# Never finance purchase of a timeshare? Really?



## hipslo (Apr 2, 2007)

Ok, so I know that conventional wisdom is that if you need to finance the purchase of a timeshare, especially at developer rates, that you probably shouldn't buy.  At a gut level, I agree with that.  However, the economics of a recent transaction have got me thinking. 

Here is what happened.  I just closed on the purchase of a platinum week at Mountainside.  Let's say that the all-in cost, including closing costs and title policy, are roughly 32.5k (Marriott has been pretty aggressive with rofr lately - though this is likely to ease up for a while now that ski season is more or less over, so the 32.5k is actually a bit on the high side).  As with most large purchases, I paid for it with a draw on my home equity line.  My typical practice is to then pay off the draw within 30 days or so, once I figure out the best source of raising the cash to do so, as I typically keep very little cash on hand.  And that was my intent here as well.  However, in running the numbers, I'm no longer so sure that is the best thing to do, as described below.

Note that, for the next few years, at least, I am likely to be renting this unit out.  This year, Marriott itself is offering $2765 through their rental program for platinum weeks as Mountainside (I am aware of course that this could change at any time).  Depending on the week reserved, renting myself could generate anywhere from a few hundred dollars less than that to roughly $1000 more than that, but let's just use $2765 for sake of this example as an "average" rental rate.  The fact that I could get it from Marriott, now, well in advance of check in with no hassle, makes it that much more attractive.

So, what are the annual out of pocket costs of ownership, assuming 100% financing on the home equity line?  Interest rate is roughly 8% these days, so that's (.08 x 32,500 = 2600).  Of course interest on the home equity line draw is fully tax deductible, so the after tax annual cost of the borrowing is only (2600 x .6 = 1560).  Add to that 1560 the 825 annual maintenance fee and we get an annual carrying cost of 2385.  Thus, even taking the "no brainer" route and renting back to Marriott through its rental program nets $380 of positive cash flow, using 100% financing.  And I am able to leave 32,500 invested, presumably earning a higher rate of return than it would earn if invested in the platinum MS unit.  

What am I missing here?  Is there any reason to pay off the draw on the home equity line in this scenario?  There isnt that I can see, but I was so surprised by the outcome that I feel I  must be missing something.

Or, let's say that instead of renting, I would like to use this unit.  What is my per night cost of occupany, using 100% financing?  Its that same 2385, which comes out to $340 per night, and it is cheaper than renting the same unit over redweek or myresortnetwork.  Again, am I missing anything here?

If the above analysis holds water, I have a hard time seeing how timeshare prices are in some sort of a "bubble" and, at least in this particular instance, actually appear to be undervalued.

Thoughts?


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## gmarine (Apr 2, 2007)

You are leaving out the opportunity cost of the $32500. Assuming a modest 5% return, add $1650 to the cost of each week.


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## hipslo (Apr 2, 2007)

gmarine said:


> You are leaving out the opportunity cost of the $32500. Assuming a modest 5% return, add $1650 to the cost of each week.



I disagree.  That's the beauty of what I am asking about.  With 100% financing, the 32.5 is NOT invested in the TS, it remains invested as it always has been, earning 5%, 8%, 10%, 12%, or whatever.  The opportunity cost is ZERO in my example, is it not?


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## Pit (Apr 2, 2007)

I agree with gmarine, and would also add that you will have to pay taxes on your rental income (which Marriott is required to report to the IRS).

The 32.5K IS in fact invested in the timeshare, as you could have taken that money and invested it elsewhere, thus the oppty cost. You've invested borrowed money. If you pay it back or not has nothing to do with the rental performance of the t/s. You are paying, say 8%, on the loan. So, if you pay it off, you are effectively earning a guaranteed 8% return on the payoff cash. If you can do better than 8% on your investments of similar risk, then don't pay it off. If you like the sound of 8%, guaranteed, then pay it off.


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## Dave M (Apr 2, 2007)

Confirming Pit's comments, I think you may be confusing two somewhat unrelated issues. You made the decision to purchase. You own it. You can now decide each year whether to rent, use or exchange your week for maximum overall advantage.

Completely separate from the use issue is how do you finance the ownership. Between the home equity loan and paying it off with other invested assets is a choice between the 8% rate and the rate you anticipate earning on those other invested assets (tax effecting both alternatives, of course).

Also, you made a mistake in your rental analysis. You figured your interest expense on a net after tax basis. But you then offset that with the gross rental income to figure your net cash flow. Since that rental income is taxable, you should figure in the tax related to that. But to figure your cash flow properly, you should take into account rental income, maintenance fees, interest expense *and* depreciation, all on a pre-tax basis, since that net rental income will determine how much tax, if any, will be payable on the rental income. 

Depreciation should be calculated as 3.485% of your cost if you rent in the first year of ownership and in consecutive future years. Depreciation should be calculated as 3.485% of _resale value_ if you rent in any year after you have used (or exchanged) your week yourself at least once. 

See the Income Taxes and Timeshares article in the TUG Advice section for more on taxation of timeshare rental income.


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## hipslo (Apr 2, 2007)

Pit said:


> I agree with gmarine, and would also add that you will have to pay taxes on your rental income (which Marriott is required to report to the IRS).
> 
> The 32.5K IS in fact invested in the timeshare, as you could have taken that money and invested it elsewhere, thus the oppty cost. You've invested borrowed money. If you pay it back or not has nothing to do with the rental performance of the t/s. You are paying, say 8%, on the loan. So, if you pay it off, you are effectively earning a guaranteed 8% return on the payoff cash. If you can do better than 8% on your investments of similar risk, then don't pay it off. If you like the sound of 8%, guaranteed, then pay it off.



I suppose we'll just have to agree to disagree on this point.  I have ZERO of my own dollars invested in the timeshare, and have positive cash flow.  (Understood that any net income is taxable).  I do  not need to reach into my pocket to pay even $1.00 of the 8% interest, the rental income takes care of it (and then some).  Rather than oppotunity cost, I think what each of you gentlemen are referring to is the loss of ability to arbitrage with borrowed money - something that I am not in the habit of doing, as that can be extremely risky.  Here, I am using the borrowings to purchase something that I would otherwise purchase.  Had I used my own 32.5 for that purpose, there would certainly be opportunity cost in that case.  I respectfully submit that it is not appropriate to employ the concept of opportunity cost in this scenario.  The 8% interest (lower effective rate after taxes) is a REAL cost of funds - it makes no sense to double dip and impose an IMPUTED cost of funds (which remain profitably invested elsewhere) in addition to the REAL cost of funds.  Another way to look at it is that I am using the borrowed funds to invest - just not in the TS.  The bororwings allow me to keep my 32.5 otherwise invested, earning more that the after tax 8% cost of funds.  After all, money is fungible - its just as correct to say that the borrowed funds are invested in the TS as in the other investment that I would have had to liquidate to pay cash for the 32.5.  

