Best Mandatory Resort to Buy for Trading into WKORV

[YYJMSP]

I am also considering purchasing a week at WKORV directly.

Other then booking at the 12 month window are there any other benefits to being an owner at WKORV? ...

You are guaranteed the unit type and view you own if you book 12-8mos out. You lose this at 8mos, and will be assigned a floating view (unless you are lucky enough to find a OF unit at a higher redemption rate) when booking with SOs.

 

[CalGalTraveler]

So based on these responses, if OF view matters and school schedule buy WKORVN or WKORV OF. Otherwise trading is possible but know that trading rules can change and may not get exact week, day or best unit because busy weeks will have owners with higher priority taking the best units and views in OV. If you dont mind the Pirate ship or restaurant view or low floor/IV then u will be fine (and will save a lot of money.)

 

[controller1]

I'm always reminded of the "buy where you want to go". If one wants to go regularly to Maui then why one would buy elsewhere in order to trade into Maui is beyond me. Rules for trading can change and then one could be without the ability to get into a Maui unit with a trade. If one owns in Maui then that won't change.

 

[DavidnRobin]

Even if units are picked up for Flex, or Marriott somehow gets in with points - or whatever else... the ability to reserve as an Owner does not change as VSN/Marriott can’t hold more then they own.

Proportionally, the ratio of available villas to deeded owners remains the same.

Sent from my iPhone using Tapatalk

 

[CalGalTraveler]

True. However there was speculation on the MVC/Vistana integration forums that there may potentially be an adjustment points-wise between Desert and Florida weeks to align with MVC values which requires more points for such locations to trade into Hawaii.

If significant number of HI owners are incented to enroll in MVC program with adjusted points values...there will be fewer SO units available in SO inventory at the arbitraged rate. HI owners are not affected but SO traders will be.

 

[YYJMSP]

OP, remember to consider the MF increases over time as well as comparing upfront vs ongoing costs.

Exchange rate fluctuations come in to play more than MF increases when you're not playing in USD.

On average the MFs on our units, over the last 10yrs, have gone up around 20% (i.e. 2% per year) in USD, but when measured in CAD which is likely how you are ultimately paying, they have gone up over 60% (i.e. 6% per year) because of a 30% change in exchange rates.

On the other hand, the exchange rate has been relatively steady the last 4-5 yrs, so maybe not as much as consideration going forward. Or you could get lucky and it changes in the opposite direction and you actually come out ahead!

 

[nadz786]

Thanks everyone for the information. Will report back if the deal for the WKV week goes through. Once that's done I will likely pull the trigger on a WKORV week.

 

[HenryT]

The 10-year break even assumes $25k purchase price depreciates to zero in 10 years. I would say it's too pessimistic. It's not a new resort, and the majority of depreciation has already occurred. Resale prices do not show signs of any significant decreases any more. If the OP buys a unit there, he can resell close to the buy in price down the road, with minimal depreciation.

The above is true but it should also be considered that investing the $25k for 10 years at 5% interest results in a total future value of over $40k. I think when we do these financial analysis we should also compare the purchase cost to how much we could earn on that money if we invested it instead.

That being said, the Op should decide based on the option which gives them an acceptable chance of getting to Maui in their desired resort.

 

[controller1]

The above is true but it should also be considered that investing the $25k for 10 years at 5% interest results in a total future value of over $40k. I think when we do these financial analysis we should also compare the purchase cost to how much we could earn on that money if we invested it instead.

That being said, the Op should decide based on the option which gives them an acceptable chance of getting to Maui in their desired resort.

That may be true but no one is earning 5% interest in new investments in today's economic environment. To earn 5% would require a riskier investment and with risk one may need more than 10 years to ensure the 5% average is earned.

 

[vacationtime1]

That may be true but no one is earning 5% interest in new investments in today's economic environment. To earn 5% would require a riskier investment and with risk one may need more than 10 years to ensure the 5% average is earned.

Timeshares are risky investments (if they are investments at all). A fair economic rate of return on the capital used to purchase a timeshare is in the 15-20% and perhaps more -- given the lack of control, illiquidity, risks, and use restrictions. Comparing a bank rate of return (where the principal is guaranteed by the federal government and is totally liquid) to a timeshare rate of return is like comparing apples to (rotten) oranges.

