# Worldmark No Housekeeping mbrship - Value?



## DaveS

Hi, I just saw a 13,000 point premier membership (w/13,000 available) with the NO HOUSEKEEPING feature sold for over $25,000 on Ebay. This is at the same time regular premier memberships are selling for $.60 to $.70 a point on Ebay. Based on that, it should have sold for around $8,000 - $9,000. 

I understand that once you add this no housekeeping points to your current membership, then all the points becomes no housekeeping. But can someone explain to me why this membership fetched such a high price? Just curious.

Thanks!

Dave Sun
My Website


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## Hoc

Most likely shill bidding.


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## Cathyb

hoc:  what is shill bidding???


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## Steamboat Bill

Cathyb said:


> hoc:  what is shill bidding???



Shills, or "potted plants", are sometimes employed in auctions. Driving prices up with phony bids, they seek to provoke a bidding war among other participants. Often they are told by the seller precisely how high to bid, as the seller actually pays the price (to himself, of course) if the item does not sell, losing only the auction fees.

Shilling has a substantially higher rate of occurrence in online auctions, where any user with multiple accounts (and IP addresses) can shill without aid of participants. Many online auction sites employ sophisticated (and usually secret) methods to detect collusion, and a number of people have been sent to jail for online auction fraud in the past decade.

Shill bidding may be a common practice on eBay. In his book FAKE: Forgery, Lies, & eBay, Kenneth Walton describes how he and his cohorts placed shill bids on hundreds of eBay auctions over the course of a year. While many sellers consider shill bidding a harmless act, some believe that it may violate federal or state laws. Walton and his associates were charged and convicted of fraud by the United States Attorney for their eBay shill bidding. Some eBay sellers frown on the practice and a few spend considerable time trying to "out" those among them that use shill bidders as well as working to increase public knowledge of how to protect themselves from said shilling. Their tactics can easily turn up many "false positives" - for instance, they believe that auctions having many bidders with very low (less than 20 or so) and/or no feedback could be suspect.


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## Bill4728

DaveS said:


> Hi, I just saw a 13,000 point premier membership (w/13,000 available) with the NO HOUSEKEEPING feature sold for over $25,000 on Ebay. This is at the same time regular premier memberships are selling for $.60 to $.70 a point on Ebay. Based on that, it should have sold for around $8,000 - $9,000.



The going price for NHK packages is about $2.00 /pt.  So, 13,000 pts should sell for about $26,000.  I'm not sure why anyone thinks this was "shill" bidding?

The key thing is to buy the NHK than buy more regular points and get the whole thing NHK.  This allows you endless one and 2 nights stays with no extra costs.

PS I'm moving this to the Wyndham board.


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## DaveS

*I don't think so...*



Hoc said:


> Most likely shill bidding.



Hi, somehow I don't think it's shill bidding. Even if it was, then the real buyer had to have some value in mind for the NHK membership in order to bid this high. As someone just posted, the NHK is worth $2/pt.

I guess my question is back to how do you place a vlue of $2/pt on a NHK membership? For $26,000, you can pay for a heck of alot of housekeeping fees using a regular membershp.

Thanks,

Dave Sun


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## ROCKJenkins

*There are only 1500 worldmark NHK accounts in the world*

Tuggers,

The discussion of No House Keeping  Accounts is a hotly debated subject on the privately run WorldMark Forum at www.wmowners.com

One of the reasons that No Housekeeping Accounts are so valuable is because their will never be more than around 1500 accounts.

Many Worldmark Members believe that as long as Wyndham does not tamper with No Housekeeping accounts that they will continue to increase in value, while the price of worldmark's regular re-sale accounts continues to go down.....down.......way way down.


Rock


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## Steamboat Bill

ROCKJenkins said:


> Many Worldmark Member believe that as long as Wyndham does not tamper with No Housekeeping accounts that they will continue to increase in value, while the price of worldmark's regular re-sale accounts continues to go down.....down.......way way down.



This makes no sense at all unless you plan on traveling the US and staying in WM properties and checking out every day or two.

The extra $ saved can buy a TON of housekeeping fees in addition you get a few tokens per year anyway...correct? 

Can you sell housekeeping tokens on eBay...how much are they?


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## ROCKJenkins

*No it doesn't........unless*

Steamboat B,


At the prices these NHK accounts are going for now.... no-one is going to break even until they sell them.   

Since there will never be any more such accounts I think a few NHK members are hopeing to sell (like a stock) for a profit.  There are members who actually own more than one account.  Others just see it as something their children's children MAY break even on someday.

What get me is there are a few members who feel that nhk contract holders are takeing advantage of members with regular accounts.

Their are many reason this is not true.......and as I have said....this is  discussed in more detail on www.wmowners.com


Rock


P.S 

  No there are no hk Tokens to sell in a NHK account...........one of two recent rules leveled by Wyndham

Yes you can sell HK Tokens from a Regular Worldmark Account on e-bay.....Tin buck two or....   the moon.

Worldmark members get 1 free hK token for 6000 credits on a regular account.
Member who have more than 10,000 credits receive one hk token for every 10,000 credits Annually.
20K= 2 hk tokens
30K= 3 hk tokens
50K= 5 hk tokens

While Wyndham sells RENTAL CREDITS for up to 14 cent thru their new program call TRAVELSHARE;  members sell them to each other on the forum for 6 to 7 cent a credit.


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## LLW

DaveS said:


> Hi, somehow I don't think it's shill bidding. Even if it was, then the real buyer had to have some value in mind for the NHK membership in order to bid this high. As someone just posted, the NHK is worth $2/pt.
> 
> I guess my question is back to how do you place a vlue of $2/pt on a NHK membership? For $26,000, you can pay for a heck of alot of housekeeping fees using a regular membershp.
> 
> Thanks,
> 
> Dave Sun
> www.DaveSun.com



You are right. The seller Redseason is a major Worldmark reseller, and would not be engaged in shill bidding since their reputation and livelihood depends on reselling Worldmark. The bid history indicates that there was some competitive bidding on this, and it looks like a sniper was used in the last minute to win it. A reseller, especially a major one, would not use a shill bidder this way.