If what you descrobe above is the only "weakness" that folks are able to identify with respect to what I have described, then I'm one happy guy!


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## hipslo (Apr 2, 2007)

Dave M said:


> Also, you made a mistake in your rental analysis. You figured your interest expense on a net after tax basis. But you then offset that with the gross rental income to figure your net cash flow. Since that rental income is taxable, you should figure in the tax related to that. But to figure your cash flow properly, you should take into account rental income, maintenance fees, interest expense *and* depreciation, all on a pre-tax basis, since that net rental income will determine how much tax, if any, will be payable on the rental income.
> 
> Depreciation should be calculated as 3.485% of your cost if you rent in the first year of ownership and in consecutive future years. Depreciation should be calculated as 3.485% of _resale value_ if you rent in any year after you have used (or exchanged) your week yourself at least once.



Thank you for pointing that out, Dave.  It seems to me that, since the interest is on the home equity loan, it is deductible without regard to the use that the funds are ultimately put to, and that the after tax cost of the interest is as I stated, 1560.  Thus, my expenses are 1560 plus 825 (mf).  Cash flow is therefor 2765 - 1560 - 825 equals 380.  Taxable income associated with the rental activity is 2765 - 825 (no deduction for the interest, since that has already been fully deducted) equals 1940.  Depreciation (I was leaving this out for the sake of simplicity in presentation but am aware of it) would be (.03485 x 32.5k) equals 1132, leaving taxable income of 808.  Tax on that would be roughly 323, leaving 485 after tax.  Thus, after tax cash flow looks like (-100), rather than +228 (after tax) in my original example.


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## hipslo (Apr 2, 2007)

hipslo said:


> Thus, after tax cash flow looks like (-100), rather than +228 (after tax) in my original example.



Oops, actually after tax cash flow would be the 380 minus 323, so still positive $57.  Think I got it right that time!


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## hipslo (Apr 2, 2007)

Perhaps what I'm really getting at is simply this - how often does one come across a real life scenario where a "no money down" purchase of a real estate asset (or, in the TS scenario, something that at least distantly resembles a real estate asset) generates positive cash flow, day one, at prices that are pretty widely available (other than in late night tv infomercials)? It is that "forest" that I am trying to focus on here, rather than getting lost in the "trees".


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## Dave M (Apr 2, 2007)

I agree with your net cash flow - $57. That's where you get by using my calculation as well as your revision.

And, yes, to an earlier point, your home equity interest should be fully deductible as long as the total amount of home mortgage and home equity debt that is related to items (such as timeshares) other than home purchase and "substantial" remodeling/improvement is less than $100K.

As for the opportunity cost issue, you might have misunderstood what Pit and I were saying, because your analysis confirms exactly what we were trying to communicate. You state that you are borrowing at 8% to allow you to keep a like amount of funds invested at a rate that will likely exceed 8%. That's the same choice we were suggesting. Thus, I don't think there is a need to agree to disagree!


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## hipslo (Apr 2, 2007)

Dave M said:


> I agree with your net cash flow - $57. That's where you get by using my calculation as well as your revision.
> 
> And, yes, to an earlier point, your home equity interest should be fully deductible as long as the total amount of home mortgage and home equity debt that is related to items (such as timeshares) other than home purchase and "substantial" remodeling/improvement is less than $100K.
> 
> As for the opportunity cost issue, you might have misunderstood what Pit and I were saying, because your analysis confirms exactly what we were trying to communicate. You state that you are borrowing at 8% to allow you to keep a like amount of funds invested at a rate that will likely exceed 8%. That's the same choice we were suggesting. Thus, I don't think there is a need to agree to disagree!



Fair enough.  I just do not believe it is appropriate to ADD another 5% to the cost of annual use, or to the carrying costs, as suggested by gmarine.  I took you and Pit as agreeing with that notion.  If you do not, then you are correct, there is no need to agree to disagree!

On the depreciation point, my accountant has advised that it is not the entire basis that is depreciable, it is only the portion allocable to the improvements, as opposed to the land.  He suggested a 75% allocation to improvements.  Since you did not mention such an allocation, should I conclude that you find his position too conservative?


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## Dave M (Apr 2, 2007)

hipslo said:


> how often does one come across a real life scenario where a "no money down" purchase of a real estate asset (or, in the TS scenario, something that at least distantly resembles a real estate asset) generates positive cash flow, day one, at prices that are pretty widely available (other than in late night tv infomercials)?


I think you are kidding yourself. I can also buy a car, a home entertainment system, a PC and many other assets all for "no money down", simply by using a home equity line of credit or getting a personal unsecured loan from my bank based on my assets and credit record. But in each case, I will have paid in full for the asset with those borrowed funds. Thus, I think you are stretching the definition of "no money down".

As to the real life scenarios for buying rental property that generates positive cash flow at day one, I would submit that it's more the rule than the exception. As a CPA, I often advise others on such transactions, many of which are readily available in newspaper classified listings. I rarely see one presented to me that _doesn't_ have initial positive cash flow. Thus, I would submit that positive cash flow of $57 on an investment of $32,500 makes that a lousy "investment", not even counting the immediate significant drop in value, unlike true investment real estate assets. $57 of net cash flow might be okay for an appreciating property, depending on the property. 

It's for that reason that it all comes back to buying timeshares because we want to, not for investment, unless you find the right timeshare at the right _resale_ price!


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## hipslo (Apr 2, 2007)

Dave M said:


> I think you are kidding yourself. I can also buy a car, a home entertainment system, a PC and many other assets all for "no money down", simply by using a home equity line of credit or getting a personal unsecured loan from my bank based on my assets and credit record. But in each case, I will have paid in full for the asset with those borrowed funds. Thus, I think you are stretching the definition of "no money down".
> 
> As to the real life scenarios for buying rental property that generates positive cash flow at day one, I would submit that it's more the rule than the exception. As a CPA, I often advise others on such transactions, many of which are readily available in newspaper classified listings. I rarely see one presented to me that _doesn't_ have initial positive cash flow. Thus, I would submit that positive cash flow of $57 on an investment of $32,500 makes that a lousy "investment", not even counting the immediate significant drop in value, unlike true investment real estate assets. $57 of net cash flow might be okay for an appreciating property, depending on the property.
> 
> It's for that reason that it all comes back to buying timeshares because we want to, not for investment, unless you find the right timeshare at the right _resale_ price!



