Are owners really owners?

[CalGalTraveler]

@Fredflintstone Unlike most TS, ski weeks and Maui, Waikiki OF and some OV at hotel branded resorts currently are holding their resale value. Week 52 would be higher. Developer sold for much more.

• Resale oceanfront 3 bedrooms at Marriott Ocean Club on Maui and Waikiki run $50k+ and Westin Kaanapali south OF Centers run $35k+, North and Deluxe OFs 2 bdrms run $20 - 25k resale.
• Waikiki Lagoon Tower OF (the one OP stayed in) has been holding steady at $29k+ for a platinum season. Hilton Hawaiian Village is popular with the HGV's large Japanese customer base.
• Grand Waikikian (HHV) has been holding resale values.
• Hyatt Kaanapali Residences resale run in the same range.

If they decide to sell, these units are popular so they resale approx. the same resale price so they get their money back. Some families I know plan to keep and pass to their kids. It is their equivalent of a second home.

When you compare $50k for oceanfront to buying an equivalent condo next door it's nothing. The equivalent OF condos next door sell for millions. And those wholly owned condos have rising HOA maint fees and owners don't have much say in those boards either.

 

[bogey21]

When you compare $50k for oceanfront to buying an equivalent condo next door it's nothing. The equivalent OF condos next door sell for millions. And those wholly owned condos have rising HOA maint fees too and owners don't have much say in those boards either.

I used to pat myself on the back (with justification) when we would sit out on the deck of our Monarch Crown Suite Week (cost $25k) in Sea Pines and look at the condo next door...

George

 

[CalGalTraveler]

Yes,

But you can’t upgrade it, modify it or change it.

With ownership, you can do all 3.


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As a second homeowner, we can change or modify the home all we want. So what? It's over-rated. Maintenance is a headache and capital improvements are expensive. With an aging home there are worries when you are not there for weeks such as pipes bursting. Trying to interview and line up good contractors and managing schedules remotely is a lot of work. We have a rental management company and they do very little.

I want to go on vacation to relax and not worry about fixing that leaky faucet! Compared to owning a vacation home, renting or owning a timeshare is an inexpensive and easy alternative.

 

[Ralph Sir Edward]

It's "different strokes for different folks" . . .

There are many different reasons for buying (or not buying) a timeshare. Each person's needs are different.

If you want a "second home" in an expensive area, and are only going to be there for a few weeks, timeshares may be the cost effective advantage - but not if you are being a real estate speculator.

If you just want to take random vacations, at random locations, as cheaply as possible, you may be better off renting - if you are comfortable with rarely having prime season vacations. (yes, you can catch bargains, but you can't count on them.)

If you want to "try before you buy" (aftermarket, of course), renting is the way to go initially.

One of the things I own at Bay Club is position in the queue. I only have to compete with people who also own the same type of unit as I do - during the initial booking window. That has value to me, as is written in on the deed. (As I quoted it in an earlier post.) Other people ignore it, and to them it has no value.

As I have pointed out before (on other threads) a condo on the Big Island of Hawaii would cost $15,000 to $20,000 in continuing maintenance (Taxes, Condo fees, Utilities, and repairs). 4 weeks at the Bay Club costs me around $6,500 a year currently. I take mine as a block. I might be able to rent random weeks (off peak) for less, but I would wager long odds against getting a prime block of 4 weeks. So "owning" is value for me, but not other people. (A condo in the area might cost $400,000 up front, I paid less than $15,000 up front. Of course, I'll never make any money off of the timeshares, I might make money off of selling the condo eventually - maybe. I've seen condos (same place) go from $200K to $525K, back to $275K and now around $400K - in the last 20 years. Sort of like the stock market. . . )

You pays your money and takes your choice. . . .

 

[Snazzylass]

There is one aspect of ownership I see. You get a deed that locks you into their rules and gives them teeth to extract MF from you.

So, I suppose what you get is a prepaid (hopefully nice) condo at a reduced rate and you can trade for different locations for an extra fee.

Perhaps not ownership, but getting a nice resort at a reduced rate.

Your thoughts?

You definitely need to do the math, and ask yourself if you WANT to make the commitment - that's true of any sort of ownership. With all the AirBnB and such options today, I wondered if T/S would continue to be as popular.