NHK accounts have appreciated steadily in the recent past. The way to value an NHK is this:

Value of 13,000 credits in the account at market: 13,000 credits X 65 cents= $8,450
The NHK premium paid on this account: $25,000-$8,450=$16,550

NHK accounts have sold recently at a premium from about $10,000 to about $15,000. For the winning bidder to pay $16,550, s/he must believe that the value of NHKs will continue to go up. They have appreciated about 5% per year in the last few years, depending on the transaction.

Credits added to the account will become NHKs also, as the NHK feature is with the account, not with the credits. There is a rumor that this will change in the future, but at this time that is still the case, if the credits are added before the window closes. That is probably one of the reasons why the buyer was determined to win this auction at this time.

So if the buyer believes they will be able to sell the account at at least $16,550 when they sell, the housekeeping fee savings that they will make will amount to return on the investment until they sell.

HK fees range from $42 to $118. The fee on a 2BR is $70. Wyndham has been increasing HK fees at an astronomical pace recently. The 2BR increase was 8% the last time. How much an owner saves will depend on how they use WM. Using myself as an example for usage:

I typically book reservations of about 2,500 credits for each booking, for a 1 to 3 day trip, usually in shoulder or off season. If I add 20,000 credits to this account as soon as possible (they are readily available on the market), making it a 33,000 credit account, I will be able to travel once a month on it. If I don't have an NHK account I would pay an annual HK fee of about $700. An NHK account will also change the way the owner uses WM. Whereas one-day trips were not economically feasible before (because each time you change rooms will cost you a HK fee of $70 in addition to the credits used, for a 2BR), they would be freely taken by an NHK owner. This is especially handy for road trips.

My $700 savings on the $16,550 investment would yield a 4.2% return. Plus now my WM usage would not be inhibited by the hefty HK fee and future increases. Not a bad investment for my WM vacation future.

So you really have to know WM in order to understand the price paid on this auction. 


P.S. More discussions on this auction may be found here on www.wmowners.com.

P.P.S. I was not the buyer nor the seller, nor did I bid on this auction.


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## DaveS

*The price of HKT on Ebay...*



Steamboat Bill said:


> Can you sell housekeeping tokens on eBay...how much are they?



Hi, Ebay shows that these tokens have been selling between $45 and $60 each.

Dave Sun


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## PerryM

*NHKs and the evil developer...*

What is a NHK account worth?  In my opinion the same price the developer, Wyndham, is selling WM credits for – about $1.98 a credit.

NHK credits seem to track the developer’s price and I’d be hard pressed to advise anyone to pay a cent more - about $1.98 as of today.

Meanwhile normal WM credits are in a free fall – losing about 36% of their relative value to Wyndham’s price in just 4 years.

The great trick is to buy a small NHK account, like 6,000 credits, add 6,000 normal credits more for 65¢ a credit and sell the account for a tidy profit, about the same price per credit as a 6k account; $1.98 a credit.

Now the real kicker here is why NHK accounts shadow Wyndham’s price and regular WM credits are falling like a lead balloon.  The ability to take short vacations at the last minute and not pay a housekeeping charge just can’t account for this difference.

What’s obvious to me is that it’s NOT the developer causing this huge discrepancy – it’s in the minds of the folks who buy and sell these NHK accounts.  This to me is proof positive that the developer is NOT responsible for falling resale WM prices.  If Wyndham was responsible then ALL WM credits would fall like lead balloons – that is NOT the case.  NHK accounts are now selling for way beyond the developer's price.

A word about eBay and shills – that era is over.  You can easily check the bidding history of any bidder to an auction and see for yourself if the bidder is a shill.  This is about 99% accurate.


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## acesneights

Why would anyone pay $2 per credit for a no-HK account? The no-HK property is worth a certain amount, say $14,000.

So a no-HK account would be worth $14,000 + 60 cents a credit.

There might be some small premium paid to avoid having to assemble a large account by adding additional contracts to an existing no-HK account.

Is there really a huge profit to be made by bulking up a small no-HK account?

Isn't there some upper limit as well? Is a 50,000 credit account going to sell for $100,000?

Stan


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## mshatty

LLW said:


> You are right. The seller Redseason is a major Worldmark reseller, and would not be engaged in shill bidding since their reputation and livelihood depends on reselling Worldmark. The bid history indicates that there was some competitive bidding on this, and it looks like a sniper was used in the last minute to win it. A reseller, especially a major one, would not use a shill bidder this way.
> 
> NHK accounts have appreciated steadily in the recent past. The way to value an NHK is this:
> 
> Value of 13,000 credits in the account at market: 13,000 credits X 65 cents= $8,450
> The NHK premium paid on this account: $25,000-$8,450=$16,550
> 
> NHK accounts have sold recently at a premium from about $10,000 to about $15,000. For the winning bidder to pay $16,550, s/he must believe that the value of NHKs will continue to go up. They have appreciated about 5% per year in the last few years, depending on the transaction.
> 
> Credits added to the account will become NHKs also, as the NHK feature is with the account, not with the credits. There is a rumor that this will change in the future, but at this time that is still the case, if the credits are added before the window closes. That is probably one of the reasons why the buyer was determined to win this auction at this time.
> 
> So if the buyer believes they will be able to sell the account at at least $16,550 when they sell, the housekeeping fee savings that they will make will amount to return on the investment until they sell.
> 
> HK fees range from $42 to $118. The fee on a 2BR is $70. Wyndham has been increasing HK fees at an astronomical pace recently. The 2BR increase was 8% the last time. How much an owner saves will depend on how they use WM. Using myself as an example for usage:
> 
> I typically book reservations of about 2,500 credits for each booking, for a 1 to 3 day trip, usually in shoulder or off season. If I add 20,000 credits to this account as soon as possible (they are readily available on the market), making it a 33,000 credit account, I will be able to travel once a month on it. If I don't have an NHK account I would pay an annual HK fee of about $700. An NHK account will also change the way the owner uses WM. Whereas one-day trips were not economically feasible before (because each time you change rooms will cost you a HK fee of $70 in addition to the credits used, for a 2BR), they would be freely taken by an NHK owner. This is especially handy for road trips.
> 
> My $700 savings on the $16,550 investment would yield a 4.2% return. Plus now my WM usage would not be inhibited by the hefty HK fee and future increases. Not a bad investment for my WM vacation future.
> 
> So you really have to know WM in order to understand the price paid on this auction.
> 
> 
> P.S. More discussions on this auction may be found here on www.wmowners.com.
> 
> P.P.S. I was not the buyer nor the seller, nor did I bid on this auction.