Again, we'll have to agree to disagree!  The examples you cite (car, pc, etc) are typically not going to generate sufficient cash flow via rental income to cover 100% of the carrying costs, so I think they are kind of besides the point as examples.  And they are pretty much guaranteed to decline in value over time (I suppose there would be an exception for certain types of classic cars, collectibles, etc).  

As far as the TS example that I have given, the price cited IS the resale price (current retail price is around 53k, at a sold out resort, with a waiting list).  While I could not turn around and sell it tomorrow for 32.5, I could do so if I were willing to be patient, and could also sell immediately for a few thousand less (anything less than 30k), which limits any downside.  But that is not my intent.  My intent, ultimately, is to use the unit, as well as several others that I have purchased, but the bulk of that use is still a number of years down the road.  In the meantime, it is possible that resale prices could go up, just as they have over the past 5 years at this particular resort, and that it would cost more to purchase the units at the time I actually need them.  It could also cost less, sure, but, so long as rental rates don't drop sharply in the interim, it hasnt cost me anything to lock in the usage cost up front.  If rental rates rise, the rate of return in the interim goes up, as well.  If resale prices rise, likewise.  

Would I make this purchase solely for investment purposes?  No, I agree with you that the cash flow alone doesnt warrant it and any appreciation is likely to be relatively modest.  However, given my intended usage scenario, I am simply pleased that there is no out of pocket cost to lock in current (resale!) prices until I am ready to use the unit.


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## Dave M (Apr 2, 2007)

hipslo said:


> On the depreciation point, my accountant has advised that it is not the entire basis that is depreciable, it is only the portion allocable to the improvements, as opposed to the land.  He suggested a 75% allocation to improvements.  Since you did not mention such an allocation, should I conclude that you find his position too conservative?


I agree with your accountant that normally there should be an allocation between land and build. However, I have not seen it done for a timeshare and have handled a number of IRS examinations involving rental timeshares where no adjustment to depreciation was made by the IRS.


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## floyddl (Apr 2, 2007)

Hipslo, I tend to look at this the way you do.  The one factor that could vary is your ability to get the quoted rental rate.  I called last Friday to get a quote for March 14 through 21 on my Mountainside unit and they were not accepting any.  You could still get that rental amount on your own but you might end up getting significantly less every so often.  I know that rentals were available for Plat. Plus weeks at significantly less than that amount the past 2 years.  Even so, your exposure is small and would likely be offset by future appreciation in the property values.


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## hipslo (Apr 2, 2007)

floyddl said:


> I called last Friday to get a quote for March 14 through 21 on my Mountainside unit and they were not accepting any.



Wow, that was fast!  

Yes, there is of course exposure if unable to rent the unit at a reasonable rate, I would be the first to acknowledge that.


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## Potential Buyer Scott (Apr 2, 2007)

There should be no added premium.  Since you didn't put any money down.  You don't have an opportunity cost.  Effectively, the cost of money is in your interest payment.

The key is that you have to be able to rent for the price assumed.  Is that what it actually rents for on redweek, tug, or myresortnetwork?  

It looks like you end up loosing a small amount that should probably be covered by appreciation in the timeshare over time.  That implies that someone should be roughly indifferent between renting annually and buying.  

Be sure to include the closing costs, hassles of buying, potential assessments, hassles of the reservation system, etc.


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## hipslo (Apr 2, 2007)

Potential Buyer Scott said:


> Is that what it actually rents for on redweek, tug, or myresortnetwork?



Its a decent approximation, for most of the season, though for about half of the weeks in the platinum, it is on the low side.  Could be more (as much as 1000 more) or less (by maybe 800), depending on the particular week involved, competition in the rental marketplace, etc.


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## Pit (Apr 2, 2007)

hipslo

I think you are trying to rationalize what amounts to a lifestyle decision. And by that, I don't mean to infer its a bad decision (it comes down to personal choice).

Here is one way to view the oppty cost...

1. You have elected to borrow 32.5k at 8% interest. After taxes, that interest costs you only 4.8% (.6 * 8%) because of the mortgage interest deduction.

2. You can do anything you want with that 32.5K. You are free to choose. 

3a. You can "invest" that cash in MS and get $57 positive cash flow in year 1 (anything can happen in future years). You are also accruing a tax liability here, with the depreciation.

3b. You can invest that cash elsewhere; lets use 10.83% as the 50 year historical return of the S&P 500 (This number seems to vary, depending on which study you read. 10.83% is at the low end of the range I've seen). That produces an average annual return of $3520/yr, $2112/yr after tax. Subtract your after tax cost of capital (4.8% of 32.5k), and you net $552/yr.

Alternative 3b generates nearly 10 times the profit of alternative 3a (without the additional tax liability). This is your oppty cost, or "lost oppotunity," in choosing 3a over 3b. Both of these alternatives (and many others) are available to you. It is a very real alternative to invest the money in something other than a t/s. Another alternative is to not borrow the money at all and save yourself the interest expense.

Now, you can say that you would not borrow money for investment purposes, but that is in fact what you have done (if you regard your MS purchase as a real-estate investment). Otherwise, your purchase is simply a lifestyle decision (an expense).

I'm not trying to be critical of your purchase (I own t/s too  ). I am mainly commenting on the topic of oppty cost, which is too often ignored IMHO.


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## hipslo (Apr 2, 2007)

Pit said:


> I think you are trying to rationalize what amounts to a lifestyle decision.



I certainly can't argue with that!  To a certain extent I am playing devil's advocate here, but I know full well that at some level rationalizing is exactly what I'm doing!  

At the same time, I continue to disagree with your concept of opportunity cost as applied to this situation.  Taken to its extreme, EVERYONE, at all times, with the access to (relatively) inexpensive capital (8%, tax deductibe, in this case - the rate would be lower if I elected to lock in a fixed rate for a fixed term, which I haven't done since I typically only use this as a short term revolving line of credit), would have an opportunity cost equal to the excess of what they might earn if they were to invest the funds in an S&P 500 index fund (just using that as an example) over the cost of funds.  

