[2019] How Do You Calculate Your Break Even Point?

[csalter2]

I would like some assistance in trying to figure out how to determine when has broken even on had on their timeshare purchase. What strategies do you utilize to determine that you have saved money and it has been worth your purchase?

Can one look at equivalent accommodations and and start looking at those savings over maintenance fees and add that to the recouping of the original purchase?

Do people also include money saved on eating because of the kitchen? Or what about each time you use a two bedroom you would have had to have because of your children but because you have a timeshare with two bedrooms you have saved on that extra expense of another hotel room.

I just wonder how do people look at that initial payout and subsequent maintenance fees to determine they have broken even and/or have gotten ahead. How is it that we should determine that our timeshare has been a good purchase and it’s saving us money.

 

[Bucky]

We have never considered what our break even was. We bought timeshares where we vacation. We considered what we were paying for weekly rentals at that location and realized our timeshare purchase in the long run would be much cheaper and the stay would be at a much higher quality resort. You can’t rent a comparable lodging in Myrtle Beach for what our MF come to yearly. It also didn’t hurt that we bought our units resale during the financial crisis back during 2008-2012.

 

[bazzap]

We didn’t buy into timeshare with a view to breaking even and doubt we ever will.
Our decision was to invest in a lifestyle, not for a financial return.
For this it fulfilled our objective years ago and everything is just a bonus from now onwards.

 

[Luvtoride]

I agree with Bucky, we have never done a detailed calculation of costs, break even or savings. We don’t consider our timeshare ownership an investment or even an asset so we don’t view it in the same terms we do a financial investment.

Without posting a picture here, every time I look at one of our family pictures hanging on the wall in my home office of our family (us, our kids, their spouses and our grandkids )taken in Aruba every year for the past 7 years, I know we have more than broken even from our spend on our timeshare expenses!

Sorry, some things just can’t be measured in $ and cents.


Sent from my iPad using Tapatalk

 

[Fairwinds]

The above posts hit the nail on the head. I think of it as the cost of vacationing the way I want to vacation. That said, I’ve done all the things you mention but mostly out of curiosity. I think the only real way would be to track the cost of renting the MVC villas that you visit over time and some say to somehow throw in a lost return on investment factor, which in my case makes timesharing more attractive .

 

[Dean]

I would like some assistance in trying to figure out how to determine when has broken even on had on their timeshare purchase. What strategies do you utilize to determine that you have saved money and it has been worth your purchase?

Can one look at equivalent accommodations and and start looking at those savings over maintenance fees and add that to the recouping of the original purchase?

Do people also include money saved on eating because of the kitchen? Or what about each time you use a two bedroom you would have had to have because of your children but because you have a timeshare with two bedrooms you have saved on that extra expense of another hotel room.

I just wonder how do people look at that initial payout and subsequent maintenance fees to determine they have broken even and/or have gotten ahead. How is it that we should determine that our timeshare has been a good purchase and it’s saving us money.

I don't look at it very often but my method to do so in planning purchase is to use one of 2 metrics, what I could have rented for the same or similar and what I would have spent not owning. I tend to actually look at both as they can be different. I also consider dues and the TVM/Opportunity costs of the up front amounts usually assuming half the up front at MM rates and the other half at market rates, I use 8%. I want return of principle in 10 years or less.

 

[ljmiii]

I would like some assistance in trying to figure out how to determine when has broken even on had on their timeshare purchase. What strategies do you utilize to determine that you have saved money and it has been worth your purchase?

Three different timeshare systems...three different results...but one answer. Multiple bedroom villas are the only way to vacation with more than 2 people. And finding hotels with suites and/or connecting rooms is a pain... and suites are often outrageously expensive. So it has been completely worth it to us.

DVC - My parents, in-laws, ourselves, and our young children wanted to go to WDW together and I paid cash (*cough*) for a 2BR at Wilderness lodge. Being able to make breakfast for everyone and having us stay together on property as an extended family was truly magical. Shortly thereafter I bought at Beach Club Villa...and then later at Bay Lake Tower. My DVC points have gone up in value and the Disney's changes have made staying 'on property' much more important. So, DVC has been an unqualified success - both from a financial and emotional 'extended family time' standpoint.