I look at this from a simpler point of view.  If you use the $118 HK per reservation, you can get 140 reservations from a regular premier WM account for the $16,550 difference in price.  The $16,550 that you kept in your pocket earning 3% per year is $496.50.  If you get more than 3%, you will likely cover all of the HK costs for a year.  NHK accounts seem like a waste of money to me.


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## PerryM

*Lead into Platinum is why prices are sky high...*



acesneights said:


> Why would anyone pay $2 per credit for a no-HK account? The no-HK property is worth a certain amount, say $14,000.
> 
> So a no-HK account would be worth $14,000 + 60 cents a credit.
> 
> There might be some small premium paid to avoid having to assemble a large account by adding additional contracts to an existing no-HK account.
> 
> Is there really a huge profit to be made by bulking up a small no-HK account?
> 
> Isn't there some upper limit as well? Is a 50,000 credit account going to sell for $100,000?
> 
> Stan




Great question – why does anyone pay more than 10¢ for ANY WM credit?

In the NHK account BOTH the seller and buyer place a premium on it.

We bought our 6k NHK account about 4 years ago now for $1.50 a credit while the developer was charging $1.55.  People told me I was crazy (I get that a lot), since resale WM credits were selling for 80¢ back then.

 I knew better – I know that there are many WM owners who use WM like a hotel – a few days here, a few days there.  I envision using WM the same way in a few years.  We plan on staying at Cabo all the way up to Whistler and even more north in WM resorts.

Right now you get 1 free housekeeping with 10k credits or about 1 week in a 2BR unit.  WM has the great ability to book 3 days at one WM and 4 days at another to satisfy the 7 day min stay in Red season.  Well that second reservation will cost you $60 to $70, depending on the 2BR configuration.  1BR is $60 - $63, studio is $40 - $42, 3BR is $75 - $104, 4BR $110 - $118.

Say you book 3 WM’s per week for 4 weeks = 12 stays.  4 are already paid for so you must cough up 8 stays at, let’s say, $65 = $520 for the month extra.

Do that for 10 years and that’s $5k in savings (with inflation a hell of a lot more).

There are other WM owners who do much more than this and save a ton.

So, the buyer knows that NHK accounts save a lot of money and seem to keep up with the developer’s price and you can buy normal WM credits for 60¢ and when you merge them into your NHK account they are worth $2 – lead into platinum.

The seller knows all of this too.

However, if the developer was hell bent on destroying WM the price would be nowhere near the developer’s price.  I’ve seen plenty of sales where the NHK credits sold for MORE than developer credits.


In our case the NHK account has saved us ZERO dollars since we avoid WM resorts like the plague and rather stay at Marriott resorts.  My $1.50 NHK credit is worth about $2 now and we will not be selling the original 6k credits but probably closer to 20k credits.

Thank you very much.........Wyndham I guess?  WM has nothing to do with this - not ONE employee works for WM so I must defer to the developer - Wyndham.


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## LLW

mshatty said:


> I look at this from a simpler point of view.  If you use the $118 HK per reservation, you can get 140 reservations from a regular premier WM account for the $16,550 difference in price.  The $16,550 that you kept in your pocket earning 3% per year is $496.50.  If you get more than 3%, you will likely cover all of the HK costs for a year.  NHK accounts seem like a waste of money to me.



So your opportunity cost is $496.50. If you save $496.50 annually in housekeeping fees you would break even. If you save more, you make money. If you save less, you lose. Correct?


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## mshatty

LLW said:


> So your opportunity cost is $496.50. If you save $496.50 annually in housekeeping fees you would break even. If you save more, you make money. If you save less, you lose. Correct?



I don't think so (I'm not real sure of what you are asking here).  I still have the $16,550 that the NHK buyer paid out.  So I have $16,550 plus $496.50 a year to pay for HK that the NHK owner avoids.  Even if the NHK account appreciates in value by 20%, it will be years and years and years before the NHK account will break even compared to my regular HK account and it paying occasional HK fees.

I do agree that having the perception of getting to stay in WM resorts and not having to pay HK fees for frequent short stays is great, but it's not a financial reality.


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## cruisin

For me it does not make sense to own a NHK, I exchange too much, but if I was doing 20 short stays a year, it would be worth it. Also,  you get HK tokens for every 10,000 credits you own. So, LLW only needs to pay for 9 hks a year if traveling once a month.


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## FLYNZ4

mshatty said:


> I don't think so (I'm not real sure of what you are asking here).  *I still have the $16,550 that the NHK buyer paid out. * So I have $16,550 plus $496.50 a year to pay for HK that the NHK owner avoids.  Even if the NHK account appreciates in value by 20%, it will be years and years and years before the NHK account will break even compared to my regular HK account and it paying occasional HK fees.


