Financing a timeshare.

[dboy1]

Steamboat Bill

That's what I like to see in these conversations--Something that completely changes direction like your comment on blaming Canada. This site is a phenomonal resource for timeshare info, but sometimes people get a little too caught up in the numbers and calculations and forget that we are talking about vacations and fun:zzz:

 

[Steamboat Bill]

Steamboat Bill

That's what I like to see in these conversations--Something that completely changes direction like your comment on blaming Canada. This site is a phenomonal resource for timeshare info, but sometimes people get a little too caught up in the numbers and calculations and forget that we are talking about vacations and fun:zzz:

Thanks...for those that missed it, here it is again.

Robin Williams sang South park's: Bigger, Longer, Uncut Original Soundtrack "Blame Canada" (nominated for best original soundtrack academy award 2000)
http://www.youtube.com/watch?v=DjoNucs20Vw

directly from the movie South Park - M.A.C (mothers against Canada) making there plan against Canada
http://www.youtube.com/watch?v=ds07XDaKhC4

 

[ira g]

Whatever happened to the traditional values of saving for the future and keeping debt to a minimum? The savings rate in America is zero. Many Americans are relying on Social Security and the equity in their homes to take care of them. No one seems to worry about the future. That is a big reason so few Americans have any true savings and why our economy is suffering.

My grandmother went through the depression and, fortunately, she taught me to save and invest.
Frankly, I want to teach my grandkid that its important to save and invest for the future.

Rather than encourage a newly married child to finance a timeshare I would start by teaching him to invest as much as possible in a good retirement plan and to pay his mortgage at a rate so that its paid off in 15 years.
We have gone to Maui once or twice a year for 25 years. We paid around $200 a night for nice hotel rooms on Kaanapali Beach (depending on various deals that were offered). We really loved those trips.

Unfortunately, I did something last summer that was really out of character and rather stupid. I bought a MOC TS for an outrageous amount of money. Yes, it is nice to have an ocean view and a full kitchen (we cooked our own eggs and ate cereal – but we still ate out at night and went once to Sheraton’s brunch, which is not to be missed).

So what am I paying for this new way of vacationing? $2,000 a year in maintenance fees – which is more than what we paid to rent a really nice hotel room. I am also paying $650 a month on the loan after making a down payment of $10,000.

Would I recommend that my grandkid (or any child) do this? Heck no (unless I hated the kid).

That $10,000 down payment and the $650 a month should have been put in an investment for our retirement. It would have grown to a nice nest egg to add to our support. Alternatively, If we had invested that $10,000 and $650 a month (plus the maintenance fees) in a college fund for our grandkid (age 8), it would undoubtedly provide him with a very nice education.

Sorry, but buying a TS is pure folly and is not a legacy to leave to one’s children. I would urge anyone thinking of buying a MVC timeshare to give a lot of thought about what can be done with that money. Why waste it on an asset that will depreciate faster than you can enjoy it and that will generate maintenance fees that increase at several times the rate of inflation. The only one to profit from financing a timeshare is Marriott - and the prices they charge reflects unbelievable greed.

I agree with you. You spent IMHO an obscene amount of money for the purchase price, interest costs and MF's. We have 9+ weeks of timeshares that have cost us a total of $7380 with total annual MF's of $2020. We have vacationed in all Gold Crown(RCI) and 5 Star(II) resorts, including Calif, Las Vegas, Hilton Head, Hawaii, Sedona, and Scottsdale. As my grandmother taught me BUYER BEWARE. We are extremely happy with our units and would not travel any other way.

 

[Lawlar]

Not Alone

I agree with you. You spent IMHO an obscene amount of money for the purchase price, interest costs and MF's. We have 9+ weeks of timeshares that have cost us a total of $7380 with total annual MF's of $2020. We have vacationed in all Gold Crown(RCI) and 5 Star(II) resorts, including Calif, Las Vegas, Hilton Head, Hawaii, Sedona, and Scottsdale. As my grandmother taught me BUYER BEWARE. We are extremely happy with our units and would not travel any other way.

Thank you. Its good to know I am not alone in my feelings about the value of Marriott's TSs at retail (rediculous) prices. You did it the smart way. Congratulations!

 

[cp73]

Thank you. Its good to know I am not alone in my feelings about the value of Marriott's TSs at retail (rediculous) prices. You did it the smart way. Congratulations!

