodation Certs from II, I assume the 'savings' on using these should play in the breakeven analysis, correct? For ex. I got a two Bedrm ski week resort for Week after Thanksgiving for $299 (for activating the AC) ... I checked several places and this two BD rents for 200-300/night even with AAA discounts - so that's a savings about $1000.  By the End of this year, I would have done 14 trades (count by weeks) since I purchased my 1 bdrm resort in 1996/1997, of these about 5 or so have been using ACs, and savings on each is about $1000 or more (never less as far as I can tell/est).


----------



## Dave M (Oct 11, 2006)

winger said:
			
		

> ....since Marriotts exchanges normally result in Accommodation Certs from II....


This isn't accurate. Many Marriott weeks qualify for ACs, but only weeks that are in heavy demand by II. Some Marriott resorts don't earn ACs for _any_ weeks. For some other resorts, only a small percentage of the year qualifies. Further, since the exchange value of a week changes from year to year and, thus, whether a week qualifies for an AC might change frequently, it would be dangerous to make a purchase decision based on counting on getting those ACs every year, even if you knew the week you were buying qualified for one this year.

Assuming you factor that in anyway, your inclusion of the post-Thanksgiving AC scenario makes sense only if you would have planned to spend the $1,400 or so to rent that week if you don't buy. If not, you wouldn't save anything with the AC and you shouldn't include that in your breakeven analysis.


----------



## grupp (Oct 11, 2006)

Winger
I would agree with Dave in regard to not include an A/C in a buy vs rent decision. Also, you certainly don't need to buy an expensive week to get and A/C, I get one for a week I bought for $500 on ebay.

We actually do the same as you and use have been using an A/C for early ski weeks. You can really get some great resorts, but the snow can be iffy. We have a 3br at Hyatt Main Street Station (rents per Hyatt at $499 per night) booked for this year and can hardly wait. However, if you want to value them, you should compare them to II Getaway prices or something similar. For example, right now you can get a 2br at Marriott Mountain side Nov 26-Dec 3 for $444. So, maybe the value of getting an A/C is $145. 

So, I would say don't include the A/C. But if you do include it use some reasonable value of a few hundred dollars with $500 as the max. 

Gary


----------



## DougH (Oct 13, 2006)

Never thought my original posting would generate this much response.  But I must say...it's been very educational !  Especially all the different ways people approach their vacation planning.


----------



## winger (Oct 14, 2006)

grupp said:
			
		

> Winger
> I would agree with Dave in regard to not include an A/C in a buy vs rent decision. Also, you certainly don't need to buy an expensive week to get and A/C, I get one for a week I bought for $500 on ebay.
> 
> We actually do the same as you and use have been using an A/C for early ski weeks. You can really get some great resorts, but the snow can be iffy. We have a 3br at Hyatt Main Street Station (rents per Hyatt at $499 per night) booked for this year and can hardly wait. However, if you want to value them, you should compare them to II Getaway prices or something similar. For example, right now you can get a 2br at Marriott Mountain side Nov 26-Dec 3 for $444. So, maybe the value of getting an A/C is $145.
> ...


wow what resort you get from ebay???

Good point about using getaway prices.  For example, ski resort we going to last week Nov...direct call = $300/nite (only 5 days not 7 days available).... direct website (their) price is $175/nite.... Getaway = $475/week.  WOW, what price differences!   {you just blew my bubble my friend : (  LOL }


----------



## MOXJO7282 (Oct 14, 2006)

I may not include it in a general analysis, but I definately do in my own. I record all spend activity and value received from my TS ownership into a very detailed excel spreadsheet, so I know my exact ROI, and just to keep track overall of what we spend. 

I can tell you probably within $50 how much we've spent on all of our vacations. I also include spending money, just to get the entire picture. I just love to see how inexpensive we can travel when we plan right. I'm sure many others do as well.

Regards.
Joe


----------



## pwrshift (Oct 15, 2006)

With 6 MAR weeks, allowing for splitting lockoffs, I have 10 weeks a year to use.  Even after turning in two weeks a year for 220K points, I still have so many timeshare weeks to use each year, with lockoffs, that I have always had trouble using the AC's.  One expired on me a few months ago and i've got another that expires in January with little chance relatives or friends might use at this point.  Does anyone else run into that problem?

So they are nice to have but only if you have the time to use them.   Perhaps they are better for those who only have fewer weeks?