Mike,

I think that LLW's analysis is correct.   In her analysis... she still has the NHK account which has been appreciating in value.   For simplicity sake... let's assume that its value stays flat.

With your approach... you keep $16,550 and you use your annual interest of $496.50 to pay for HK fees.   At the end of your timeshare travel period... you still have your $16550 asset (cash).

With LLW's approach... she doesn't pay HK fees, and at the end of her timeshare travel period... she still has a $16550 asset.

Hence... I think she is correct.

The financial benefit of this is tied to the number of independent WM trips you make.     If you make all full week trips... then for sure a NHK does not make sense.   OTOH... if you make lots of short jaunts... then the saving can add up quite fast.

/Jim


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## LLW

FLYNZ4 said:


> The financial benefit of this is tied to the number of independent WM trips you make.     If you make all full week trips... then for sure a NHK does not make sense.   OTOH... if you make lots of short jaunts... then the saving can add up quite fast.
> 
> /Jim



That's correct. In my psot #10 above, I make only 12 trips a year and my return is 4.2% assuming that the NHK account stays flat in value. If it appreciates 5% a year, my return would be 9.2%. If it depreciates 2% a year, my return would be 2.2%. In the last few years, NHKs have appreciated at least 5% a year. I don't think that's going to change if HK fee increases continue to outpace inflation.


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## FLYNZ4

Post deleted by author


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## mshatty

LLW said:


> That's correct. In my psot #10 above, I make only 12 trips a year and my return is 4.2% assuming that the NHK account stays flat in value. If it appreciates 5% a year, my return would be 9.2%. If it depreciates 2% a year, my return would be 2.2%. In the last few years, NHKs have appreciated at least 5% a year. I don't think that's going to change if HK fee increases continue to outpace inflation.



IMO, putting an extra $16,550 into a purchase price seems to be THE lost opportunity because I would be unable to invest and use it.  To recover the return in your example, you have to use the asset for frequent short trips and sell the asset to recover your opportunity and appreciated return.  Otherwise, the appreciation of the asset value is not realized and only a phantom gain.  When you sell the NHK asset, you no longer have it to use and the HK savings are gone too.

With a HK account, one has the $16,550 to invest to cover the HK costs and he doesn't have to sell his credits to realize any gain.  (Depending on your acquisition cost, I agree the HK account will mostly depreciate and not appreciate in value).

As you can see, I'd rather keep my money in my pocket instead of someone else's.


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## PerryM

*Lost Savings > Lost Opportunity QED*



mshatty said:


> IMO, putting an extra $16,550 into a purchase price seems to be THE lost opportunity because I would be unable to invest and use it.  To recover the return in your example, you have to use the asset for frequent short trips and sell the asset to recover your opportunity and appreciated return.  Otherwise, the appreciatation of the asset value is not realized and only a phantom gain.  When you sell the NHK asset, you no longer have it to use and the HK savings are gone too.
> 
> With a HK account, one has the $16,550 to invest to cover the HK costs and he doesn't have to sell his credits to realize any gain.  (Depending on your acquisition cost, I agree the HK account will mostly depreciate and not appreciate in value).
> 
> As you can see, I'd rather keep my money in my pocket instead of someone else's.




In my daily life I never worry about lost opportunity.  I buy a lawn mower and I don’t fret over the fact that I could have bought a push mower for $99 and saved $600 over my Honda.  I don’t lie awake at night worrying.  Same with our 4 cars.  Sure we could take the bus to work and the $100k we spent on them could be making me rich.

Only when timeshares are discussed is the topic of “Lost Opportunity” brought up (except in B school).  Well it doesn’t make ANY difference and let me prove it to you so you guys can sleep better at night:

Let’s say that you have the opportunity to buy a timeshare for $20k or keep the money in the bank and make 4% a year with Uncle Sam wanting 15% of that or 3.4% you can spend on anything you want - $680 in this case.

This is what everyone worries about – however there is another lost opportunity you guys always leave out – the savings you get as a timeshare owner over renting as a non owner.  This is a HUGE savings that you guys never consider and it is ALWAYS greater than your lost opportunity, $680 in this case.

Take any timeshare you want and find out what renting that same unit from the developer costs.  You can even use Redweek to find lower rates and when you do the savings is ALWAYS greater than that $680 lost opportunity burning a hole in your pocket in this case.

This is Lost Savings and when you account for it Lost Opportunity is meaningless.  So sleep better tonight and leave Lost Opportunity to the MBA classes.

P.S.
If Lost Savings is less than Lost Opportunity you should have never bought that timeshare in the first place.  That would have been part of your due diligence - timeshare ownership is cheaper than renting the same exact unit.

QED


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## bnoble

I think you're analysis is correct, but your assumption is wrong.  Many many many timeshares have lost opportunity that equals or exceeeds lost savings.  This is especially true for those purchased at retail, but even some resales come dangerously close to failing this test.

For example, a Marriott Desert springs platinum 2BR LO just went for $7,600 on ebay.  OC at 7% (long term after tax return on S&P 500) is $532.  MFs of $917, yields an annual cost of ~$1450.    Winter/Spring rentals on redweek range from $1200-$2200.  So, an owner does a little bit better without much work, but is committed long term.  A patient renter can do just about as well, with no ongoing commitment.  You probably wouldn't say this purchase was a head-slapper, but it wasn't a clear win for the buyer, either.

Bringing this thinking back to the question at hand: for many owners (including you), the cost of a NHK deed is never recovered by savings realized by not paying for HK tokens.