So, shouldnt everyone therefore tap 100% of their home equity and put the proceeds into the stock market?  Of course not.  That's arbitrage, not opportunity cost.  Some folks with an appetite for risk might take that approach, but most (including me) would not, and that's a good thing. So, to talk about what else I might be able to do with the borrowed funds really strikes me as irrelevant.  I wouldnt borrow the funds were it not for this purchase.  

You mention electing not to have the interest cost as another option.  True.  However, so long as the unit rents for enough to cover the after tax cost of the interest (and the mf), in effect I don't have the interest cost (or the mf expense), and believe it can be properly ignored.  (Sure, this assume that the unit will continue to rent for the assumed amounts, and I am fully aware of and willing to accept that risk). 

As to the deferred tax liability as a result of the depreciation, I am aware of that, as well.  If, as planned, I hold the units until I pass on, that issue goes away due to basis step up.  If I dont, well, recapture is a fact of life for real estate investors (not that ownership of a TS unit would render one a real estate investor, I'm just saying that this is as it always is with that issue).

At the end of the day, I am likely to pay off the loan in a few weeks anyway, since I am very averse to debt, in general, just by nature.  On the same numbers, with no debt, the after tax return is around 4.9%, which equates to a tax equivalent return of about 8.2%.  Not great, but not terrible, either, especially given that no appreciation is assumed in getting to that rate of return.  However, in any event, I think this has been a very interesting discussion, and I will at least think twice before selling some stocks and paying down the equity line.


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## cp73 (Apr 2, 2007)

Pit said:


> hipslo
> 
> Alternative 3b generates nearly 10 times the profit of alternative 3a (without the additional tax liability). This is your oppty cost, or "lost oppotunity," in choosing 3a over 3b. Both of these alternatives (and many others) are available to you. It is a very real alternative to invest the money in something other than a t/s. Another alternative is to not borrow the money at all and save yourself the interest expense.



Without running through all the numbers again I would bet 3b would still make the most economical sense even if you had paid cash for the t/s instead of borrowing against it. That being said it still comes back to the opportunity costs of the money regardless whether you borrow the money or take it out of the bank or stock market to pay for it. Generally when people say dont borrow to buy a timeshare they are referring to the fact that although timesharing is fun and can be a better way to go then renting a hotel room, if you have to borrow to acquire it, you may have better uses of the money than making monthly payments. Timeshares really are a luxury item and not a necessity.


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## Dave M (Apr 2, 2007)

Pit said:


> That produces an average annual return of $3520/yr, $2112/yr after tax. Subtract your after tax cost of capital (4.8% of 32.5k), and you net $552/yr.


The net return will very likely be even higher. You have used a 40% tax rate, but the gains on invested equities would probably consist primarily of long term capital gains, which would be subject to a combined federal/state tax rate of only about 20% (depending on the state) under current law.


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## wuv pooh (Apr 2, 2007)

hipslo said:


> Taken to its extreme, EVERYONE, at all times, with the access to (relatively) inexpensive capital (8%, tax deductibe, in this case - the rate would be lower if I elected to lock in a fixed rate for a fixed term, which I haven't done since I typically only use this as a short term revolving line of credit), would have an opportunity cost equal to the excess of what they might earn if they were to invest the funds in an S&P 500 index fund (just using that as an example) over the cost of funds.



Hipslo,

You need to get a better Heloc.  My local bank gives me prime - 0.5 and citibank just sent me a prime - 1.01 offer.  Then you can have even better cash flow  

PS. Typing this while sitting in my Marriott Horizons timeshare enjoying opening day on the large screen TV while the kids nap before going to Epcot for dinner.  Good lifestyle decision


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## hipslo (Apr 2, 2007)

wuv pooh said:


> You need to get a better Heloc.  My local bank gives me prime - 0.5 and citibank just sent me a prime - 1.01 offer.  Then you can have even better cash flow



Mine is prime - 0.5, as well.  Was just using 8% for illustrative purposes - actual current rate on the line is 7.75%. The difference in cash flow analysis is pretty small, though.  However, if I ultimately decide to leave the loan outstanding, I'd think about refi, until now the rate hasn't mattered that much as I dont use the line often and typically pay it off very quickly when I do.


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## Pit (Apr 2, 2007)

hipslo said:


> So, shouldnt everyone therefore tap 100% of their home equity and put the proceeds into the stock market?  Of course not.



Agreed. I don't advocate that either. 



hipslo said:


> You mention electing not to have the interest cost as another option.  True.  However, so long as the unit rents for enough to cover the after tax cost of the interest (and the mf), in effect I don't have the interest cost (or the mf expense), and believe it can be properly ignored.  (Sure, this assume that the unit will continue to rent for the assumed amounts, and I am fully aware of and willing to accept that risk).



I can make that same argument for leveraging your home equity in the stock market, which you already concluded was a bad idea. As long as my market return more than covers my interest expense, I don't have the interest cost. Right?

Bottom line is, you still have 32.5k tied up, and that money could be used in other ways. Opportunity cost is not a mythical concept. It asks us to consider the best alternative use of the resources at our disposal (cash in this case). We can choose to ignore the alternatives, but we only fool ourselves in doing so.



hipslo said:


> So, to talk about what else I might be able to do with the borrowed funds really strikes me as irrelevant.  I wouldnt borrow the funds were it not for this purchase.



But, it IS relevant precisely because you DID borrow the money. If you are willing to borrow the money to "invest" in a t/s, then why would you not be willing to borrow and invest in something with a better ROI? Or, to put it another way, if you are not willing to liquidate other investments to purchase this t/s, why would you borrow money for that purpose? 

The answer, of course, is because the t/s is not so much an investment to you as it is a purchase. It's a vacation expense, as with airplane tickets, luggage, and rental cars.


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## winger (Apr 2, 2007)

Pit said:


> Agreed. I don't advocate that either.
> 
> ... if you are not willing to liquidate other investments to purchase this t/s, why would you borrow money for that purpose?
> 
> The answer, of course, is because the t/s is not so much an investment to you as it is a purchase. It's a vacation expense, as with airplane tickets, luggage, and rental cars.



Not sure if already stated here, if not ... here another reminder (as this has been stated elsewhere zillion times already).  