HGVC - Shortly after we bought at DVC we stayed at Hilton Hawaiian Village and loved it. As a couple we had been going to Hawaii at least every other year for a long time and now we needed a 1BR. We found one at HHV for which we again paid cash (*cough*). Shortly thereafter I bought an EOY Lagoon Tower 2BR (which sleeps 6)...and after it became apparent that all the grandparents wanted to come as well I bought another. The Lagoon Tower weeks have more or less held their value and the MFs are cheaper than suites for 8 people. So financially somewhere between OK and good...but again a decade of 'extended family time' together in Hawaii has been what truly matters.

MVCI - Along with our HHV purchase I also bought 2 EOY weeks at Waiohai for us all to stay at Poipu Beach on Kauai. Later I added an EOY week on Maui...along with some DPs to enroll all my weeks. Financially somewhere between disastrous and 'maybe not *too* bad' - the longer I hold and profitably use them the less the impact from their depreciation will be. From an emotional standpoint getting to stay at Waiohai EOY with kids and grandparents has been breathtaking - Kauai is heaven on earth with keiki and kapuna around. And the DPs have allowed us to stay in nice villas with our kids all over the US.

I have no idea if it would be worthwhile for an older couple to get into timeshares since a large part of what has made it financially successful for us is the low availability and staggering prices hotels charge for suites - particularly oceanfront ones. Obviously, YMMV.

 

[mbstn6254]

This is a two part question. Financial and lifestyle. From the financial perspective and from the pure cost of lodging it is fairly easy. Adding in savings from meals because of kitchen facilities makes it a little more difficult but not impossible. For me I have $45,000 into my MVC points. Add to that the yearly maintenance. So if you figure you can earn maybe 3% in a conservative fixed income investment the $45,000 will earn approximately $1,350 a year before taxes or about $1,000 net. Add that to the $2,500 of maintenance fees, I am spending about $3,500 per year on vacations. $3,500 /7 is $500 a night, with the use of my $45,000 if I needed it. The question is where can I go for $500 per night and is that comparable to what I get at the typical MVC Resort. That depends on how you like to travel. The "breakeven" is forever. So...from a financial perspective this isn't a smart move. What our membership has done, however, is force me to take trips and vacations I might not have thought about. The key is to use the points judiciously and look for the bargains.

 

[jerseyfinn]

Speaking only of Marriott TS, there once existed the relative possibility to "break even" or actually walk away with money in pocket as a Legacy week owner. This narrow window existed before the recession when specific resorts & specific seasons could net you real profit IF you sold your week. All of this when MVC was booming & when growth seemed endless. TS Cost-accounting is mostly meaningless today as it's all negative math.

Some of the MVC "old seadog" owners who buy plat wks at a resort like Ocean Pointe can attest that plat weeks bought for $14-18K would easily have fetched $24K from Marriott resale in the 2005 to 2007 window just prior to the recession ( Marriott selling those same weeks for $40K ). Of course the resale market collapses & Marriott writes down it's losses & the same plat week today would fetch 1/3 or less of that $24K. Marriott of course continues to price them at $40 in the smoke & fog of DC points. And remember, that paper profit only became real if you sold.

Break even is an illusion in today's TS world that's probably worse than the depreciation of a new car driven across the dealer curb. Better to see TS today as an investment in destination travel that leaves your ledger book negative, but the positives are the journey & the people & places you move through over the years. I call all of this the cost of doing destination travel business.

In our early years of ownership in 2001 I too kept a ledger of theoretical costs. Recession renders that process moot as your real equation today is love or dedication to destination travel. Am I happy with our TS ownership today? Mostly yes. Note that wife & I have been at it since 2001 & MVC ownership made us better travelers both in TS and non-TS trips as we honed in on hotel/MVC/airline paradigms & accept idea of cost of doing destination travel business.