Lawlar,

I dont think you are alone at all in your feelings. I would bet most of the tuggers here would agree with you.

 

[pwrshift]

I'm not sure the slogan Buyer Beware is as good as Buyer Be Aware in the timeshare market. That's a great benefit of TUG!

Brian

 

[jimf41]

The original question I raised was not whether to buy a TS or what TS to buy or if buying a TS was worth it relative to other vacation options. It was simply to question the advice to never finance a TS. Saving up for a purchase that you can’t afford currently is good advice. So is financing a big ticket item that you have made the decision to buy in the immediate future. The point is the decision to buy and the decision of when and how to buy are two separate decisions. As far as the traditional American value of saving for the future and keeping debt to a minimum, I’m sorry they went away with President Truman. Money in the bank gives some folks a warm fuzzy. To me it’s just money not being put to good use. The current issue of Time magazine has a section called Milestones. It’s essentially an obituary column for notable people. There are seven people in it this time. Ages 52, 64, 66, 71, 86, 89, 91. The 52 year old was a former astronaut. How long do you think you are going to live? Life is not a dress rehearsal. You only get one shot at this. Next November I’m going to Ocean Pointe with two of my grandchildren. They are 5 and 2. When they get to be 30 I probably won’t be here any more. They won’t care or remember what I did with my money. They will remember making sandcastles on the beach with their grandpa though. IMO life doesn’t get much better than that.

If financing is your choice I would not advise going through Marriott. At 13-16% they’d have to offer about 3-4 million points to make that worthwhile. 16% is the general usury limit here in New York. Other states allow as high as 50%. Usury is a complicated law but any time you finance something at a rate approaching or exceeding your states usury rate you should reconsider IMO.

Some posters have said that financing is bad because you can get a hotel cheaper. I strongly disagree with that one. First of all hotel rooms and TS’s are apples and oranges. No valid comparison IMO. Case in point, I’m going with another couple to MFC in 2009 during Pres week. The Marriott Reef would charge us $7575.12 for two waterview rooms. The MF at MFC are currently $993 for a 2bdm and all units have a waterview. In the Reef we might not even be in the same bldg let alone near each other. None of the normal TS amenities either. The Reef’s charge is immediate with no cancellation, refund or changes. I’ve stayed at the Reef and at MFC. While they each may be rated highly there is no comparison IMO. The Morningstar resort is a great hotel and the rooms are large. No kitchen or washer/dryer but it would cost $8557.92 for 2 waterview rooms. We could stay at the Holiday Inn but at $4460.40 for two waterview rooms I’ll still take my TS. I haven’t researched but I think Aruba and St Kitts would be similar during this period.

I could rent a 2bdrm at MFC for $3500 according to the lowest ad in Redweek. That’s riverboat gambling IMO. I might rent from someone I’m familiar with on TUG or a personal friend but never from someone I didn’t know. What would you do if you showed up at the resort and the desk told you that the reservation was cancelled and the owner traded the week for points or deposited it with II? An owner can change or cancel that guest certificate right up until the last minute. Sure you could sue and go through all the problems of getting your money back but even if you were successful where would you sleep for the next 7 nights? If you show up in St Thomas on Feb 14, 2009 without a reservation you’ll have two choices. Go to Kmart and buy a tent or beg the airline to give you a ticket home.

Buying a more inexpensive TS is an option. I’ve checked out the resorts owned by those who suggest it. I’ll stay with the big guys in the TS industry. They fit my needs better.

Finally, a lot of posters commented on the idea that it is bad to finance an investment. I agree. I’ve looked back a few times over the years and wished that I’d borrowed money to invest in one stock or another but that’s Monday morning quarterbacking. But let me put this in big letters so that nobody misunderstands. BUYING A TIMESHARE IS NOT A FINANCIAL INVESTMENT. Neither was putting in a swimming pool or adding a two car garage to my home. I certainly have enjoyed using both of those additions in the past 20 years.

 

[Beverley]

Even if you can make 9% onyour investment, you will still have to pay 15% capital gains tax, reducing your yield to around 7.6%.

Assuming you can average 9% you're only talking about a net yield of around $500/year.

Does this mean that if I sell at a loss I can declare a capital gains loss? I actually never thought about capital gains , but I bet I should.

Beverley

 

[kjd]

Jimf41--Amen brother!