When I bought my Floating Week 20 years ago, the salesman focused on it being a hedge against inflation. That's held true! I couldn't spend a week in Sedona for the price of my MF - more like 3 nights. And, even though I bought from the developer, it came with so many perks and bennies, I recouped my initial investment in the first few years.

My kids wanted me to buy the T/S. They loved the idea of inheriting it. Honestly, I can see where it will be a good value for them as well.

 

[CalGalTraveler]

One of my business school professors wisely said many years ago,"You don't need to own 'em to control 'em."

 

[goaliedave]

You definitely need to do the math, and ask yourself if you WANT to make the commitment - that's true of any sort of ownership. With all the AirBnB and such options today, I wondered if T/S would continue to be as popular.

When I bought my Floating Week 20 years ago, the salesman focused on it being a hedge against inflation. That's held true! I couldn't spend a week in Sedona for the price of my MF - more like 3 nights. And, even though I bought from the developer, it came with so many perks and bennies, I recouped my initial investment in the first few years.

My kids wanted me to buy the T/S. They loved the idea of inheriting it. Honestly, I can see where it will be a good value for them as well.

Similar to my situation! my payback was 10 years. Things were more flexible in the old days. Now, you have to be quick and smart to find the bargains... using points for high cost weeks, acting on discounts and deals, learning tricks... still a great deal for me.

One thing I am leery of however, is owning fixed weeks. Special assessments due to weather and age are increasing and born directly by weeks owners. Points owners have the benefit of being part of multi-property trusts which share the risk and payment.

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[PigsDad]

One thing I am leery of however, is owning fixed weeks. Special assessments due to weather and age are increasing and born directly by weeks owners. Points owners have the benefit of being part of multi-property trusts which share the risk and payment.

Valid concern, but it highly depends on the HOA management. I own two timeshares on Marco Island that both took a direct hit from hurricane Irma two years ago. Both were damaged to the point where they were shut down for several weeks. However, they both had very good insurance such that all repairs were made quickly with no need for a special assessment. In addition, owners of weeks that were unusable due to the shutdown were reimbursed their maintenance fees that year -- all paid for by the insurance. So if a timeshare carries adequate insurance and there is competent management, I don't see any issues of owning fixed weeks.

BTW, while both of these weeks are affiliated with HGVC, they have independent boards, management, etc.

Kurt

 

[CalGalTraveler]

We are just the opposite and believe that deeded weeks are the way to go. We don't own in any hurricane, forest fire, tornado or earthquake areas so the risk of special assessment is minimal as long as the capital reserves are adequately maintained.

 

[goaliedave]

Valid concern, but it highly depends on the HOA management. I own two timeshares on Marco Island that both took a direct hit from hurricane Irma two years ago. Both were damaged to the point where they were shut down for several weeks. However, they both had very good insurance such that all repairs were made quickly with no need for a special assessment. In addition, owners of weeks that were unusable due to the shutdown were reimbursed their maintenance fees that year -- all paid for by the insurance. So if a timeshare carries adequate insurance and there is competent management, I don't see any issues of owning fixed weeks.

BTW, while both of these weeks are affiliated with HGVC, they have independent boards, management, etc.

Kurt

You're point that there are good HOA managers is valid but not related to my point.

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[goaliedave]

We are just the opposite and believe that deeded weeks are the way to go. We don't own in any hurricane, forest fire, tornado or earthquake areas so the risk of special assessment is minimal as long as the capital reserves are adequately maintained.

You're point that you are 100% certain that you will never have a special assessment is not related to my point.

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[CalGalTraveler]

You're point that you are 100% certain that you will never have a special assessment is not related to my point.

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I never said "100% certain." I said "...risk of special assessment is minimal as long as the capital reserves are adequately funded."

 

[goaliedave]

I never said "100% certain." I said "...risk of special assessment is minimal as long as the capital reserves are adequately funded."

well, 2 points. as I said, this is irrelevant to my post. my point is that when a special assessment occurs, it is the weeks owners who hear the brunt.

However I must point out the naivete of your post. Feeling that you have minimal risk and that reserves are adequately funded is illogical. It is of course impossible to predict what accident or disaster will happen to a resort, or indeed any house building or structure as you will know from a cursory reading of news.