There were indeed more perks with your spend. Much leaner times today as airlines rational their business & new DC owners need to invest $$$ to gain some DC inertia. We're retired with MVC Chairmans status & MR Lifetime Plat Elite status. Years of travel & $ spent/enjoyed confer some nice perks in retirement for our otherwise negative TS investment. When will we stop? When we're unhappy or don't want to travel anymore. Do we recommend MVC & DC? Only if you're a relativist who enjoys destination travel & even then with great caution about cost of DC points & resale purchases.

As to cost accounting, I reflected more on our investments & retirement savings than counting TS costs as the former are net positives that you can still shape and control whilst TS is a negative that might give some folks ulcers that spoil their travels. We all spend some of our money to negative cost effect. Enjoyment sometimes comes at negative costs. Hope you enjoy your timeshare travels.

barry

 

[Quilter]

We didn’t give breaking even much consideration. I won’t go into details but I’ll focus on my experience in the last 24 hours.

A good friend called me last night to discuss their desire for a beach vacation during Spring Break 3/16-23 this year. They want to be far south Florida as possible. In the past they’ve gone to Myrtle Beach with the iffy weather. I don’t have any available inventory so I did a little searching for them. I gave him some ball park pricing for 2 and 3 bedroom units at Ocean Pointe (my home resort that they have visited).

With ownership we know where we’re going, we’re forced to plan ahead, we have flexibility for other options with points and exchanges, our maintenance fees are roughly 1/2 the cost to rent.

The perks of owning extend further than breaking even.

 

[Shankilicious]

I'm married to an accountant, and she counts everything from how much we've spent on our investment and MF and Everytime we stay at a resort, we compare how much the resort would have cost to book online and of course we rent out some of our points and add that income.
Of course there's the memories and quality of vacation that is gained vs staying in hotels.
One of our biggest factors of joining TS was on our honeymoon, all the beaches got closed and it rained half the time. We were lucky to be in a great condo with plenty to do. Had we been with our kids and stuck in a hotel room, it would have been a nightmare.

 

[csalter2]

I'm married to an accountant, and she counts everything from how much we've spent on our investment and MF and Everytime we stay at a resort, we compare how much the resort would have cost to book online and of course we rent out some of our points and add that income.
Of course there's the memories and quality of vacation that is gained vs staying in hotels.
One of our biggest factors of joining TS was on our honeymoon, all the beaches got closed and it rained half the time. We were lucky to be in a great condo with plenty to do. Had we been with our kids and stuck in a hotel room, it would have been a nightmare.

What were your wife’s findings? Do you come out behind as well?

 

[GetawaysRus]

Am I happy with our TS ownership today? Mostly yes. Note that wife & I have been at it since 2001 & MVC ownership made us better travelers both in TS and non-TS trips as we honed in on hotel/MVC/airline paradigms & accept idea of cost of doing destination travel business.
barry

I think the OP's question is an impossible one. I'm as calculating as they come, and I try to be careful about our investments, but I long ago gave up the idea of monitoring the pennies regarding our timeshare use and our travels.

We bought from Marriott (and before we found TUG) in 2004. Along with our initial purchase came a boatload of Marriott Reward points. Well, I couldn't let those go to waste, so I set about learning how to maximize our use of the MR points. And from that, I've learned an enormous amount about the travel rewards game. We now travel in ways that would otherwise be unaffordable for us. These are much grander, more deluxe trips than I ever envisioned prior to our timeshare ownership. Yes, I could put a dollar value on those international business class award seats that I obtain using airline reward miles or our reward stays at hotels or our timeshare stays. But it's impossible to put a dollar value on the memories from our trips. And it's impossible to put a dollar value on the good feeling I get from treating my beautiful wife to such grand vacations. As Barry said, we're now much better travelers.

Owning the timeshare does force us to plan. And it forces us to vacation because we don't want those weeks to go to waste. I'm not a workaholic, but I have always enjoyed my profession and worked hard. It's good for me to have that firm nudge from our timeshare ownership that I need to plan some time off from work. I'm forever saying to my wife: "Where do you want to go next? What should we plan? What's our next dream travel destination?"