Good post. You expressed my sentiments exactly. Unfortunately, these threads are often inhabited by posters who are either suffering from buyers remorse or giving psuedo investment advice. It is usually coupled with an arrogant self-aggrandizement by touting delusionary economic principles. They want to look at everything by keeping score. I tire of the bad advice given to new buyers as well as to the rest of us. I wonder how many of them who say they refuse to buy a depreciating asset (like a car), are continuing to ride a bicycle.

Every new and present owner should read your post. Thanks.

 

[tlwmkw]

Woo-eee!! Everyone gets hot under the collar about this. I have to say there are so many reasons for doing or not doing something and everyone will have an opinion. Bottom line is to do what works for you and you feel comfortable with. Some of us aren't comfortable with renting/buying from a stranger and relying on trust to get our vacation, some of us see the advantage of lower costs by buying resale/renting. It takes all types. I have to say though if someone didn't buy at "obscene" developer prices then there wouldn't be any time shares for us to use/rent in the first place. Also a home can be a depreciating asset (as we have all recently seen in this country, as well as in other economies over the years) and no one seems to mind having a loan for this very large purchase. Bottom line is- do what you feel comfortable with, enjoy it, and don't worry what others are doing. As the OP notes, financing can be an option if you are able to afford/justify it and you feel it is a good use of your money. Live and let live.

 

[sdtugger]

Purely Financial

While I'll confess to being closer to Lawlar's view of saving for a purchase, my comments are purely financial. In the end, if you can finance a timeshare that gives you a lower total cost than renting the same timeshare, then "financially" you would save money, assuming that financing a timeshare doesn't blow a hole in your budget that sinks you.

But, I think those opportunities are few and far between. I suspect that most timeshare financers don't have home equity to tap or aren't able to play the credit card intro rate game, etc. As a result, they are stuck with the near usurious rates charged by Marriott and others. In that situation, it is a virtual certainty that buying a timeshare is a huge financial mistake.

The other financial reality of even the low cost financing is the risk of default. If you tap your home equity for a low cost timeshare loan, what happens if you lose your job and can't make the payment? Instead of merely defaulting on a timeshare loan, you are now at risk of losing your home. The risks are less painful with credit card debt, but they are still there for a default. You could easily blow your credit with a large credit card default.

As a result, my advice to my children will always be to rent until you can afford to pay cash. I'm not saying deny yourselves the vacations, just wait for the purchase until you can afford it.

 

[lapdawg]

Does this mean that if I sell at a loss I can declare a capital gains loss? I actually never thought about capital gains , but I bet I should.

Beverley

First of all, I am not an accountant, so I'm just answering based on my layman understanding.

If you have an investment that loses money, you can subtract that loss from other gains to reduce your capital gains tax.

I don't think a timeshare generally counts as an investment though.

 

[GaryDouglas]

Does this mean that if I sell at a loss I can declare a capital gains loss? I actually never thought about capital gains , but I bet I should.

Beverley

I think DaveM has stated in more than a few threads (and Dave knows his numbers) that if you lose money with a timeshare, there is no tax advantage. Whereas if you gain money, there is a tax liability. Government 1, Taxpayer 0...

 

[jerseyfinn]

But let me put this in big letters so that nobody misunderstands. BUYING A TIMESHARE IS NOT A FINANCIAL INVESTMENT.

Oh my goodness Jim, I'm surprised at these words. Every time that you plunk down your hard earned dollars on something, you are making an investment of some sort and consequences flow from that purchase decision. Granted, TS falls into a gray area, but it is indeed an investment in destination travel. Folks should be very aware of this reality before they make any decision to jump into TS.

And TS does indeed behave like real estate while at the same time it does not behave like real estate as so many choose to argue here. So anyone pondering a purchase should indeed be aware of all of the nuances & characteristics of TS before making the decision to jump into the pool.

Bottom line is to do what works for you and you feel comfortable with.

The reason that the waters appear so muddy is because of what tlwmkw suggests. It all boils down to individuals and what their world view and their personal goals in life are. In other words, destination travel is not an absolute thing precisely definied and organized into absolute principles. Yes, it is governmed by procedures, but it is also an aesthetic which operates in a very real world where one should proceed cautiously. As the saying goes, about facts I will argue emphatically, but of things aesthetic . . . there is little to be gained. This is why MVC works for so many different types of people. They can put their own spin and their own imprint on their ownership experience. You can be frugal or spendthrift, you can insist upon developer & MR points or you can take your stand on resale weeks. It's always an individual decision built upon the foundations of what TS is.