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## PerryM

*Let's look at the complete picture...*



bnoble said:


> I think you're analysis is correct, but your assumption is wrong.  Many many many timeshares have lost opportunity that equals or exceeeds lost savings.  This is especially true for those purchased at retail, but even some resales come dangerously close to failing this test.
> 
> For example, a Marriott Desert springs platinum 2BR LO just went for $7,600 on ebay.  OC at 7% (long term after tax return on S&P 500) is $532.  MFs of $917, yields an annual cost of ~$1450.    Winter/Spring rentals on redweek range from $1200-$2200.  So, an owner does a little bit better without much work, but is committed long term.  A patient renter can do just about as well, with no ongoing commitment.  You probably wouldn't say this purchase was a head-slapper, but it wasn't a clear win for the buyer, either.
> 
> Bringing this thinking back to the question at hand: for many owners (including you), the cost of a NHK deed is never recovered by savings realized by not paying for HK tokens.



I can site example after example where timeshare ownership is MUCH cheaper than renting the same exact units; this is why we own so many of them.  This does away with Lost Opportunity completely.

In your example of Marriott it's no big deal to exchange into the Maui Ocean Club where just a year or two of this has the savings much superior than the home resort.

When you buy a timeshare, you buy access to much more expensive units if you exchange.  This can't be left out.  If you get to pick an unbelievable interest rate for your example I get to use the timeshare to it's max.

Conclusion:
Lost Opportunity is meaningless if the whole idea of a timeshare is to be cheaper than renting in the first place.  This is step one of due diligence.  Heck, even the timeshare salesreps do this right up front and prove that owning a timeshare is a great place to park your money.

Now granted, there are some timeshares where renting is cheaper than buying.  If that's the case then just don't buy that timeshare.

P.S.
In the case of WM it's easy to see rental rates that we owners charge for units on RedWeek and MyResortNetwork - this is exactly why owning and renting WM is so profitable.  I routinely rent for 3 times the MF.  With that it's easy to completely pay for your WM purchase in just a few years and then make timeshare ownership totally free.

Owning WM makes a lot of cents....


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## mshatty

PerryM said:


> In my daily life I never worry about lost opportunity.  I buy a lawn mower and I don’t fret over the fact that I could have bought a push mower for $99 and saved $600 over my Honda.  I don’t lie awake at night worrying.  Same with our 4 cars.  Sure we could take the bus to work and the $100k we spent on them could be making me rich.
> 
> Only when timeshares are discussed is the topic of “Lost Opportunity” brought up (except in B school).  Well it doesn’t make ANY difference and let me prove it to you so you guys can sleep better at night:
> 
> Let’s say that you have the opportunity to buy a timeshare for $20k or keep the money in the bank and make 4% a year with Uncle Sam wanting 15% of that or 3.4% you can spend on anything you want - $680 in this case.
> 
> This is what everyone worries about – however there is another lost opportunity you guys always leave out – the savings you get as a timeshare owner over renting as a non owner.  This is a HUGE savings that you guys never consider and it is ALWAYS greater than your lost opportunity, $680 in this case.
> 
> Take any timeshare you want and find out what renting that same unit from the developer costs.  You can even use Redweek to find lower rates and when you do the savings is ALWAYS greater than that $680 lost opportunity burning a hole in your pocket in this case.
> 
> This is Lost Savings and when you account for it Lost Opportunity is meaningless.  So sleep better tonight and leave Lost Opportunity to the MBA classes.
> 
> P.S.
> If Lost Savings is less than Lost Opportunity you should have never bought that timeshare in the first place.  That would have been part of your due diligence - timeshare ownership is cheaper than renting the same exact unit.
> 
> QED



In my explanation, I get the $680 in my pocket and get the use of a WM TS at a great savings over renting (whether in an exchange or a direct reservation).


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## bnoble

> When you buy a timeshare, you buy access to much more expensive units if you exchange. This can't be left out.


I happen to agree with you---this year, including opportunity costs, exchange fees, etc. etc., I've been getting DVC units for about 15% less than the owners pay in MF, let alone what it would cost to rent from _any_ outlet.  The leverage has been tremendous.

However, if you are going to consider exchange, rather than rental-equivalence, you need some way of valuing the set of poential exchanges---and that set changes as owners change depositing habits, or as resort systems decide to change their reliance on exchagne to get tour traffic.  You can't rely only on the best possible outcome, because that outcome is far from certain; you have to consider the entire valuation at once.  It becomes impossible to quantify very quickly.

I'd be a lot more comfortable buying an interval with a positive rental-to-cost ratio (including opportunity costs) that happens to exchange well, than a negative ratio interval that's a tiger.  That way, if the exchnage landscape changes dramatically, you still have a postive-valued interval.

My estimation is that the risk of dramatic (negative) change in the exchange landscape is higher than the risk of dramatic change in rental/cost ratio for an interval.  There are exceptions---areas that will always be high-demand due to limited expansion opportunities---but they are definitely exceptions, not the rule.


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## PerryM

*Would of…should of…could of…*

We can all play an infinite number of games with the numbers, so here’s what I tell folks who ask me if a deal is good:

Take 1/20 cost of the timeshare + the MF and that should equal or less than the cost of renting the same exact unit from the developer.

That assumes you own the timeshare 20 years and it’s worthless at the end.

Beyond that we are all guessing as to:

1)	What the timeshare is worth 20 years from now
2)	What inflation will do
3)	What Lost Opportunity and Lost Savings is
4)	What discounts a person can wrangle out of the rental agency
5) The economy

Simple, quick, and gives you an answer in a few minutes.

If you want to spend hours of what-if games then that’s a form of entertainment that’s a freebee with timeshare ownership.


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## bnoble

Amusingly, 1/20th of the cost of the timeshare is a pretty darn close valuation to my OC figure (5% vs. 7%).  So, we come to very similar buy/don't buy conclusions, even though our rationales are different.

The only substantive difference: I want a rental/cost ratio greater than 1 by some margin.  As the rental/cost ratio approaches 1 from above, I'd rather not take on the ongoing burden of ownership, and would prefer to rent.