Brian


----------



## MLC (Oct 15, 2006)

pwrshift said:
			
		

> With 6 MAR weeks, allowing for splitting lockoffs, I have 10 weeks a year to use.  Even after turning in two weeks a year for 220K points, I still have so many timeshare weeks to use each year, with lockoffs, that I have always had trouble using the AC's.  One expired on me a few months ago and i've got another that expires in January with little chance relatives or friends might use at this point.  Does anyone else run into that problem?
> 
> So they are nice to have but only if you have the time to use them.   Perhaps they are better for those who only have fewer weeks?
> 
> Brian



Brian,

That happens to me all the time.  I have about 15 AC and I will allow my friends and family and I still have alot left over.  It is nice to have and I will not deposit any of my weeks until they offer AC.  Every week that I own I get a AC except Four Season Avaira(can you believe that, four seasons you can not get an AC) but I would not deposit a four season anyway.  Brian, it is a good problem to have.  I have always enjoyed your post.  Take care


----------



## DougH (Oct 16, 2006)

MOXJO7282 said:
			
		

> I can tell you probably within $50 how much we've spent on all of our vacations. I also include spending money, just to get the entire picture. I just love to see how inexpensive we can travel when we plan right. I'm sure many others do as well.
> 
> Regards.
> Joe



100% agree Joe.  When my friends hear I'm off to Kauai again for 2 weeks, and at a top resort, they always ask how I can afford to do it so often...especially with a family of 6.  Always fun telling them how, and then they ask "OK...help me do it".


----------



## DougH (Oct 20, 2006)

Just out of curiosity...

What's the cheapest price you've ever gotten by on.  This price should include all travel expenses, and food expenses as well.

The price should be given as cost per person per day.  So...if you spent $2100 for one week, and 3 people were on the trip...the price per person per day would be $100.  ($2100/21 people days)

My 12 nite trip coming up in March 2007 at Waiohai will be about $55/person/day ($4,000 total).  There will be six of us travelling.  Got 4 tickets free with miles, buying two (possibly only 1, but my calculations are for 2 tickets).  Got the discounted car with my preview (but will have to upgrade to a van), and then we eat in quite a bit at our villa.


----------



## squiggle (Oct 20, 2006)

ciscogizmo1 said:
			
		

> Exactly...  I can't figure out why people are so hung up on MONEY...  Or who got the best deal.  You can't take it with you!    QUO
> 
> It's because some people's sense of happiness or enjoyment  comes from  knowing they are secure financially while alive - maybe hard to see that those people enjoy life too as much as those of us who consider vacationing or owning ts are as enjoyment -  different strokes for different people


----------



## akantro (Nov 14, 2006)

all the math goes out the window when the maintenence fees go up 18% in 2 years.  hotels are not going up by 9-10 % per year. so if this continues the time share is definately not worth the value.


----------



## Steamboat Bill (Nov 14, 2006)

akantro said:
			
		

> all the math goes out the window when the maintenence fees go up 18% in 2 years.  hotels are not going up by 9-10 % per year. so if this continues the time share is definately not worth the value.



This is a one year bump...I doubt that it represents a trend.


----------



## MOXJO7282 (Nov 14, 2006)

The truth is hotel rates have gone up considerably over the last year or so. I would bet that it is comparable to the increases we are seeing with Marriott. 

I know in Maui they certainly have. When looking to add onto my Feb week stay I scoured the island for reasonable rates. Hotels that were Ocean-anything were $400+. The same exercise in 2004 got me something right around $325. that's a 20% increase over 2 years.  

Regards.
Joe


----------



## rickandcindy23 (Nov 14, 2006)

I followed this thread with great interest.  The one thing I took away from it that really impressed me was the increase in value Doug realized for the week.  I think that is amazing.  I am so impressed with the Marriott system.  I wish we would have purchased one of them long ago, instead of the first two we chose.  Things would have been very different for us, but who knew that Marriott would become such an impressive system that would even be starting their own exchange company.   

Conversely, the second thing I got from it is the obvious savings over owning a timeshare.  You are a smart money manager, Doug, and don't let anyone tell you differently.


----------



## ZCar (Nov 14, 2006)

Joe,
Think you're correct. Maybe 3 weeks ago, a Honolulu newspaper said hotel rates were up around 16+% vs a year ago.


----------



## Hoc (Nov 15, 2006)

MOXJO7282 said:
			
		

> The truth is hotel rates have gone up considerably over the last year or so.