Also, the timeshare ownership sometimes helps us be spontaneous. That's a good thing for me, since I'm not a real spontaneous person by nature. Interval keeps dropping ACs into our account. Many of them go unused, but every once in a while something will open up that allows us to take a week-long timeshare vacation on very short notice.

The timeshare ownership also allows me to build vacations around it. For example, we're recently back from a month-long SE Asia trip. We were busy running around like typical tourists (and stayed in hotels) in Bangkok, Siem Reap, Chiang Mai, and Singapore. But I was able to insert a one week timeshare stay at the Marriott Phuket Beach Club in between Chiang Mai and Singapore. That week gave us a chance to slow down and rejuvenate before vacationing onwards as well as enjoy the more spacious 2BR timeshare unit when compared to hotel rooms.

Finally, the timeshare ownership gives us the option of taking 2 different types of vacations. There are the faster paced touristy vacations (such as our international trips) where we're usually up early to eat breakfast and get out to see the sights. But then we also can take slower paced timeshare vacations, and I know that my wife enjoys that. It's relaxing to lounge in your timeshare unit in your jammies in the morning and not have to get dressed and go out for breakfast. That's another thing that I can't put a dollar value on.

Am I happy about the steady rise in maintenance fees? Nope. Am I happy about the unit size upgrade fees that Interval introduced? Nope. But I'm still determined that we'll do our best to maximize the value of our ownership and enjoy our travels.

 

[x3 skier]

Every time I read something like this thread, I’m very content to have the ones I have Steamboat Springs and in Raintree. The two in Steamboat can be sold for what I paid (or more) and I’ll be out of Raintree in a few years.

My annual 6 week Steamboat ski season stay is less than a week charges for a comparable unit and about half of what I pay for renting for another 6 weeks. The Raintree week is slightly less than rental.

Reading about the high end other systems (DVC, etc.) makes me think you won’t ever break even but I have zero real knowledge about them.

Cheers

 

[Steve Fatula]

Pretty much, the early posts in this thread have nailed it. But if you insist on cost analysis, we did it once on one trip (out of 21 years of trips). We compared the cost we paid for our Australia trip a few years back to what it would have cost without timeshares. So, we included maintenance fees for what we used (3 different TS), airfare, hotel, a portion of our upfront costs to buy the timeshare(s) in question (1/10th), and exchange fees and even the annual DC fee for the II membership. Note we used 1/10th of our upfront costs, which is too much since we've owned for 21 years, but some was purchased later so it was fair. And note this means we consider our resale value as $0 else that number should be reduced as any resale recoups some of that cost (though inflation kills some of that). We considered food a break even since presumably one could have a kitchen without a timeshare, though hotel would have significantly added to the cost. We noted the best prices we could find for equivalent accommodations in the areas we went to. Note that we included airfare. Why you ask, because that's a perk of our ownership. Most view presentations as a labor, hate them, etc. We see it as income, as those pay for our airfare on overseas trips, we've never ever purchased an overseas ticket.

So, how did it turn out? We were over $10,000 ahead, on one trip. Just in accommodations, we were at least 5k ahead (from memory, it's posted somewhere on this site). It was easy to see that we are vastly ahead on our purchase. But we are aggressive users who use all of the tricks to squeeze out the best value we can get. This year, we are heading to Fiji, then on to Brisbane, then on to Thailand. Airfare: $0 (ok $200 in taxes), thanks to presentations. The MF is quite low. And the presentations paid for the Fiji "hotel" stay at Momi Bay also, which is more like a TS. In 2020, we go to Uganda, again, we already have the miles from presentations (had accumulated them for a few years).

So, I disagree that one cannot come out ahead. But YMMV, depends on what you bought, how you use it, etc. Granted not all trips come out this way. However, I also view II getaways as a perk. Staying in Williamsburg for a 2 weeks in a 3BR house for $500 ($35/night) is just kind of hard to do otherwise for example. Coming out ahead was not our goal. Our goal was to travel, and, this sort of forces us to do so. And we are glad it does. But we thought it fun to do an analysis for the one trip, which admittedly was best case scenario. But, we've done such trips many times over 21 years.

