when should you buy from the developer

[Crohnos01]

Reading the 101 lessons for newbies, there is a reference that there are a few times it might make sense to buy from the developer. Cited are trust issues of buying resale (in my opinion, not a consideration if you practice due diligence), and the other reason cited was to obtain "developer perks" of one type or another. Can anyone give me an example.of said perks that can't be obtained when buying resale?

 

[DeniseM]

[Edited so the math makes more sense]

At this point in time, developer purchases can cost [2 - 20 times as much] as a resale purchase, so the "perks" are seldom worth the thousands and thousands of dollars difference.

But here is an example:

With Starwood, if you buy enough timeshares from the developer (around $100K) you reach Starwood 5 Star Elite and get some special perks, including Platinum Starwood Preferred Guest status.

However, instead of buying all your timeshares from the developer, you are also allowed to buy a resale week, for a fraction of the cost, and then buy a developer week to "grandfather in" the resale, and you could perhaps reach Starwood Elite for $50-60K, instead of $100K.

We have quite a few Starwood Elite Owners on TUG, and overall, they seem to be happy with their status, but of course, you have to the time and money to make it worthwhile.

 

[jerseygirl]

Although I agree with Denise that the perks are generally not worth the cost, here's an example of dollar cost averaging:

It's very difficult for non-Starwood owners to trade into Starwood's premier properties due to a Starwood-to-Starwood preference at Interval international (the same can be said for Marriott's premier properties). But, it's easier to trade within Starwood if you're part of SVN, their internal trading network.

It can make sense to purchase a valuable (using Starwood's internal currency for the definition of value) resale week for pennies on the dollar, then integrate that purchase into Starwood's network by purchasing something from Starwood. You pay almost nothing for the first one, then overpay for the second one - and end up with a decent average price.

However, this only makes sense if you truly value the opportunity to convert your weeks to hotel points or are chasing an elite level of ownership for added perks.

Do I personally think it's worth it? No. But, I did purchase something from the developer when a specific unit type and season I wanted was not available on the resale market (pre economic meltdown). The ability to "mainstream" a bad eBay purchase took some of the sting out of paying full retail.

The situation with Starwood is more complicated due to the fact that you can get some of the perks (but never all) by buying resale at certain resorts. So, this response is an over simplification .... But I'm attempting to describe one reason people buy from the developer (actually two reasons, but the availability issue pretty much disappeared when the economy tanked!).

 

[Rent_Share]

I respect your timeshare knowledge and volunteer time, but I am glad you are an English Teacher not a Math Teacher :whoopie:

At this point in time, developer purchases usually cost 80-100% more than resale purchases, so the "perks" are seldom worth the thousands and thousands of dollars difference.

Resale Price "All Inn" $1,000 - (To make the arithmetic easy)
Developer Price $21,000

Premium of a Developer Week/Resale Price = Developer Premium Percentage (21,000-1,000)/1000 = 20 Times or 2,000%

Using your percentages on a 1,000 Resale Price the Developer Price would be between $ 1,800 and and $ 2,000

The only reason I can see paying developer pricing is if the season an view cannot be obatained except at developer pricing.

 

[DeniseM]

Definitely NOT a math teacher

See if my edit makes more sense.

 

[ronparise]

In the Wyndham system VIP gives you up to a 50% discount when you book within 60 days of check in and free upgrades if available. So its possible if you are the highest level of VIP to get a 3 or 4 bedroom unit for 50% of the studio or 1 bedroom price. Also as VIP you get more free guest certificates and unlimited transactions and unlimited housekeeping

For most people just do the math and you will see its not worth the money to buy at developer prices to get these benefits. But there are a few circumstances where I think its worth a developer purchase to get the benefits. Specifically if you wanted to make a living renting vacation accommodations. In the Wyndham system thats possible, but the difference between breaking even and profit are often those discounts.

 

[Rent_Share]

Definitely NOT a math teacher

See if my edit makes more sense.

As the Resale Aproaches $ 1.00 or Seller Paid Costs the Ratio/Percentage moves towards Infinity (and beyond, to hijack another thread)

 

[timeos2]

With the exception of a "must have" resort available only at retail - and virtually none exist now - there is never a reason to grossly overpay at retail (developer) price.

 

[Crohnos01]

To infinity and beyond?... Really? Ok...thanks Buzz....lol

So for a Wyndham property (since thats what i currently own) I can't obtain VIP status without buying developer points?

 

[learnalot]

To infinity and beyond?... Really? Ok...thanks Buzz....lol

So for a Wyndham property (since thats what i currently own) I can't obtain VIP status without buying developer points?

Correct. BUT you need to understand that VIP benefits are not guaranteed and can be (and have been) changed at the whim of Wyndham. It is a pretty big financial gamble to pay the upfront costs and hope that they don't change the rules before you might possibly break even in 20+ years.

 

[Beefnot]

If you have disposable income and can afford to drop cash for extra benefits and status, then it might be "worth it" to you. But unless you are some superdupermega traveler that racks up oodles of miles and points, you would not be making a financial decision, but rather a lifestyle or vanity decision.

 

[Crohnos01]

Well, a quick glance at my bank account tells me I am not blessed with more money than I know what to do with, and while some may consider me a "mega traveller", mostly my travels are to spectacular places like Podunk, Kansas on business related travels... On the other hand, it's the business related travel that gets me the air mile points that makes my TS in Hawaii such a affordable vacation spot.

So, it would seem that I should just go on with the fixed week contract I have currently and not worry about the VIP status, perks or other conderations in regards to developer points.

Thanks folks!