Obviously, if it approaches 1 from below, well, that's not a timeshare I'd be buying.

I guess the other difference is that, for intervals with enough direct-owner rental pricing information, I also prefer to use those rental costs.  They require little to no negotiation, but have restrictions that more accurately compare to using an owned week---no cancellation, book in advance, that sort of thing.  Rental direct from the developer is often artificially high, because the developer assumes the risk of a change in plans.  In a rental direct from an owner, the renter must assume that risk, and correspondingly pays a lower price.


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## FLYNZ4

mshatty said:


> IMO, putting an extra $16,550 into a purchase price seems to be THE lost opportunity because I would be unable to invest and use it.  To recover the return in your example, you have to use the asset for frequent short trips and sell the asset to recover your opportunity and appreciated return.  Otherwise, the appreciation of the asset value is not realized and only a phantom gain.  When you sell the NHK asset, you no longer have it to use and the HK savings are gone too.
> 
> With a HK account, one has the $16,550 to invest to cover the HK costs and he doesn't have to sell his credits to realize any gain.  (Depending on your acquisition cost, I agree the HK account will mostly depreciate and not appreciate in value).
> 
> As you can see, I'd rather keep my money in my pocket instead of someone else's.


Mike,

Yes... in your example... at the end of your timeshare use period (however long)... you still have the $16,550... and that is all you have.   You spent the interest on HK fees.    Your WM HK account has also depreciated to a lower value.

In LLW's case... She still has the contract that is worth the $16,550 premium (and probably more)... plus the value of the "base credits" in her account has probably not gone down in value as much as yours either, since it is tied to a NHK account.  I think she is getting a better deal providing that the dollar value of saved HK fees equals the interest that she would have received on the $16,550.

In my personal case... the premium that I paid for my NHK account has paid for itself many times over in saved HK charges... but I use mine a ton, plus I bought when the premium was miniscule (about $0.15/credit).   In fact... I have saved over $10K in HK charges (219 total reservations, minus 50 tokens = 169 extra NHK reservations)... which is about 10X the premium that I paid for my NHK!!!   LLW... what is that return? 

/Jim


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## LLW

PerryM said:


> We can all play an infinite number of games with the numbers, so here’s what I tell folks who ask me if a deal is good:
> 
> Take 1/20 cost of the timeshare + the MF and that should *equal or exceed *the cost of renting the same exact unit from the developer.
> 
> That assumes you own the timeshare 20 years and it’s worthless at the end.
> 
> Beyond that we are all guessing as to:
> 
> 1)	What the timeshare is worth 20 years from now
> 2)	What inflation will do
> 3)	What Lost Opportunity and Lost Savings is
> 4)	What discounts a person can wrangle out of the rental agency
> 5) The economy
> 
> Simple, quick, and gives you an answer in a few minutes.
> 
> If you want to spend hours of what-if games then that’s a form of entertainment that’s a freebee with timeshare ownership.




I believe there is a mental typo  in the above boldfaced phrase - it should be "be equal to or less than".


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## Steamboat Bill

PerryM said:


> In my daily life I never worry about lost opportunity.



Can I interest you in investing in some Florida swamp land or some Bear Sterns stock?



PerryM said:


> Only when timeshares are discussed is the topic of “Lost Opportunity” brought up (except in B school).
> 
> If Lost Savings is less than Lost Opportunity you should have never bought that timeshare in the first place.  That would have been part of your due diligence - timeshare ownership is cheaper than renting the same exact unit.



I think "lost opportunity" should be discussed for any "significant" purchase, especially for discretionary purchases like timeshares, destination clubs, yachts, planes, etc. Things like food, clothes, automobiles, lawn movers are necessary items for modern day living.

I don't bother with lost opportunity for items $10k or less, but if I was to buy a new Marriott timeshare for $50k, then it would be very foolish to dismiss the potential of lost opportunity of investing your $50k rather than buying a timeshare. In addition, I think the savings from a timeshare purchase probably won't come close to break even is after 5 or more years of ownership.

Thus, as you stated, found savings must be greater than lost opportunity, but I am assuming that you may not "worry" about it, I am sure it is an important part of your decision to buy or not. 

If you want to have fun, imagine buying a new condo in Miami Beach for $1m cash and you will see that the lost opportunity can be $40k or more per year (assuming a conservative 4% return) and you can rent many nice condos for less than $3,500 per month.


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## Steamboat Bill

bnoble said:


> I happen to agree with you---this year, including opportunity costs, exchange fees, etc. etc., I've been getting DVC units for about 15% less than the owners pay in MF, let alone what it would cost to rent from _any_ outlet.  The leverage has been tremendous..



The average DVC MF is $4.50 per point and they rent for $10-12 point online.

I am assuming you traded WM credits for DVC via II to make this assumption that your WM cost is equal to $4.00 per DVC point???

I find most II trades are off season and mainly OKW/SSR studios.


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## LLW

FLYNZ4 said:


> In my personal case... the premium that I paid for my NHK account has paid for itself many times over in saved HK charges... but I use mine a ton, plus I bought when the premium was miniscule (about $0.15/credit).   In fact... I have saved over $10K in HK charges (219 total reservations, minus 50 tokens = 169 extra NHK reservations)... which is about 10X the premium that I paid for my NHK!!!   LLW... what is that return?
> 
> /Jim



That depends on how long you have owned the account. If you have owned it for about 5 years, your return is about 275% (Note 1), vs the 5% or 7% opportunity cost cited by bnoble above (note this OC varies by person. Warren Buffet's OC is probably much different from mine or yours  ). If you have owned it for about 10 years, your return is about 130% (Note 2), compared to the 10% long-term OC as of last week, or -10% as of yesterday, for some stock investors.  