There is simply no question we have received all our money back and then some from our purchases. But far more importantly, we took dozens and dozens of trips we would otherwise never have taken. And those trips are priceless.

A simpler way of looking at it is this, we have 12 weeks we are taking this year. Just considering accommodations, nothing else, and figuring the cost per night in MF and upfront costs, it's easy to see as well we are way ahead.

 

[vacationtime1]

What do you mean by "break even"? We all understand the unlikelihood of ever getting one's purchase price back. So the question is what is the return on "investment" (ROI) during the time of ownership.

My own metric is a 10% ROI. That is much more than what I get from my financial investments, but my investments generally increase in value. The 10% is based on a safe return on capital (e.g. Treasury bonds) PLUS increments for capital risk, lack of control (i.e. no control over MF's; no control over changes in rules), and lack of marketability (it's easy to sell securities, more difficult to sell timeshares).

I compare rental value vs. cost. Rental value is per Redweek, not a hotel site, because an "apples to apples" comparison needs to include the concepts of a full week reservation with little flexibility. My cost is the 10% ROI on the current value of the TS + the annual MF's and mandatory club fees.

My Kierland platinum 2bd unit rents for about $3,700 vs. MF's of $1,565; my "profit" is $2,135. If someone were to buy it for its FMV of $15,000 today, s/he would earn a 15% ROI -- a pretty good deal.

By contrast, my Kauai Beach Club 1bd OF unit rents for about $2,200 (Redweek rents are actually all over the place on this unit, suggesting additional risk), vs MF's of $1,921. The rental "profit" of a mere $279 suggests a value of $2,790. That's an ROI of about 4% on an "investment" of $7,000 to purchase it. I will probably sell this unit because I am not adequately compensated for the capital I have tied up in it (i.e. its $7,000 value).

I do not consider the ability to cook in my TS nor do I compare a TS to a hotel suite. I can cook in a rented TS (or in a rented condo or in something such as Marriott's residence clubs). A hotel suite has different and usually better amenities. My analysis attempts to compare the full cost of ownership vs. the cost of a comparable rental to determine whether owning is cheaper than renting. If owning is cheaper over time, I believe I break even or profit.

Obviously there are situations where intangibles trump economics, such as that week 7 ski week, that fixed summer week where you have friends every year, or in my case, our OF unit at WKORV; I cannot make the math work but remain willing to pay for it.

 

[Shankilicious]

What were your wife’s findings? Do you come out behind as well?

We're slowly making ground to get ahead. But it's gonna be a long trip to getting there since we bought from the developer... But every year we calculate the vacations we take with our points and add up what it would cost us without our ownership. including MF of course and we've been saving money and taking better vacations and more very nice getaways.

 

[Dean]

What were your wife’s findings? Do you come out behind as well?

I can tell you ours and my observations. With DVC we came out ahead early but it was because we got free passes for several years. Otherwise it would have been 7-10 years apples to apples. But in reality most just spend the money elsewhere so there is no real savings with DVC.

Bluegreen saves me a ton because I got in so cheaply at Platinum (actually Gold before Platinum existed) and the dues setup there combined with their resorts and the way we use it. Our best value is using bonus time, esp for Presidential units at $79-$99 a night. We use some for family trips and it works well when we do.

Marriott - no really savings but it allows us to travel and give back to family with multiple units at Grande Ocean most years.

 

[dansimms]

If you financed your purchase with Marriott, like I did, and took the better part of 5 to 10 years to pay it off, factor that into your calculations. Perhaps adding another 5 years to break even, or more. Without a timeshare, I never would have budgeted as much money and time to travel, so I have no regrets. After the great recession, I had to painfully close a business down and lay off workers and had about 5 years of paying off a lot of debt. Knowing that I had 3 weeks vacation, even in a hard time like that was huge psychologically, because having a trip to look forward to, was and will always be so important to us. If I could have gotten more for my timeshares, I would have seriously considered selling them all, as we were facing a foreclosure at the time. Thankfully, we were able to dig out after about 6 or 7 years and are so glad we still have our MVCI portfolio and it will remain an integral part of our retirement lifestyle in a few years.