I prefer not to delve into issues of "lost opportunity cost" or "alternative investments", the MR Point ratio or any other absolutist maxims about what one should or should not do in TS. Other than standing by the maxim of buyer beware I believe that the best we can do here on TUG is to lay out all of the possibilities and let the individual decide if the shoe fits or not.

Hey, I agree that in general, one should avoid MVC financing as better deals are usualy to be found elsewhere. But I would be wrong to suggest that Marriott financing should never be a choice -- our own personal experience attests this. Likewise I still suggest that an MVC developer purchase will indeed behave like a real estate investment for certain owners who pursue specific strategies of ownership. I'm not going to assail folks who feel otherwise, but I will indeed insist that there are MVC owners out there who have availed themselves of this situation or are in a positive equity position to do so. I'm not gonna say that this is a likely outcome that every owner can count on. That's why I point to relative costs of ownership as a more accurate measure of the wisdom of purchasing TS.

I still believe that you raise some good points about MVC. I do however want to caution anyone who is pondering a TS to see the big picture and figure out how/if you can wear the TS shoe. How you walk it is an individual choice. I myself am a combination of relativist, pragmatic-optimist, and a touch sentimentalist. The MVC shoe fits us well, though like others here, we've hit a bump or two along the way.

When I look back at the family vacations we have enjoyed, where we have traveled, and what it has cost us, I can only say that we remain very satisfied with our MVC ownership experience. And a big part of that satisfaction lies in how we made it our own. I think that many owners agree with this aspect of MVC

safe & happy journeys to all

Barry

 

[JimIg23]

Having a family of five, IMHO there is no better way to go on vacation. Marriott may be more money (even as a resale) and they will not become the type of asset one will be able to sell to help pay for the kids college, but to me, worth every penny anyway. On the other side of the coin, we are at a point at our life where we can comfortably buy a Marriott without crippling us financially. I would not buy a TS I could not pay fully within six months to one year, too many things could happen in one's life and trying to sell a TS you can lose a lot of money and put yourself in a bad bind.

 

[Beverley]

I think DaveM has stated in more than a few threads (and Dave knows his numbers) that if you lose money with a timeshare, there is no tax advantage. Whereas if you gain money, there is a tax liability. Government 1, Taxpayer 0...

Sounds about right. I should have known this ... isn't it always 'Gov't 1, Taxpayer 0" :hysterical: Actually, I was just chatting with my sister on this today while she was doing her taxes.... She looked up Capital Gains and says that ... selling our house and reaping a profit we pay cap gains if we do not reinvest within 2 years ... but .... if we sell and have a loss we can not take a cap loss for a "home". I have to imagine Dave is right.

Thanks to you and lapdawg for your responses.

Beverley

 

[Beverley]

Woo-eee!! Everyone gets hot under the collar about this. I have to say there are so many reasons for doing or not doing something and everyone will have an opinion. Bottom line is to do what works for you and you feel comfortable with. Some of us aren't comfortable with renting/buying from a stranger and relying on trust to get our vacation, some of us see the advantage of lower costs by buying resale/renting. It takes all types. I have to say though if someone didn't buy at "obscene" developer prices then there wouldn't be any time shares for us to use/rent in the first place. Also a home can be a depreciating asset (as we have all recently seen in this country, as well as in other economies over the years) and no one seems to mind having a loan for this very large purchase. Bottom line is- do what you feel comfortable with, enjoy it, and don't worry what others are doing. As the OP notes, financing can be an option if you are able to afford/justify it and you feel it is a good use of your money. Live and let live.

I am glad to be of service ... we have bought 5 at those "obscene" developer prices :rofl: I can only say in our defense is that they were at least at pre-construction prices and one was at Marriott's resale price which is also not exactly a bargain :hysterical: . In case you ask why? well as you did say very eloquently, something for everyone ... ease of operation is one reason, another was availability of what we wanted at the time we wanted it, and probably one was just plain unnecessary and perhaps we shouldn't have .. but we love them all and are traveling happy.

Beverley

 

[Steamboat Bill]

There "may" be a loophole.