JMHO.  

On the other hand, the free feeling that you have about taking any trip of any length at any time is priceless.  


Note (1): Annual return from HK savings: $10K/5 years/$1K = 200%
              Annual return from principal appreciation over 5 years 
                  (between $1,000 and $16,550): 75%
              Total return: 275%
Note (2): Same forumula as above, over 10 years


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## mshatty

FLYNZ4 said:


> Mike,
> 
> Yes... in your example... at the end of your timeshare use period (however long)... you still have the $16,550... and that is all you have.   You spent the interest on HK fees.    Your WM HK account has also depreciated to a lower value.
> 
> In LLW's case... She still has the contract that is worth the $16,550 premium (and probably more)... plus the value of the "base credits" in her account has probably not gone down in value as much as yours either, since it is tied to a NHK account.  I think she is getting a better deal providing that the dollar value of saved HK fees equals the interest that she would have received on the $16,550.
> 
> In my personal case... the premium that I paid for my NHK account has paid for itself many times over in saved HK charges... but I use mine a ton, plus I bought when the premium was miniscule (about $0.15/credit).   In fact... I have saved over $10K in HK charges (219 total reservations, minus 50 tokens = 169 extra NHK reservations)... which is about 10X the premium that I paid for my NHK!!!   LLW... what is that return?
> 
> /Jim




In your case, a $.15 per 1000 credits purchsae premium would be hard to argue against, even if you only used WM sparingly.  A $1.30 to $1.50 premium is a different matter.  The buyer had better have enough credits to use the WM resorts "a ton" like you do.

For me, being in Texas, I use my WM account much differently than the west coasters.  My use of it is more similar to Perry's than yours or LLW's.  The number HK credits I would need on a yearly basis is pretty much covered by my annual allotment.


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## mshatty

Steamboat Bill said:


> The average DVC MF is $4.50 per point and they rent for $10-12 point online.
> 
> I am assuming you traded WM credits for DVC via II to make this assumption that your WM cost is equal to $4.00 per DVC point???
> 
> I find most II trades are off season and mainly OKW/SSR studios.



Steamboat Bill,

Is there a difference in MF for DVC for off season or OKW/SSR studios?


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## Steamboat Bill

mshatty said:


> Steamboat Bill,
> 
> Is there a difference in MF for DVC for off season or OKW/SSR studios?



DVC sells points for about $100pp and annual dues of about $4.50pp.

Members use points to reserve a studio (cheaper) that 2 bedrooms (requires more point) and holiday nights/weeks cost more points than a off-season period.


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## bnoble

> I am assuming you traded WM credits for DVC via II to make this assumption that your WM cost is equal to $4.00 per DVC point???



No, I don't own WM.  I'm using a fixed week.  The week was purchased for $850 including closing.  With 7% opportunity this yields an annual carrying cost of under $60.  MFs are under $500.  When deposited, it generated an AC.

I acquired two weeks: a 1BR OKW that I used for a full week during late February---that was obtained with the real week, so I am charged an exchange fee ($140), plus the DVC extortion fee ($95).  The points required for that unit are 218.  

(I was offered a 2BR, but it was a Friday check-in, and I already had Saturday flights, so I passed on that and eventually settled for the 1BR with a Saturday check-in.)

I got another another 1BR OKW for a four-night stay over the upcoming Memorial Day---Friday through Tuesday.  This was obtained with the AC, so total cost, about $250 including taxes, plus another $95 extortion fee.  This is dream season, and the total points required for that four night stay would have been 136.  (I'm not counting the points for the other three nights, because I would not have needed them if I was booking with DVC.)

Total costs: opportunity $60 + my MFs $500 + exchange fee $140 + DVC resort fee $95 + AC redemption fee/taxes $250 + DVC resort fee $95 + annual II dues $85, or $1225.  Total points required: 354.  Cost per point: $3.50, rounding up.

Lowest in-system MFs in DVC are at SSR.  For 2007 UY points, that was $4.12.  So, I obtained these 11 nights at approximately a 15% discount over the lowest possible in-system MFs.

Even without considering the AC, I'm doing okay.  If I had obtained only that February week, it would have cost me about $4.04 per DVC point.

I won't get so lucky every time, of course.  My annual February trip is not flexible at all; it is a school and work vacation week for us.  I certainly don't expect DVC to come through on exchange most years for that week, so I imagine I will have to settle for a 2BR Marriott instead.


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## PerryM

LLW said:


> I believe there is a mental typo  in the above boldfaced phrase - it should be "be equal to or less than".



Ooopppppssss...thanks


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## PerryM

*Open a "Lost" account....*



Steamboat Bill said:


> Can I interest you in investing in some Florida swamp land or some Bear Sterns stock?
> 
> 
> 
> I think "lost opportunity" should be discussed for any "significant" purchase, especially for discretionary purchases like timeshares, destination clubs, yachts, planes, etc. Things like food, clothes, automobiles, lawn movers are necessary items for modern day living.
> 
> I don't bother with lost opportunity for items $10k or less, but if I was to buy a new Marriott timeshare for $50k, then it would be very foolish to dismiss the potential of lost opportunity of investing your $50k rather than buying a timeshare. In addition, I think the savings from a timeshare purchase probably won't come close to break even is after 5 or more years of ownership.
> 
> Thus, as you stated, found savings must be greater than lost opportunity, but I am assuming that you may not "worry" about it, I am sure it is an important part of your decision to buy or not.
> 
> If you want to have fun, imagine buying a new condo in Miami Beach for $1m cash and you will see that the lost opportunity can be $40k or more per year (assuming a conservative 4% return) and you can rent many nice condos for less than $3,500 per month.



If someone is worried about Lost Opportunity they should get sick with realizing all the Lost Savings that they lose out every day.

Both of these numbers are theoretical and worthless in my book.