I would agree with that.  Three years ago, I could consistently book the top hotels around $150 a night with no trouble at all.  Now, with very little work, that rate is usually about $200 a night, an increase of about 33 percent.  I can still find the occasional deal (such as the $125 a night rate for the Vienna Intercontinental Executive Suite room I got last month, the $150 a night rate at the Mark Hopkins next month, or the 1-br. suite I got at the Swissotel London next April and August for about $90 a night), but that takes a lot of work and time, and to guarantee a room in a top hotel during peak season without too much work, I am looking at paying a rate closer to $200 a night.

That said, with annual timeshare fees topping $1,000 at many of the more highly rated timeshares (and additional Special Assessments being imposed more frequently as the buildings age), the amount you are paying for your maintenance fee comes close to the $200 a night you would pay if you just rented the timeshare as a hotel suite.  Figure the (mostly) nonrefundable purchase price for the timeshare, and you are paying more for your timeshare than you would for the same room as a hotel suite.


----------



## Hoc (Nov 15, 2006)

DougH said:
			
		

> Just out of curiosity...
> 
> What's the cheapest price you've ever gotten by on.  This price should include all travel expenses, and food expenses as well.



Cheapest: several trips to Las Vegas, including one where I paid $1 for a round trip ticket on National Airlines, and was lucky enough to win about $200 gambling, which paid for the rental car and meals for the day.  Total cost: -$130/day.

Also did a cheap trip to Ireland earlier this year which included a $118 round trip ticket from LAX (upgraded to First Class on the domestic legs), and a Priceline hotel in Dublin (Best Western -- clean, but a real hole, though it did include breakfast) for $25 a night.

I got some really good rooms via Priceline in Toronto and San Francisco ($35 for the Park Hyatt in S.F. -- Upgraded to a suite, $35 at the Le Royal Meridien King Edward Hotel in Toronto), but unfortunately some extravagant meals in S.F. and shows in Toronto blew my ability to claim that the whole trip was cheap.

Best Value: 14-night trip over Chinese New Year this year to Hong Kong, Bangkok and Phuket, including First Class airfare on Cathay Pacific (miles), an executive suite at the Intercontinental Bangkok ($125/nt), an executive suite at the Intercontinental Grand Stanford Hong Kong ($125/nt), and a week at the Marriott Phuket (traded my 2004 Streamside-Aspen Condo: $400 annual fee + $149 exchange fee).  The Intercontinental suites included full breakfast, tea and cocktails with full hors'doevres that could function as lunch and dinner (and did, on several days).  Total price: ~$1,500 or about $107 a night, including all meals.

I tend to get better than timeshare rooms at the Intercontinental, Omni, Hilton and Starwood hotels because I have elite status with their frequent guest programs, and I always get upgraded.  So staying at a hotel instead of a timeshare often represents particularly good value for me.


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## DougH (Nov 16, 2006)

rickandcindy23 said:
			
		

> You are a smart money manager, Doug, and don't let anyone tell you differently.



I don't have any other choice, not being independently wealthy...I have to count my nickels and dimes !


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## pwrshift (Nov 17, 2006)

I was speaking with a meeting planner at Amex yesterday and was told that they are gearing up for a very costly 2007 ahead due to hotels rates going through the roof.  Some of their meetings originally planned for the same hotels as this and previous years are being moved to lower priced hotels simply because sponsors refuse to pay upwards of 20% increases announced by the majors.  What is going on?

Brian


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## Hoc (Nov 17, 2006)

pwrshift said:
			
		

> What is going on?



My guess is that it's worldwide inflation, generated by the more than double increase in gas prices in the U.S. over the past 5 years or so.


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## JimC (Nov 17, 2006)

Demand is up and they can fill the rooms at higher prices.


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## Dave M (Nov 17, 2006)

pwrshift said:
			
		

> What is going on?


Occupancy rates at major hotel chanins have been steadily increasing since 9/11. Economic times are good. Unemployment is low. People are traveling more (look, for example, at air passenger traffic at major airports). Construction of new hotel properties has been at a relatively slow pace in recent years compared to the 1990s. All of that, combined with a bit of overall inflation, means that the hotel chains *can* increase prices, just as has been happening in a big way this year with plane ticket prices.

That same "What is going on?" question has been asked on numerous occasions on the Travel forum this year with respect to plane ticket prices. Now here come the hotel chains....