Investing in a vacation (TS) is not just dollars and cents and ROI's!  It is also an investment in being able to experience those priceless moments you get to spend (where you want) in awesome locations/settings with people you choose to spend time with.  For us, I would never forget (and we have lots of videos and pics, for sure) the time we took our kids down to NCV for two weeks in 2005 - we did the whole southern calif tourist thing, with Disneyland, Knottsberry Farm, San Diego zoo, Sea World, etc... I got a video of my eldest son still in diapers waking up very early (up after our first night there),  rubbing his eyes - but clearly excited about seeing Mickey 'in 5 minutes' !  How about that video of my little girl sitting in our NCV balconey (with mom) carefully applying pink nail polish on her toe nails - all the while with soothing jazz music in the background (yes, that was what NCV played in the balconey that afternoon!) and the blue Pacific Ocean right over their shoulders.  I mean, I have so many memories of these sort of moments and I really do not think I would have had these opportunities if we did not buy our first timeshare in 1995/1996.  And yes we paid FULL PRICE then as well.


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## hipslo (Apr 2, 2007)

Pit said:


> The answer, of course, is because the t/s is not so much an investment to you as it is a purchase. It's a vacation expense, as with airplane tickets, luggage, and rental cars.



Actually, for me, in this case, its a hybrid.  The ultimate goal is to use it for personal purposes, so at the end of the day its a "purchase".  However, betwen now and then, it needs to perform as at least a reasonable facsimile of an "investment", or I can't really justify the acquisition today, for future use.  I believe it does that.  On a fully leveraged basis, it covers all carrying costs.  On a full cash purchase basis, it produces tax equivalent returns of roughly 8.2%.  A great investment?  No.  A reasonable performance, given the intended long term use?  Yes, by my standards.  As to whether or not there is an opportunity cost on not doing something else with the borrowed funds, well, I suppose we'll just have to agree to disagree.


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## MOXJO7282 (Apr 2, 2007)

I also don't think Op cost should be a factor in this case. The fact is he is using the money as an investment, just not a traditional investment vehicle.

I am also "financing" some of the ownership, but not with my HELOC, but low interest credit cards. I bought my MB Plat Plus with my MAR Visa, and then did balance transfer for the $32k at 1.90% interest for life of the loan.  I'm now down to $16750, and I pay about $300 in interest annually, so my overhead is my $800 MF plus the interest paid. I don't like to get into specifics, but suffice to say, I cover my overhead and thensome when I rent my unit. 

Now I guess I could've borrowed the money and invested in stocks instead, but I choose to invest with Marriott, and so far, its been a great investment, to a point where it has produced a better ROI than another investment would've, IMHO.

Regards.
Joe


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## bogey21 (Apr 3, 2007)

hipslo said:


> I just closed on the purchase of a platinum week at Mountainside.  Let's say that the all-in cost, including closing costs and title policy, are roughly 32.5k



Man, you guys are in a different league than me.  I just bought a 2 bedroom/2 bath Week 9 *for cash* for my Son at Orofino at Straight Creek in Dillion for $1,000 + Closing Costs.  Yeah, I agree Keystone is not Vail but good gosh, $30,000 (and the interest) will buy a lot of drinks and steaks and Breckenridge is just around the corner!! 

Truth is I just bought a race horse for $!0,000  with part of my savings, so I guess we all have our vices!!

GEORGE


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## hipslo (Apr 3, 2007)

bogey21 said:


> Man, you guys are in a different league than me.  I just bought a 2 bedroom/2 bath Week 9 *for cash* for my Son at Orofino at Straight Creek in Dillion for $1,000 + Closing Costs.  Yeah, I agree Keystone is not Vail but good gosh, $30,000 (and the interest) will buy a lot of drinks and steaks and Breckenridge is just around the corner!!
> 
> Truth is I just bought a race horse for $!0,000  with part of my savings, so I guess we all have our vices!!
> 
> GEORGE



Based on the list of "rented" units over the past couple of years at that resort on mrn, 2 bedrooms that have actually rented seem to have had ASKING prices running between roughly $350 and $950, with an average asking price of around $725.  Its hard to say what the units on average have actually rented for, but the average is likely at least somewhat less than $725.  For argument's sake, let's say maybe its around $650.  I'd be curious what the mf's are there, since, at the end of the day, what you are really paying for is the spread b/w rental cost and your mf. That's really the only way to compare apples to apples, I would think.


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## bogey21 (Apr 3, 2007)

hipslo said:


> I'd be curious what the mf's are there



MF is $350.  

GEORGE


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## hipslo (Apr 3, 2007)

bogey21 said:


> MF is $350.
> 
> GEORGE



Good deal!


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## PA- (Apr 3, 2007)

hipslo said:


> ...
> As far as the TS example that I have given, the price cited IS the resale price (current retail price is around 53k, at a sold out resort, with a waiting list).  *While I could not turn around and sell it tomorrow for 32.5, I could do so if I were willing to be patient, and could also sell immediately for a few thousand less (anything less than 30k), which limits any downside. * But that is not my intent.  My intent, ultimately, is to use the unit, as well as several others that I have purchased,* but the bulk of that use is still a number of years down the road.*  In the meantime, it is possible that resale prices could go up, just as they have over the past 5 years at this particular resort, and that it would cost more to purchase the units at the time I actually need them.  ...



The red flags I would see, if I were the one making this decision rather than you, are the 2 items I put in bold above.

1)  Resale prices at Mountainside HAVE increased in the last few years, a very rare event in timeshares, and I'm sure that ROFR is the reason.  I find it so unlikely for that increase to continue as to not even be considered.  As a timeshare ages, and Marriott builds new ones in Vail or whereever, Mountainside will always (or at least for a long time) be desirable, but I would bet money it will depreciate rapidly.

2)  An even bigger red flag is the 2nd sentence I put in bold letters in your quote.  Your intended usage is some years away.  If I were making the decision, that statement would decide it.  It's almost certain that 5 years from now, you can buy it cheaper if you still want it.  But what's far less certain is whether you'll still want it at that time.  And if you DON'T want it, and have to sell at a ten thousand dollar loss (not unlikely), just to make $57 per year in the meantime...

You can't imagine how many people I have talked to who planned to do one thing in retirement, and now find they have to do something different.  FOr all kinds of reasons; loss of health or loss of spouse.  Maybe the wife wants to move across country to be closer to the grandkids.  Maybe you don't ski anymore at that time.  Lots of people plan to travel when they retire, only to find that after they retire they don't have the money to do so.

None here can say your decision is right or wrong for you, but it sure would be wrong for me.


