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Exit Strategy

Discussion in 'Buying, Selling & Renting Timeshares' started by OldGuy, Apr 25, 2019.

  1. bogey21

    bogey21 TUG Member

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    Another way that makes exiting easy is to buy right. Exiting is less painful if your portfolio is mad up of Weeks you bought on the cheap, say $1,000 or less.

    George
     
    Snazzylass and jme like this.
  2. bogey21

    bogey21 TUG Member

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    So true. Exactly the way I saw it when I sold my 4 Marriott Weeks many years ago for roughly $85 thousand. Cancer is an over statement but I was troubled as I saw changes being made one after another to what I had bought, all to my detriment...

    George
     
  3. Eric B

    Eric B TUG Member

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    ... or giving away (gifting).

    Interesting thread and I'm sure it's not the first or last time someone will speculate about this subject. To me, it's a bit disquieting to think that someone might try to push for legislation that affects my ownership rights in deeded property because they want to get out of a management contract they have with a timeshare resort they own. Fortunately there are constitutional protections against the government taking away my property without providing compensation. Could be done through eminent domain, I suppose, and relieving people of their TS obligations might be a public good in the minds of some people, but that seems like it would be pushing the boundaries of treating people properly.

    I do own a few RTU resorts as well as deeded TS properties. They've all got their pluses and minuses, but the most important thing IMHO is understanding how they work and what you can do with them.
     
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  4. jme

    jme TUG Member

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    Nice post.....you get it.
    I don't want anyone doing anything, or having the "right to" via legislation, that will ultimately adversely affect my real estate property's financial standing, or my family's playground, so to speak.

    So, Yes, but on your first point, in gifting someone must accept. THAT is the hard part, unloading garbage on another
    unwitting person who will inherit problems. But you're right, that's another way.
     
    Last edited: Apr 28, 2019
  5. T-Dot-Traveller

    T-Dot-Traveller TUG Member

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    One RTU developer that Eric & I both own is Mexican based Vidanta/ Grupo Mayan .

    SInce 2005 they have sold a product that combines MF on use only ( "no go- no pay") with
    A renewable RTU time line . THe time line on a contracts currently being sold is 10 years and then
    a renewal fee of 1 or 1.5 MF / use fee is required to keep the contract active .
    Annual MF increases have a cap based on USA CPI .

    FYI - they also pretty much have extinguished eBay resales by having a transfer payment of
    5 x MF for all but family transfers . Family transfers are no charge/ 0$ .

    *******

    IMO - Vidanta has built and continues to build & staff for peak season - snowbird and Mexican Holiday
    Time (ie - late December until Easter) in pesos while MF/ use fees are in USD .This means they have a lower cost structure
    for a premium use product AND it also means they control lots of shoulder season weeks as a developer .
    They also seem to use sales income as their primary source for funds to keep building.

    FYI - RTU is / was also required in Mexico since the government limited foreign
    ownership of coastal property .

    I add all of this because the model Vidanta uses may not work for other developers or resorts ; But it is an interesting model .

    We bought before finding TUG and really understanding timeshares . I am glad it turned out to have a built in exit plan .
     
    Last edited: Apr 28, 2019
    Eric B likes this.
  6. bogey21

    bogey21 TUG Member

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    Agree as long as this this contemplates selling it for zero back to a Resort if they think they can make money either renting it out or selling it to someone else...

    George
     
  7. OldGuy

    OldGuy Guest

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    Actually, that makes sense, and is the way it should be. When you buy a membership in anything for a set time period, when that time period is over, it's over. Of course, you would have to buy another membership for another set time period.
     
  8. OldGuy

    OldGuy Guest

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    The reason RTU fell out of favor in US is not because it was not right for the buyer/owner/consumer, but because it was not right for the seller.
    - - - - - -
    & regarding there being types of resorts more susceptible to financial problems at this point in time, yes, and as for due diligence, people have or have not done due diligence over the years regardless of the type of resort. The really, really old among among us, who bought before Al Gore started the Internet, pre-TUG, due dilgence was little more than thinking to oneself, "They couldn't say these thing if it wasn't true."

    Even today, where folks could be fact-checking in realtime, people who should not buy, do.
     
  9. chapjim

    chapjim TUG Member

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    I also have had involuntary thoughts. If I expressed mine out loud, I'd get my face slapped (or worse).

    Yours is no more likely to lead to anything good than mine.
     
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  10. OldGuy

    OldGuy Guest

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    It's a good day if all you get is your face slapped.
     