Any competent real estate or business appraiser using a typical buildup rate (Ibbotson, etc.) will come to this conclusion. Think about it: you can buy a relatively safe real property investment and get an ROI of 5-10% -- and that's for an asset such as a single family residence to rent, a shopping center or an apartment building that the owner controls, can borrow against, and that may even go up in value.

In contrast, timeshares are subject to rapid depreciation, sometimes intentional. When Marriott raises the "education fee" on points resales, point values decline. When DRI takes over a project, values decline. When a shiny new project goes in next door, values decline. When MF's go up, values decline. And as owners, we have zero control over any of this, except to sell at the diminished price. (None of this even considers a developer purchase which is a 99%+ guarantee of losing money.) One may hope to resell a resale purchase for the same price years later, but that is the exception, not the rule. Most timeshares lost 50-99% of their value between 2008-2011 and never recovered.

 

[jabberwocky]

Any competent real estate or business appraiser using a typical buildup rate (Ibbotson, etc.) will come to this conclusion. Think about it: you can buy a relatively safe real property investment and get an ROI of 5-10% -- and that's for an asset such as a single family residence to rent, a shopping center or an apartment building that the owner controls, can borrow against, and that may even go up in value.

I would like to point out that real estate is highly illiquid and can easily drop in value (has it only been a decade since the real estate collapse?). Those in the commercial property space can tell you that while warehouses are doing pretty good, larger shopping center values have been stagnant or dropping.

I completely agree that we should not be talking about investment returns along side timeshares. They are not investments! They are a discretionary purchase to be enjoyed, just like Starbucks or a good pair of Louboutin's. Preferably all three at one.

 

[HenryT]

That may be true but no one is earning 5% interest in new investments in today's economic environment. To earn 5% would require a riskier investment and with risk one may need more than 10 years to ensure the 5% average is earned.

We can debate what the expected return will be but the probability of earning income if you invest the $25k is much higher than the probability that the timeshare will increase or maintain value over 10 years. My point is that if you are going to perform a financial analysis to decide if you should purchase a timeshare, you need to compare the lifecycle cost of purchasing the timeshare vs investing your money in something else and renting the timeshare over a given period of time.

I think we can also all agree that purchasing a timeshare is not totally a financial decision (if at all) but includes the value we get from owning that timeshare. Since I decided to own a lot of timeshares (all purchased resell), clearly I get a lot of value from ownership!

 

[controller1]

Timeshares are risky investments (if they are investments at all). A fair economic rate of return on the capital used to purchase a timeshare is in the 15-20% and perhaps more -- given the lack of control, illiquidity, risks, and use restrictions. Comparing a bank rate of return (where the principal is guaranteed by the federal government and is totally liquid) to a timeshare rate of return is like comparing apples to (rotten) oranges.

Any competent real estate or business appraiser using a typical buildup rate (Ibbotson, etc.) will come to this conclusion. Think about it: you can buy a relatively safe real property investment and get an ROI of 5-10% -- and that's for an asset such as a single family residence to rent, a shopping center or an apartment building that the owner controls, can borrow against, and that may even go up in value.

In contrast, timeshares are subject to rapid depreciation, sometimes intentional. When Marriott raises the "education fee" on points resales, point values decline. When DRI takes over a project, values decline. When a shiny new project goes in next door, values decline. When MF's go up, values decline. And as owners, we have zero control over any of this, except to sell at the diminished price. (None of this even considers a developer purchase which is a 99%+ guarantee of losing money.) One may hope to resell a resale purchase for the same price years later, but that is the exception, not the rule. Most timeshares lost 50-99% of their value between 2008-2011 and never recovered.

We can debate what the expected return will be but the probability of earning income if you invest the $25k is much higher than the probability that the timeshare will increase or maintain value over 10 years. My point is that if you are going to perform a financial analysis to decide if you should purchase a timeshare, you need to compare the lifecycle cost of purchasing the timeshare vs investing your money in something else and renting the timeshare over a given period of time.

I think we can also all agree that purchasing a timeshare is not totally a financial decision (if at all) but includes the value we get from owning that timeshare. Since I decided to own a lot of timeshares (all purchased resell), clearly I get a lot of value from ownership!

I hope no one is inferring I believe a purchase of a timeshare is an investment. If you read the entire thread you will see that I took a very conservative approach and assumed the timeshare would drop to a value of zero.