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## hipslo (Apr 3, 2007)

PA- said:


> The red flags I would see, if I were the one making this decision rather than you, are the 2 items I put in bold above.
> 
> 1)  Resale prices at Mountainside HAVE increased in the last few years, a very rare event in timeshares, and I'm sure that ROFR is the reason.  I find it so unlikely for that increase to continue as to not even be considered.  As a timeshare ages, and Marriott builds new ones in Vail or whereever, Mountainside will always (or at least for a long time) be desirable, but I would bet money it will depreciate rapidly.
> 
> ...



All  fair observations.  Some I agree with, some I don't, but all have been thoroughly considered.  In any event, I appreciate the input.


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## msweaver (Apr 3, 2007)

PA,

You make some really good points.  I've seriously considered adding another week at Summit Watch, with the intention of primarily renting the unit out and using it to get 13 month advantage.  On occasion, I see using it consecutively or concurrently with my present unit, but that would be the exception.

What keeps me from pulling the trigger is that, even though my calculations have me coming out in the black year after year, I am simply not willing to expose myself to the possibility of a quick depreciation.  Summit Watch and Mountainside developer and resales prices have been appreciating at over 10% per annum for the past three years, and in spite of the crazy real estate market in Park City, I can't see that sustaining itself.  Marriott is purchasing units from owners to recycle through their own resale shop because they can sell MSW for $44K and MMS for $54K, but who knows how long that will last?

Bottom line for me is that I will purchase a timeshare week for the purpose of using it.  Purchasing for rental purposes, even if I plan to use the week later, just doesn't seem to make sense to me.

Mike


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## PA- (Apr 3, 2007)

msweaver said:


> PA,
> 
> You make some really good points.  I've seriously considered adding another week at Summit Watch, with the intention of primarily renting the unit out and using it to get 13 month advantage.  On occasion, I see using it consecutively or concurrently with my present unit, but that would be the exception.
> 
> ...




I just picked up a silver week at Summit Watch for $2200 including closing costs and 2007 maintenance fees.  The high maintenance fees will affect bronze and silver weeks more than others, but eventually they'll also impact gold price, and at some level it will even make platinimum less valuable.  I've only been following the market for 20 years, but I don't believe that resale prices will hold steady.  And if they are propped up artificially for a period with ROFR, once that prop is removed, they can fall even faster than they otherwise would have.

Here's the warning signs:

1)  First, the number of days on the market will start getting big
2)  Marriott will begin to be less interested in taking them.  THey offer fewer incentives and worse terms.
3)  They won't have salespeople in that resort.


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## hipslo (Apr 4, 2007)

PA- said:


> I just picked up a silver week at Summit Watch for $2200 including closing costs and 2007 maintenance fees.



Couldn't you just rent a silver week at SW for roughly the mf?  If so, why pay anything for it?  (If the answer is for trading purposes, then I understand, but otherwise it seems like those off season weeks with high mf's have zero or even negative value).


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## johnmfaeth (Apr 5, 2007)

Hi Hipslo,

1) You already bought it...

2) You seem pretty well thought out and certainly wanted it...

3) How long will you be dead after you die?

Throw away your calculator and focus on enjoying your purchase. The economic's definition of value is what someone feels something is worth and will pay that amount to acquire it.

Forget "fair market value" as this is not a market in equilibrium in economic terms.

Hope you have years of fun using it... 

John


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## BocaBum99 (Apr 5, 2007)

I don't find opportunity cost a helpful metric for timesharing.  I prefer risk adjusted return on invested capital and cost of capital as the most useful metrics.   By using these financial measures, you can pretty much turn every timeshare into an equivalent cost for a week of usage.  When you do that, you can easily compare timeshares to each other and to alternative investments and usages for your cash.  This is how I evaluate all of my timeshare purchases.

In Hiplso's case, here is how I would perform a financial assessment of his situation.

First, we need to agree what we are assessing and what the alternatives are so that we can compare them properly.

In Hipslo's case, he wants to go to Mountainside every couple of years.  He now needs to decide the best approach to getting there.  His alternatives are renting from another owner, buying it with cash or financing it through a Home Equity loan.  Which is the best alternative?  That is the question.  And, Hipslo asserts that financing may make sense.  So, that is the problem we are solving.

Second, now that we have defined the problem, we need to model the alternatives and compare them to each other.

The first alternative is renting.  I'm not sure what it would cost to rent a unit there in the winter.  I just checked redweek.  Let's just say that it rents for $3500 for a ski week.  If Marriott will offer $2765, then $3500 isn't a bad number to use.  So, alternative A is to rent a unit for $3500 whenever he wants to go skiing.

The second alternative is buying and using cash.  The upfront capital is $32.5k, the maintenance fees are $825.  The years he uses the unit, his return on invested capital is (3500-825)/32,500 = 8.23%.  No tax liability since he is not charged for imputed rent.  The question is whether or not an 8.23% is a) an acceptable return for $32.5k in cash and b) what is the relative risk of this return relative to alternatives.

If Hipslo puts the money in a money market account, he can net 3% after taxes (5% pretax) since he is in the 40% tax bracket for Fed and State taxes.  Since he completely controls his usage, that gives him a high degree of confidence that it will be used every year.  An 8.23% return is about what you can expect from a lower risk stock investment.  So, this is not a bad investment.  Not a great one either.  There is risk such as not being able to use it one year, maintenance fees going up, needing to sell, selling for a loss, etc.  So, it needs to be higher than money market.  

If Hipslo uses it as a rental property using Marriott, his return goes down due to taxes and Marriott's take.  It is now .6*(2765-825)/32.5k = 3.58%.   That is a very poor return given the alternative of a money market.  You have much lower risk putting your money in a money market account and using it to rent the unit.

Given that Hipslo intends to use some years and rent other years, there will be a blended return that is about the average of the above 2 scenarios.  That yields a 5.9% after tax return.  

The decision is completely up to Hipslo if he believes he has better investment alternatives for his $32.5k.  Personally, I am a heavy consumer of capital and so I have more opportunities for investing at an expect return of 25% or more that I would never make this purchase.  If Hipslo was just going to leave that money in a bond or money market account, then buying the timeshare might make sense.  It depends on his own personally available options for cash.

Alternative C is simply a financing option.  His cost of capital is 8% before taxes and 4.8% after tax.  That is a pretty low cost of capital.  If he has a relatively low risk usage for the cash, then that usage of cash could be good for Hipslo.  He has obviously concluded that it has.  I don't disagree with him.  And, he is yielding the return on captial equivalent to alternative B and he is more than covering his cost of capital which makes it not a negative investment.