In stocks you can write down your capital gais with capital loses. For example, if you gain $20,000 in Google and lose $5,000 in Yahoo, your net gain is only $15,000 net for the year.

I have never sold a timeshare for a loss, so I have no idea if it works the same as stocks, but it is worth asking.

Taxes on the long term gain of stocks, timseshares, etc. held for 366 days or longer are 15% unless it is your primary home and you lived in it for more than 2 years, you can have a tax free gain of $500,000.....hooray!...but most people never reach this level.

 

[tlwmkw]

Beverley,

We also bought from developer and have to say we don't regret it for the same reasons that you mention. As I said before you just have to do what works for you and not worry about how other people manage their vacation time.

tlwmkw

 

[Beverley]

You are absolutely right!

Beverley

 

[AwayWeGo]

Different Folks Have Different Character Wrinkles.

We also bought from developer and have to say we don't regret it for the same reasons that you mention. As I said before you just have to do what works for you and not worry about how other people manage their vacation time.

Me, for instance. I am so guilt-driven & thrift-obsessed that even though I live a life of (by my standards) luxury & ease, I do it all pretty much on the cheap. I mean, shux, I still stick the little leftover slivers of soap onto the new bars of soap. Waste not. Want not. I still pick up a penny somebody has dropped on the sidewalk. Nobody else I know will bend down for less than a nickel. (Is that a practical illustration of inflation or what?)

If I were to win PowerBall tonight (unlikely, in that I never buy tickets), I might use some of the money to buy more timeshares, but I couldn't enjoy paying full freight for any of'm just because (thanks to TUG) I already know the same thing is out there resale for thousands less. (Plus, there is no such thing as a "new" timeshare no matter how much I pay, so why throw money away paying full-freight regardless of how rich I might become? In precisely the same vein, why tip toll-booth attendants?)

If there were no such thing as resale timeshares, I would not be a timeshare owner, period, irrespective of my ability to afford any number of full-freight timeshares (not as many as that doctor who keeps on buying full-freight Marriotts, but lots nevertheless). In that circumstance, assuming I were still hooked on luxury vacation accommodations for Motel 6 & Super 8 rates, I suppose I would go with renta-renta-renta.

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

 

[Dave M]

I have never sold a timeshare for a loss, so I have no idea if it works the same as stocks, but it is worth asking.

No, it's not the same. Losses on the sale of assets used for personal purposes (personal residence, cars, furniture and timeshares) are not deductible and cannot be used to offset taxable gains. See the TUG Income Taxes and Timeshares article in the TUG Advice section for more info.

 

[MOXJO7282]

Ok, I just received a bank offer, and if a similar pattern occurs, like in the last recession,(yes I think we're in one.) better ones should follow, that can make financing a TS a wise move, if these special offers appear.

I financed my MOW this way and have almost paid of the entire loan using mostly someone else's money.

One of my smaller credit limit banks has offered me a 2.99% "life of the loan" rate for a balance transfer or direct deposit. If it happens like in the past, 1.9% "life of the loan" rates will appear.

If you are someone who has good credit, has the income to pay down the loan, this is a way to basically use someone else's money to buy a TS, or any high ticket item that you might not want to lay out the cash for.

I did this with my MOW, when I received a 1.9% for the $31K cost. I'm now under a $9K balance and the interest that I've paid is peanuts compared to the value I've received.

I did purchase from Marriott, because at the time the points offered was still decent and it was a pre-construction deal, but you can buy a resale through this method as well, because banks will allow direct deposits to your checking account..

So if you see a 1.9% offer and have the income to pay down, its something to consider. Just make sure there is a small cap on transfer fee, when I bought there was none, and make sure to pay your bills on time. Other than that, its an easy way to purchase something special without laying out a ton of cash.

Regards.

 

[AwayWeGo]

Maybe Not. (Yet.)

like in the last recession,(yes I think we're in one.)

Well, maybe 1's coming. But we might not actually be there -- yet.

Click here for a more reassuring view.

Fret not.

This too shall pass.

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

 

[vivalour]

I'm more interested in how you averaged 9% growth in your stocks this year.

Brian

We use our brains. Try stocks with at least 2-3% div., combined with 6%+ capital gain, e.g. in the TSX: Russell Metals, Bell Canada, Teck Cominco, Crescent Point Energy, Yamana Gold, etc., etc.