If someone is all worried about Lost Opportunity then they should open a “Lost” account at a bank and deposit all those Opportunities and Savings.  I didn’t rent a car last year but own a car.  I can look up the cost of renting a car for the year and look at my cost to own and I’ve got a lot of Lost Savings (Found Savings in this case) and I should march down to the bank and demand they deposit the Found Savings in my account.

Comparing ownership to renting is very easy to do and that’s really all we need to do.

If we buy a condo for $1 M, it’s easy to forecast occupancy rates, average rentals, projected replacement costs and determine if the deal is good or not.  These are forecasts and sometimes things change for an owner.  Knowing the Lost Opportunity of the $1 M means little after a hurricane wipes out the resort area and your condo is damaged.

Now where we compare timeshares we can compare purchase price, MFs, and rental rates of a number of timeshares and pick one that is superior.  However, I don’t see where knowing the Lost and Found Opportunity costs mean anything.

But that’s just me…


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## FLYNZ4

LLW said:


> That depends on how long you have owned the account. If you have owned it for about 5 years, your return is about 275% (Note 1), vs the 5% or 7% opportunity cost cited by bnoble above (note this OC varies by person. Warren Buffet's OC is probably much different from mine or yours  ). If you have owned it for about 10 years, your return is about 130% (Note 2), compared to the 10% long-term OC as of last week, or -10% as of yesterday, for some stock investors.
> 
> JMHO.
> 
> On the other hand, the free feeling that you have about taking any trip of any length at any time is priceless.
> 
> 
> Note (1): Annual return from HK savings: $10K/5 years/$1K = 200%
> Annual return from principal appreciation over 5 years
> (between $1,000 and $16,550): 75%
> Total return: 275%
> Note (2): Same forumula as above, over 10 years


Five years... almost to the day.    I can live with 275% annual return.     Too bad my stocks haven't done as well 

/Jim


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## FLYNZ4

bnoble said:


> No, I don't own WM.  I'm using a fixed week.  The week was purchased for $850 including closing.  With 7% opportunity this yields an annual carrying cost of under $60.  MFs are under $500.  When deposited, it generated an AC.
> 
> I acquired two weeks: a 1BR OKW that I used for a full week during late February---that was obtained with the real week, so I am charged an exchange fee ($140), plus the DVC extortion fee ($95).  The points required for that unit are 218.
> 
> (I was offered a 2BR, but it was a Friday check-in, and I already had Saturday flights, so I passed on that and eventually settled for the 1BR with a Saturday check-in.)
> 
> I got another another 1BR OKW for a four-night stay over the upcoming Memorial Day---Friday through Tuesday.  This was obtained with the AC, so total cost, about $250 including taxes, plus another $95 extortion fee.  This is dream season, and the total points required for that four night stay would have been 136.  (I'm not counting the points for the other three nights, because I would not have needed them if I was booking with DVC.)
> 
> Total costs: opportunity $60 + my MFs $500 + exchange fee $140 + DVC resort fee $95 + AC redemption fee/taxes $250 + DVC resort fee $95 + annual II dues $85, or $1225.  Total points required: 354.  Cost per point: $3.50, rounding up.
> 
> Lowest in-system MFs in DVC are at SSR.  For 2007 UY points, that was $4.12.  So, I obtained these 11 nights at approximately a 15% discount over the lowest possible in-system MFs.
> 
> Even without considering the AC, I'm doing okay.  If I had obtained only that February week, it would have cost me about $4.04 per DVC point.
> 
> I won't get so lucky every time, of course.  My annual February trip is not flexible at all; it is a school and work vacation week for us.  I certainly don't expect DVC to come through on exchange most years for that week, so I imagine I will have to settle for a 2BR Marriott instead.


My DVC experience is very similar to bnoble... except that I also own DVC and use that to make locked down reservations... and then I use II opportunistically to replace my "expensive" DVC credits with less expensive WM credits/fees.

/Jim


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## Steamboat Bill

FLYNZ4 said:


> My DVC experience is very similar to bnoble... except that I also own DVC and use that to make locked down reservations... and then I use II opportunistically to replace my "expensive" DVC credits with less expensive WM credits/fees.
> 
> /Jim



What is your WM --to-- DVC success?


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## FLYNZ4

Steamboat Bill said:


> What is your WM --to-- DVC success?


Bill,

That depends upon the season... and of course it is always a bit of a crapshoot.

Generally I will make a 12 day reservation at 11 months... and then possibly remake the reservation at 7 months at my non-home resort.   During the timeframe, I will put in an exchange request for either of the two weeks, at any DVC resort.

So far I have received 3 echanges (2 completed, 1 pending) as follows:


BWV 1BR 6/07
OKW 2BR 1/08
SSR 2BR 1/09

I have not had any luck getting a 2BR unit during the summer.. so if I travel then with kids (the primary reason I would want to travel in summer), I just plan to use my DVC points.  It looks like the easiest time to get an exchange is September.

Also... if you look at the confirmed reservations above... I once had to change rooms when changing between my II and DVC reservations for my ~ 2 week stays.   In he second exchange (OKW), I switched from a 1BR to a 2BR requiring the change of rooms.  Unfortunately... my 2BR reseravation was for a dedicated 2BR, so I could not simply open the door to the lockoff.   For my BWV reservation... we crammed into a 1BR for a week, then we opened the door to lockoff and did not have to switch rooms.  This is not gauranteed.  For my upcoming reservation next January... I matched up my DVC reservation to the same unit type as my II exchange.   My goal is to not change rooms... but once again, it is not guaranteed.

I think that over time... exchanging into DVC will become harder to get, primarily as DVC builds additional resorts outside of WDW.   My expecation is once DVC finishes the Hawaii property, a lot of people will directly book there rather than exchanging through II.   I could be wrong.

/Jim


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