Once again, if Hipslo has alternative investments that look better, he would reject that usage of cash.  There are so many timesharing alternatives with 25% or more expected return on invested capital that I personally would not make that purchase.


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## hipslo (Apr 5, 2007)

BocaBum99 said:


> If Hipslo uses it as a rental property using Marriott, his return goes down due to taxes and Marriott's take.  It is now .6*(2765-825)/32.5k = 3.58%.   That is a very poor return given the alternative of a money market.  You have much lower risk putting your money in a money market account and using it to rent the unit.



BB, you are looking at this in more or less the same way that I am.  My only comments are that (i) the above ignores the tax benefit of depreciation, which, when taken into account, generates a tax equivalent yield of roughly 8.2%, which is quite a bit more respectable than the 3.58%, and, though still nothing to write home about, increases that "blended" rate to 8.2%, and (ii) I obviously don't possess your knowledge and skills as to ability to generate 20-25% return on capital via timeshares, so I don't really consider that as a realistic alternative in my case.  Compared to the realistic alternatives, I am comfortable with the 8.2%. 

 In addition, though conventional wisdom says that resale prices will stay flat or decline, personally my faith in conventional wisdom is limited, as a general proposition, and have reason to believe that MS is a unique situation, given lack of comparable developable land in Park City.  Sure, I could be wrong about that, but have never been one to limit my vision to the conventional wisdom and to date that has served me resonably well. If it turns out that I am correct in that regard, the 8.2% is a floor, and the true return is unjkbown, but higher.


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## hipslo (Apr 5, 2007)

johnmfaeth;3124813) How long will you be dead after you die?
[/QUOTE said:
			
		

> Great point!
> 
> Though I am not one to throw away the calculator, I certainly do intend to enjoy it!
> 
> My parents were quite frugal when I was growing up, and had all sorts of plans for the retirment they were saving for.  Then they were both killed in a traffic accident in their late 40's.  This was many years ago now.  That has no doubt colored my approach to the balancing of today v. tomorrow.  This is not a dress rehearsal!


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## oldkey (Apr 8, 2007)

*Great conversation....*

....especially as I am in the same boat as Hipslo. I am thinking twoards for the future when I can travel more but do not want prices to pass me by while I wait for that day to come. I am considering obtaining another Maui Ocean Club to augment my current week (2bd). I received $3600 in rental income this President's Day week (by splitting the unit and renting twice) and am therefore bullish on the prospects. But....a couple of questions:

- Has anyone other than MOXJO7282 played this game with 0% or low interest credit cards instead of using a home equity line? For how long? Is this a viable option any longer? Can you do so and make minimal payments? I am looking for a way to have zero cash outflow for at least the next 4 or 5 years while at least chipping away at the principal somewhat. If I take out a home equity line, I will need to make minimum payments (of principal and interest) that make the prospect of zero outflow of cash difficult. $3600 - fees - $1500 MF = about $1900 or about $150/month towards payments. A 20 year Home Equity on $30K @ 8% requires about $250/month.
- Thoughts on Maui Ocean Club.....will the "old project" rooms continue to climb as Kannapali becomes built out and the rooms in the "new project "area continue to rise? The real estate there is unbelievable (sorta like the Newport Coast) and I am wondering if the Marriott property will rise accordingly? If so, buying now and renting for a future use makes sense. If prices might actually drop, then certainly there is no need to buy now.
- What Marriott properties would allow this math to work better? I don't mind the reservation game at all and like the variety of exchanging. If I thought differently and bought a trader instead of another Maui..........

Thanks in advance

Matt


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## bogey21 (Apr 8, 2007)

oldkey said:


> Has anyone other than MOXJO7282 played this game with 0% or low interest credit cards instead of using a home equity line? For how long? Is this a viable option any longer? Can you do so and make minimal payments?



The answer to your questions are yes. yes and yes.  I have been doing it for about 2 years now.  Just picked up another about a week ago.  And you can make minimum payments.  If you are going to do this, however, you need to have a Plan "B" ready for the day when the 0% offers stop coming.

GEORGE


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## cp73 (Apr 9, 2007)

MOXJO7282 said:


> I bought my MB Plat Plus with my MAR Visa, and then did balance transfer for the $32k at 1.90% interest for life of the loan.
> Regards.
> Joe



Joe is that 1.90% per year or per month? If its per year where did you get a deal like that?


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## PA- (Apr 9, 2007)

cp73 said:


> Joe is that 1.90% per year or per month? If its per year where did you get a deal like that?



Those offers come in the mail all the time.  The interest rate varies, of course, depending on market conditions.  At the current time, it might be 4.9% for life of loan or whatever, but sub-prime deals are available from the credit card companies all the time.  They lure you with good deals and hope you'll borrow at 19% later.


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## Steamboat Bill (Apr 9, 2007)

The 0% credit card game is very dangerous. 

How about simply not charging anything you can't pay cash for when the bill comes?

Check out www.prosper.com for TONS of Payday loan horror stories and credit card interest horror stories.

They should really teach money management 101 in school these days as common sense is not so common after all.


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## hipslo (Apr 9, 2007)

Steamboat Bill said:


> The 0% credit card game is very dangerous.
> 
> How about simply not charging anything you can't pay cash for when the bill comes?
> 
> ...



True - but - if you know you will be able to pay the entire bill off at any time, why not take advantage of the float, while its being offered?  (I do this frequently with the purchase of big ticket electronic items, for example - no payments and no interest for 18 months is a pretty typical deal - then pay in full at 18 months.  I can never understand why no discount is given for full payment up front equal to the present value of the payment 18 months later, but so be it). If you can't, then I agree, you are playing with fire.


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## MOXJO7282 (Apr 9, 2007)

cp73 said:


> Joe is that 1.90% per year or per month? If its per year where did you get a deal like that?



Per month.

I've been doing this for 6 years now, and when I started doing it, interest rates were much lower, so offers like that were out there. I actually had $32K on a 0% for a year, and then found this 1.9% life of loan. I could have found another 0% at the time, but I knew in the long run this was a great rate, so I jumped on it.  I also have had some money on 2.99%. So it been a mix of mostly 0%s, some on 1.9% and a little on 2.99%.  Today you won't find rates like that.  