 

[cp73]

Quick and dirty

Roughly 40 years with these assumptions:
Resale price at breakeven is 10% of original purchase price which you purchased directly from Marriott;
You are able to rent the same unit off from a private party for approximately 50% higher than your maintenance fees.
Food will be the same.
Not factored in is the cost of money or inflation, which would push it out a few years further.

 

[csalter2]

I agree with all of the responses that state that the rewards and benefits of timesharing are beyond dollars and cents. The experiences and memories that families share cannot be measured in money.

However, I can’t help to think if there are some ways in which we can feel that our purchases are worthy of some value. I wanted to know if there were people who felt in the long run they were saving money than if they merely used hotels or rented condos all the time.

I appreciate everyone’s thoughts.

 

[Dean]

I agree with all of the responses that state that the rewards and benefits of timesharing are beyond dollars and cents. The experiences and memories that families share cannot be measured in money.

However, I can’t help to think if there are some ways in which we can feel that our purchases are worthy of some value. I wanted to know if there were people who felt in the long run they were saving money than if they merely used hotels or rented condos all the time.

I appreciate everyone’s thoughts.

We appreciate the extra amenities and space that timeshares tend to offer as well as some of the other amenities/activities that many resorts offer. I travel more because of timeshares and in reality timeshares Have "forced" me to travel more which is a good thing for me and has helped me achieve a better balance between work and play and to spend more family time.

 

[bogey21]

The reason I owned TS Weeks (Fixed Weeks/Fixed Units) was certainty. Certainty that I would be able to stay in the Unit of my choice at locations of my choice and, knowing when I would be traveling, be able to minimize traveling expenses. My trips were an expense. Breaking even was never a consideration. Minimizing expenses were...

George

 

[dgf15215]

I agree with all of the responses that state that the rewards and benefits of timesharing are beyond dollars and cents. The experiences and memories that families share cannot be measured in money.

However, I can’t help to think if there are some ways in which we can feel that our purchases are worthy of some value. I wanted to know if there were people who felt in the long run they were saving money than if they merely used hotels or rented condos all the time.

I appreciate everyone’s thoughts.

I think that you've read enough so far to figure out that most of us perceive the "value" of the timeshare as something differently than the dollars and cents value. We've been in the system for sixteen, seventeen years now and over the years added to the point that we've maxed out in terms of our needs. When you buy a stake in the system you are committing to use it, to enjoy the benefits. I darn well know that if we had to put out the dollars required to go to Hawaii at the end of this week, or to the south of Spain a few weeks after that trip concludes, we probably wouldn't. But we are, and are already booking for next year. Of course, at some point we'll be leaving the use of these points to our kids, a gift that will keep giving long after we're gone. We see "value" in that. We even see "value" in the perks we get because we have enough points to be in the chairman's club and as we travel to Marriotts around the globe we've had royal treatment that is tough to come by. In our minds it all adds up pretty well. I wish I knew about this forum in 2003 and was smarter about some the purchases we made along the way, but that's life.

I think that George (above) has a good point - it's about minimizing expenses and getting what you want. When the market in FL was tanking, we looked at some condos down there. Not expensive ones so they weren't on the beach. At the end of the day I didn't want to be responsible for another vacation property, I wanted a key and a number to call if there's a problem. I like being on the beach by walking out the door, not finding a parking spot an hour through traffic away. Those were the values that drove us to invest in more points rather than more property.

It's an individual decision. If you are going to buy, pay attention to the resources and advice right here. There's a font of wisdom and experience to help make your decision in the best possible way. Good luck.

 

[Dean]

Let me make a point on the other side. Anyone that doesn't at least consider the costs is being foolish.