  11. OldGuy

    OldGuy Guest

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    ARDA:

    https://www.arda.org/uploadedFiles/...ial Business Services for a Legacy Resort.pdf

    #1 - Gaining Control of Inventory
    Legacy resorts face common issues like aging owners, increasingly delinquent maintenance fees, and the “Sunset Clause” that will come into efect over the next few years. . . .
    It’s possible for properties to obtain a deed back from delinquent owners for reasons like bankruptcy, death, divorce, or those who simply cannot be found. . . .
    “The association was on very tenuous ground, but placing the inventory in the hands of a responsible assessment-paying owner has substantially solidified the financial footing of the association,”

    #2 - Maintaining Revenue Streams
    With timeshare sales no longer happening onsite at legacy resorts, maintaining cash low requires rental revenue. . . .
    Another client had no pre-existing online rental program, and began collecting more than $100,000 in net revenue over a three month time period.

    #3 - Investing in Your Property
    When investing in your property, a good starting point is gathering feedback from your owners and rental guests. . .
    “As small resort operators, we need as much technology that we can afford,” Mattoni continued. “We are always looking for affordable ways to generate rentals." . . .
     
  12. AJCts411

    AJCts411 TUG Member

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    The one thing, the positive, that this topic exposes is the complete unbalance, so totally in the resorts/TS/RTU favor. And how you the one who paid for the right to keep paying, is left with so few options to get out from your dream vacation contract. I say keep the discussion loud and in the open, so all newbies can judge for themselves, and hopefully the industry will forced to change as profits dwindle. Major change is needed, just paying large amounts of cash or giving something away does nothing to fix the real problem. Some sort of mandatory statement/clause under the EXIT title in plain language, is in order, attached to the title/contract. Now would someone buy anything with a Exit statement that might read...sorry you are stuck in this paying for ever, we have no exit plan for you?
     
  13. OldGuy

    OldGuy Guest

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    Huh? I remember the "Exit" portion of our first presentations 30 years ago. They went pretty much like:

    "Why would anyone ever want to sell? . . . . But, if that ever happens, these are going up in price every day . . . If you don't get one today, they'll be higher tomorrow."

    In our first ones you can add, "Besides, you can rent these for so much more than you're paying, and make a lot of money."

    But, then, Al Gore hadn't opened his Internet yet, and on Thursday of that first week of presentations, probably 8, 9 or 10 of them, I succumbed. Yeah, no way to do any due diligence, so I had to rely on the only source I had.

    Even with the best of due diligence, and the best of intentions, and the best of personal responsibility, things change, people change, resorts change, and the resort wakes up one day with their belly up.

    Even nowadays, with the Internet right there in their pockets, where they could see that people are trying to give away what they are getting pitched, and complaints about companies numbering into the thousands, even at the worst of the worst, people are still buying. A personable BSer will beat due diligence enough of the time . . . . . nuff said, don't wanna go there.

    For those who have not experienced this, good for you, just disregard this discussion.
     
    Last edited: Apr 29, 2019
  14. JohnPaul

    JohnPaul TUG Review Crew: Expert TUG Member

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    Pure point systems like Vacation Internationale (now rebranding as VI Resorts) and Worldmark essentially do this. MF are based on points owned and are computed to cover the whole system.

    Low season uses less points so effectively MF are lower when you book low season.

    For example, VI MF is currently $7.85 per point. A week at Lake Tahoe in lowest season (of4) in a 2 bedroom is 76 points or $596.60 MF. A week in high season is 129.5 points or $1016.57 MF.

    FWIW. This concept never seems to garner much interest on this site.
     
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  15. OldGuy

    OldGuy Guest

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    Mostly mainstream owners at mainstream plans/resorts here.
     
  16. rapmarks

    rapmarks TUG Review Crew: Elite TUG Member

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    Bluegreen also uses less points for off season, I thought that was standard for vacation club ownership
     
  17. OldGuy

    OldGuy Guest

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    For many, not only is it not what they were told it would be, but they find out it's just not right for them.

    At the point that you sign, the seller never has to win your business again, because you’re obligated to keep paying – almost no matter what.

    https://www.tripadvisor.com/ShowTop...en_ownership-Timeshares_Vacation_Rentals.html


    I get so frustrated at the people who try to put a spin on owners who say, 'well you should have known what you were getting in to?" We get it. At the time, we wanted what they were selling. It has never ONE time, felt ANYTHING like what they were selling, EVER.

    And I have never heard of anything that you couldn't be done with at some time. You can sell a car. You can sell a house. You can wean your kids off of your salary at a certain age. You can give away a pet. Lifestyles change. Preferences change. Priorities change. I am THRILLED that some people are completely smitten with the timeshare lifestyle. It should not be that big of a deal that we aren't as impressed for us.

    But the fact that it appears to be the most locked in, binding, insanely ridiculous life-long contract eludes me. I watch my husband have a meltdown every year when fees roll around and he realizes that he works 90 hours plus a week and none of his family had time to use the points.