To do this right, IMHO, the two things you need are good credit and extra cash flow to pay down the "loan" as much as possible every month.  You'll be able to use the rental income to pay some of the monthly payments, but you'll still need additional cash flow so that you are reducing your overall debt as you make payments. 

Theoritically you could just pay the minimum, but eventually the 0% game will will run dry, and when that happens, you want the amount that hits the HELOC to be as small as possible.  That was my plan all along, but I just kept finding more funding "vehicles" to use instead of my HELOC. If you can find some low "Line of Loan" rate that works too, but today those are at best 3.99%, but mostly 4.99%. 

Just like the Marriott Points and an other promo type offer as time goes on they make it tougher for the consumer to extract max value. Nowadays its much harder to do what I did, for a number of reasons. 

Aside from the absence of the lower rates, the 0% offers are also different. In the past you could be offered a 0% with no balance transfer fee. Then they started charging 3% max $75 transfer fee. Now many have done away with the $75 max, so if you transfer $10k or more, you are paying hefty transfer fees, which is something I never had to do in the past.   

So if you are planning to do it, I still think its possible for a few years, but watch out for the new hidden fees, and realize, or better yet assume that the 0% game will eventually run out, and be prepared with a low rate vehicle to pay off the remaining balance as quickly as possible.

Regards.
Joe


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## Steamboat Bill (Apr 9, 2007)

The people that can figure out the math to win the credit card game of 0-2% interest are NOT the same people that get into credit card hell and then take out desparate payday loans.

Although, I often wondered why there are so many check cashing stores, I never realized how large the payday loan problem is...this is a major problem for the financially challenged individuals.


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## Dave M (Apr 9, 2007)

Joe -

1.90% per month? A great rate? That works out to almost 23% per year, even without compounding! Did you really mean per month?


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## MOXJO7282 (Apr 9, 2007)

Dave M said:


> Joe -
> 
> 1.90% per month? A great rate? That works out to almost 23% per year, even without compounding! Did you really mean per month?



I always got confused with that terminology. I guess its annual but compounded monthly? Is that the right phrase? Its less than $300 a yr in interest. 

Regards.
Joe


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## winger (Apr 9, 2007)

MOXJO7282 said:


> Per month.
> 
> ...
> So if you are planning to do it, I still think its possible for a few years, but watch out for the new hidden fees, and realize, or better yet assume that the 0% game will eventually run out, and be prepared with a low rate vehicle to pay off the remaining balance as quickly as possible.
> ...


Just signed up for a card with 2.9% for life of loan, but yep, the hidden fee is they have NO CAP on the tx fee (3% of bal tx'd).  Which is still not a big deal considering MVCI is jacking folks w/ the 13.9% (for life of loan, I presume)!  Well, at least they give some MRP incentives...

BTW, I currently have a cc loan out for 0.9% for life of loan, and I think the cap tx fee was about $60.  

Deals are still out there, but I agree, tougher to come by.


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## JDandJen (Apr 10, 2007)

*A dollar for your time?*

Hi, all.

I've been reading this whole discussion with great interest (pardon that!), and have found myself nodding in agreement with a few things posted.  Perception of value is important.  Opportunity cost should be considered, but it's really the "risk adjusted return on invested capital" that's being played with, considering that the money might not be invested otherwise.  And, it's the spread between MF and rent that's the meat of the return.

I look in the classifieds every now and then, and am amazed at the $1 purchase prices for a week here or there.  With some having sub-$1000 MF annually, a good pick would put you "in the money" with very little annual exposure.  If the MF on a place is $900 and you could rent it for $1200 annually, that's a pretty good return on the $1 investment, even with $75 per month in carrying costs.  As for risk exposure and whatnot, how much do you spend on coffee in a year?

One thing that I can't figure out is what "ROFR" is.  People in this discussion keep slinging it around like it's an important thing to consider for long-term planning.  I've just turned 40, so I'm hoping to have a lot of years ahead of me to do this (my regards, hipslo, for the loss of your partents).  I've got to get a good dose of "conventional wisdom" to carry me forward.  I've got "shiny object" syndrome in the worst way, and this is a dangerous field for me to play in.

Regards to all of you.

J.D.


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## hipslo (Apr 10, 2007)

JDandJen said:


> Hi, all.
> 
> I've been reading this whole discussion with great interest (pardon that!), and have found myself nodding in agreement with a few things posted.  Perception of value is important.  Opportunity cost should be considered, but it's really the "risk adjusted return on invested capital" that's being played with, considering that the money might not be invested otherwise.  And, it's the spread between MF and rent that's the meat of the return.
> 
> ...



ROFR = right of first refusal, a right reserved to the developer (this does not apply univerally and varies by developer and by resort) that gives the developer the right to purchase a week at the price and on the terms that a seller has otherwise agreed to sell to a third party.  There appears to be a fairly wide divergence of viewpoints on this BBS as to whether that helps or hurts owners, as well as whether it hurts or helps resale prices.  My own view is that the answer is, like most things, "it depends".


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## gmarine (Apr 10, 2007)

JDandJen said:


> Hi, all.
> 
> I've been reading this whole discussion with great interest (pardon that!), and have found myself nodding in agreement with a few things posted.  Perception of value is important.  Opportunity cost should be considered, but it's really the "risk adjusted return on invested capital" that's being played with, considering that the money might not be invested otherwise.  And, it's the spread between MF and rent that's the meat of the return.
> 
> ...



ROFR is " right of first refusal". It is a clause in some contracts, especially Marriott's, in which Marriott can choose to purchase a unit at the agreed sales price instead of letting the sale go through to a private party. When you agree to sell, a ROFR form goes to Marriott and then Marriott chooses to purchase the unit or to waive ROFR.

Regarding the $1 timeshares. Dont count on any $1 timeshare renting for $1200. Most would be lucky to rent for the annual fees. Thats why they are selling for a $1.


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## JDandJen (Apr 10, 2007)

> ROFR = right of first refusal



Okay, that makes sense.  For the sellers, it seems like a "who cares?" clause.  If you've agreed to a sales price, why would it matter where the money comes from?  OTOH, for the buyer, having a deal snatched out of your hands seems like it could become frustrating.  That would create uncertainty in the market, making buyers generally disinterested in buying from anyone but a developer.



> Don't count on any $1 timeshare renting for $1200.



Oh, I wouldn't count on such things.  If I were to buy one, I would try to rent it, but be willing to absorb the entirety of the maintenance fees every year, making whatever I could rent it for a bonus.

This sure is an interesting line of thinking, though...  

J.D.


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