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[bogey21]

One thing I am leery of however, is owning fixed weeks. Special assessments due to weather and age are increasing and born directly by weeks owners. Points owners have the benefit of being part of multi-property trusts which share the risk and payment.

For the last about 10 years of my TS Ownership experience I owned only Fixed Week/Fixed Units. All MFs were below average. Two of them were ravaged by hurricanes, one in Biloxi and one just outside Galveston. In both cases the Resorts were put back together without Special Assessments. In both cases, however, I did lose usage for a year...

George

 

[goaliedave]

For the last about 10 years of my TS Ownership experience I owned only Fixed Week/Fixed Units. All MFs were below average. Two of them were ravaged by hurricanes, one in Biloxi and one just outside Galveston. In both cases the Resorts were put back together without Special Assessments. In both cases, however, I did lose usage for a year...

George

that's great but isnt relevent to my post. Again, I am talking only about situations where a special assessment does occur, not the 99.9% of times when one doesn't occur. lol social media

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[CalGalTraveler]

A downside of renting VRBO/Homeaway:

Paris Homeshare Owner No Shows. Company Tells Reader to Pound Sand.

https://viewfromthewing.com/2019/08...-no-shows-company-tells-reader-to-pound-sand/

 

[1Kflyerguy]

A downside of renting VRBO/Homeaway:

Paris Homeshare Owner No Shows. Company Tells Reader to Pound Sand.

https://viewfromthewing.com/2019/08...-no-shows-company-tells-reader-to-pound-sand/

I have had very mixed results with VRBO/Homeaway... Not sure i would use them again.. Last time i used them for a rental on Kauai, the owner was very hard to reach never responded to emails, except when the payment was due...

 

[Ralph Sir Edward]

that's great but isnt relevent to my post. Again, I am talking only about situations where a special assessment does occur, not the 99.9% of times when one doesn't occur. lol social media

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A matter of viewpoint. Points owners may not take a direct loss like a fixed week owner. But their probability of loss is the same, only they are more spread out. Each property has the same risk of a special assessment, but you have many properties in the points pool. Your risk in a point pool is 1/n (where n is the number of resorts) but there are n times as many special assessment on resorts in the pool.

As example 30 resorts in a pool. Your cost of payout for a resort with a special assessment is 1/30th as much as a fixed week owner. But at the same time the odds of a special assessment occurring is 30 times that of a fixed week owner (there are 30 chances of a special assessment occurring; one for each resort); whereas there is only 1 chance of a special assessment (only one resort) occurring for a fixed week owner.

 

[CalGalTraveler]

+1 @Ralph Sir Edward

Points trusts are usually more expensive than the equivalent deed. You are paying a premium for two things:

1) a higher probability that at least one of the properties in the trust will have an assessment every year, but that cost is spread out among more owners
2) garbage silver week deeds that have low point to MF ratios

Plus no one really knows what's in the portfolio! That's like buying a mutual fund when the fund company doesn't disclose the composition of stocks inside it. IMO that opens these trusts up to a lot of games.

 

[goaliedave]

A matter of viewpoint. Points owners may not take a direct loss like a fixed week owner. But their probability of loss is the same, only they are more spread out. Each property has the same risk of a special assessment, but you have many properties in the points pool. Your risk in a point pool is 1/n (where n is the number of resorts) but there are n times as many special assessment on resorts in the pool.

As example 30 resorts in a pool. Your cost of payout for a resort with a special assessment is 1/30th as much as a fixed week owner. But at the same time the odds of a special assessment occurring is 30 times that of a fixed week owner (there are 30 chances of a special assessment occurring; one for each resort); whereas there is only 1 chance of a special assessment (only one resort) occurring for a fixed week owner.

exactly 100% great explanation.

the reason I believe points holders are at less risk, is because , similar to auto life or hone insurance or bank loan portfolios, they pool lower risk resorts with higher risk ones. My Diamond Hawaii Collection contains several mainland resorts like Las Vegas so imho we are better off than the weeks owners at Point at Poipu.

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[bogey21]

The 3 things I got owning my Fixed Week/Fixed Unit Resorts were (1) low initial cost; (2) low MFs; and (3) certainty of availability. What I gave up was quality which I acknowledge was significant. The exception to this was my Fixed Week Monarch Crown Suite Week...

George