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## pwrshift (Nov 18, 2006)

With 'catch up' adjustments in air and hotel rates it makes points travel even more valuable, at least for now.  So, plan that points trip soon, book it, and enjoy it while you can.  When you see across the board increases like this from all the majors it does wonder if there is some competitive behind the scenes agreement.

In a truly competitive world, I think it's risky for Marriott to slap their best customers so hard and devalue their points program but at some time they will probably close the gap, hopefully in small stages.  Perhaps they feel they can raise prices and keep the points program as is because you earn more points if you pay more cash.

The way Marriott has slapped their timeshare owners this year with MF increases well above inflation will place a negative long term gloom on their direct TS sales as well as trading for points because current increases will make us all reconsider this mode of holiday.  Will we ever see 4% MF increases again now that they are tasting blood in 2007?

Brian


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## m61376 (Nov 18, 2006)

pwrshift said:
			
		

> Will we ever see 4% MF increases again now that they are tasting blood in 2007?
> 
> Brian



I think what happens in the future will depend upon the short-term impact. If they see a decrease in sales it will make them take notice.

On the other hand, Marriott starts off as a high end product. People buy into Marriott because they are buying, or at least perceive they are buying, a better product. IF the increase in MF's are truly necessary to maintain the quality then it is a double edged sword- we don't want to pay increased MF's but are angry if quality of the units decreases.

Hopefully this large increase was more of a one time market adjustment for increased costs, particularly utilitites and insurance. Since we just bought our first timeshare, I sure hope that's all it is....


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## MLC (Nov 18, 2006)

*why so high in one year*



			
				pwrshift said:
			
		

> With 'catch up' adjustments in air and hotel rates it makes points travel even more valuable, at least for now.  So, plan that points trip soon, book it, and enjoy it while you can.  When you see across the board increases like this from all the majors it does wonder if there is some competitive behind the scenes agreement.
> 
> In a truly competitive world, I think it's risky for Marriott to slap their best customers so hard and devalue their points program but at some time they will probably close the gap, hopefully in small stages.  Perhaps they feel they can raise prices and keep the points program as is because you earn more points if you pay more cash.
> 
> ...




Brian I agree with your statement but what I do not understand is why across the board.  I know not all marriotts are controled by marriott but our board members are giving a rubber stamp on all the increases that Marriott wants and I think that is not always good.  Do you know any HOA has not approved everything Marriott wants.  I love Marriott but something is happening and I cannot figure it out.  My Hyatts that I own did not go up that much,  I have not got my Four Seasons yet, but last year it was $2072 my Royals went up about 8% but the MF is 776 which is a big difference from Marriott aproaching $1,000 with assessments.  The Royals had no assessments due to the hurricanes.  I own alot of Marriotts and the Royals put most of the Marriotts to shame.  I am like most Marriott owners, we want quality but have reasonable profitablity for Marriott.  Owners need to demand that their board members that are elected represent the owners and not Marriott.  Do not get me wrong, I do believe Marriott is a great company BUT we need to be careful if this continues.  I am a business man and sometime I have to cut certain thing on my budget because of the ecconomy or whatever.  I believe our board members need to start doing a line item reduction and say to Marriott you need to decrease your expenditure on ____ by 4%.  I hope we as owners will find the solution to such a high increase in MF.


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## Hoc (Nov 18, 2006)

MLC said:
			
		

> Do you know any HOA has not approved everything Marriott wants.



Yes, Streamside at Vail - Aspen refused to approve everything Marriott wanted, so Marriott dropped the building as a Marriott timeshare.  That is basically Marriott's response if an HOA does not approve its increase in fees.

This is why all Marriott owners need to be wary and certain that they want their timeshare, even if it is not a Marriott.  Because Marriott now has a track record of dropping its management of timeshares whenever the HOA does not kowtow to its greed.


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## Pearls (Nov 24, 2006)

*TS as a toy right idea*

TS as a toy are the right idea. As a fellow 911 Porsche owner you are spot on. At least I get to sleep in my TS. My wife and kids can go, great memories and the TS never leaks oil in your garage. Got a chuckle out of this one. LOL


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## minoter (Nov 25, 2006)

*BeachPlace MF Negotiation*

Originally Posted By MLCo you know any HOA has not approved everything Marriott wants.

The Board at Beach Place does not rubber stamp Marriott's budget. The budget was reduced by approximately $160,000 from the original budget presented to the Board.


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