    But how in God's name am I locked into this madness for life? I honestly cannot believe that no one has gone all postal on one of these places. It is such a trapped feeling. If I am being completely honest with you, when I think "timeshare" I think "slit my wrists."

    http://thetimesharecrusader.blogspot.com/2014/04/a-frustrated-bluegreen-owner-has-her.html (Many frustrated Bluegreen owners)

    Not being familiar with Bluegreen, if it's a "vacation club", what is it that forces people to keep paying?

    https://www.apnews.com/2ed0f75386be48989c182b9f4e9f72bc
     
    Last edited: Apr 29, 2019
  18. easyrider

    easyrider TUG Review Crew: Expert TUG Member

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    I will never buy a deeded one location timeshare ever again. I would consider another resale Vacation Internationale with a RTU but will likely buy some more Worldmark. Eventually I will have nothing except Worldmark as far as timeshares go.

    Something many do not consider, especially here at Tug, is that timeshares are considered a fun luxury item. The people that develop these do so for profit and there are many expenses and regulations regarding timeshares. The people that buy these usually understand that timeshares are luxury items and want them because they are desirable. The problem is created because timeshare companies are selling their product to people that can't afford a timeshare which debases the product.

    The biggest reason timeshares do not offer an exit program is because they are either mortgaged backed securities or asset backed securities. Many timeshares are small deeded properties that sell deeded ownership that create a mortgaged backed security. Many larger timeshare companies sell memberships in their group with no deed and create asset backed securities. Many timeshares are a mix of both.

    The point is that the debt created from these timeshare sales are used as financial instruments for many purposes and these financial instruments and derivatives are highly regulated. For the most part, timeshare companies can't voluntarily let people exit because the debt that was created is being used to create debt.

    https://www.insidemortgagefinance.c...delinquencies-and-attractive-yields?v=preview

    Bill
     
    Last edited: Apr 29, 2019
  19. JohnPaul

    JohnPaul TUG Review Crew: Expert TUG Member

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    The difference is in how MF generate the points. In many systems, a two bedroom unit has the same MF no matter what time of year you own. However, the number of points you get for your week will vary based on the season. This causes problems because a low desirability week costs the same MF as a high desirability week even though the points one gets from owning a low desirability week are less.

    A system like VI or WM (I'm not familiar enough with Bluegreen to say) spreads the total costs across the total points.
     
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  20. rapmarks

    rapmarks TUG Review Crew: Elite TUG Member

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    True in a weeks system, I don’t think true with any system based on points. You pay maintenance fee based on points you own, you might get two off season weeks or one high season week with the points. If you stay weekdays, you get more stays.
     
  21. JohnPaul

    JohnPaul TUG Review Crew: Expert TUG Member

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    It all depends on your definition of a points system. I own in HGVC and Vistana. They are weeks systems but I get points I can use throughout their system and get more time when used in low season.

    However, I would call those weeks systems with points vs true points systems.
     
  22. PigsDad

    PigsDad TUG Member

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    Not completely true for all point systems. For example, HGVC is exactly as JohnPaul described: members purchase a week at a location in a certain size unit, and the points associated with that week is based on the room size, type, and season of that week. So a 2BR in low season could be worth 3500 points, but in high season that same 2BR at that resort would be worth 7000 points. However, the maintenance fees are based on the size of the unit, so both of those ownerships would have the same MF. In this example, the owner of the 7000 point week could reserve two weeks in low season @3500/week instead of using their 7000 point week. Of course, being a point system, there is no restriction that they need to stay exactly a week, etc.

    HGVC is sort of a mixed system in that you buy a week, and then it is worth a certain number of points -- you don't buy points directly.

    Kurt
     
  23. OldGuy

    OldGuy Guest

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    Legacy resorts are addressing these challenges in a variety of ways.

    Quite a few are reviewing their timeshare organizational documents to make them more relevant to the market. They are also cleaning up the title to their inventory and encouraging owners who wish to leave to tender their weeks to the resorts in exchange for a termination fee designed to offset operational expense.

    Others realize that their prospects are not favorable in their current state and should consider other options. Some have successfully downsized by shedding excess property and concentrating on a limited footprint that allows them to meet their owners’ expectations on a cost effective basis. Others have merged with other resorts in the area and swelled their ownership ranks, but controlled costs by selling unwanted resort property.

    A growing number have realized that their sustainability is not in the cards and that they need to shut their doors and sell the resorts. The good news from that decision is that their properties are frequently repurposed and put to good use – for senior or employee housing or new vacation choices. In some cases, after paying expenses, the net proceeds are distributed to owners. For the rest of the industry, it has the beneficial effect of removing unwanted timeshare weeks from circulation.

    All of this suggests that the industry should not ignore the challenges facing legacy resorts, but embrace it and assist the resorts make the right choices for their owners. The marketplace is telling us that change is coming, and we need to manage it without damaging the reputation of timeshare.


    more . . .

    http://www.gcglaw.com/resources/resort/legacy-resorts-future.html
     
  24. bogey21

    bogey21 TUG Member

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    Very true statement. This is why Owners who are nimble survive to live and play another day. Owners who don't quickly react to change are the biggest losers...

    George
     
  25. OldGuy

    OldGuy Guest

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    I fixed it.

    :D
     

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