 

[chriskre]

I did one direct developer purchase with DVC out of the 8 TS's that I own.

At the time (2004) DVC was selling pretty close to developer prices and it was a big chunk of change for me to pay with cash. Disney was offering an incentive down payment of $1500, so in essence I paid almost what would have been resale prices, buying direct. Disney did not charge closing costs and a resale broker would have so I saved on that also by going direct.

I got Disney "owner financing" and they did not put the payment on my credit report, which at the time was very important to me since I was buying alot of rental property and needed my credit squeaky clean to qualify for the multiple loans I was getting. Disney was true to their word and the payment never showed on my credit report.

If I were to do it today I'd only buy direct from Disney for small contracts that I could break up into different resorts. I should have done that with my bigger purchase but I wasn't that active on TUG back then so didn't have that knowledge just yet. Oh well, live and learn.

 

[Crohnos01]

Which leads me to another related question; I see a lot of people on the board own two, three, five or more timeshares.... How is that cost effective with the MF attached to each timeshare? I know that some properties have lower fees than others, but unless I am missing something, they all seem to have a minimum of $300/yr MF's, which I would think would add up to being a rather large impact on the average budget?

 

[DeniseM]

Which leads me to another related question; I see a lot of people on the board own two, three, five or more timeshares.... How is that cost effective with the MF attached to each timeshare? I know that some properties have lower fees than others, but unless I am missing something, they all seem to have a minimum of $300/yr MF's, which I would think would add up to being a rather large impact on the average budget?

If you vacation several weeks a year, it's cheaper than renting the additional weeks.

 

[Passepartout]

Timeshares are sort of like peanuts. One handful is hardly enough. The first one we bought was in RCI Points and based near the grands. It has given us flexibility to vacation in many places around the world. Then there was that 'winning' bid of $1.25 on eBay into a mini system to add some drive-to destinations, THEN there is that mid-Summer fixed week at Yellowstone. Yes, the MF is a consideration, but so is RCI membership, fees, and travel to the TSs.

We budget $200/mo into our getaway fund that softens the blow when the bills come in for MFs etc.

As to the thread title, I can't see a single instance where buying from the developer is to the (financial) advantage to the buyer. There small, imo, insignificant perks that can be bought alacarte as wanted (golf, views, housekeeping credits, etc) instead of being included in a developer purchase for 10-100X more cost.

Jim

 

[thetaxqueen]

I bought the smallest package available ($5k) thru the developer at Wyndham Glacier Canyon in Wisconsin Dells.

The reason behind this developer purchase was to give me day privledge access to the resort. It is driving distance from my home and I can have up to 10 guests per day for free at the resort. Waterpark passes in the Dells can cost of to $30/day for a good one. This give me unlimited use for FREE any time I want.

This was the ONLY reason I paid developer prices. To date (2 years) I have saved approx $1,200 because of this purchase.

However, this has to be the right situation at the right location and price to make it worth while.

 

[Rent_Share]

To date (2 years) I have saved approx $1,200 because of this purchase.

So if the developer doesn;t rescind the day access you should break even in another 6 Years

 

[chriskre]

Which leads me to another related question; I see a lot of people on the board own two, three, five or more timeshares.... How is that cost effective with the MF attached to each timeshare? I know that some properties have lower fees than others, but unless I am missing something, they all seem to have a minimum of $300/yr MF's, which I would think would add up to being a rather large impact on the average budget?

Before I discovered TS's I was already spending around $5K-$10K a year traveling doing hotels, cruises, tours etc. With that I was only doing 3 or 4 vacations a year and a few long weekends. Now for almost the same price, I do 10-12 vacations and save alot of money with the kitchens.

Luckily I live in FL where there are a ton of nice TS's within driving distance so I also use them as a quasi second home. I also own biennials and triennials in my TS portfolio so I can own in more systems and have access to different inventory in different years so I can mix it up. I do own 4 annuals but will probably not add anymore annuals to my mix again if I can help it.

 

[alexadeparis]

As someone who has bought from the developer, I have to say that it isn't always a bad idea, but 99.9 percent of the time it usually is. For my situation, I was ok with it at the time of purchase and I still am.

For the record, the rest of my timeshares are resale, and some of them predate the "developer" purchase. Looking at it from a 10 year perspective, i will break even and then some based on the perks, in my opinion (which is all that matters).

so my advice would be, don't walk in there blind and purchase willy nilly from the developer. Do your research, and if you can justify legitimate, compelling reasons why you should buy from the developer, then do it and don't look back.

 

[MN2Travel]

We have bought through developers. Most of the time we were just not able to say no. We have learned since then. Our big motivator for the last (and THE last) was that we got rid of 2 timeshares that we did not want and were of no use to us. We had advertised to sell them and had no responses. Neither one of us wanted or knew how to deal with the paperwork of transferring them. One was in Arkansas and one was on Kauai, but was not a very good property. So, we just wanted them to be gone. We bought a 5 star timeshare (use) in Mexico. We use it every year for the one vacation we take. I also wanted a timeshare that after the specified number of year we could just let it go or if our kids wanted it, they could take over. We have in our contract that if we don't use it, we don't pay MF. We are pretty satisfied with everything overall. If I bought another one (which I don't think will happen), then I would buy from someone on a place like TUG. But I would research quite a bit before I did. I can rent places where I like to go in Mexico for what we are paying now in MF and there is no output of money to make. Of course, the resort will tell us that we can't get what we can at the resort, but to be honest, we are not that fancy of people that we need all that.

 

[Barbs44]

Sometimes Okay

As someone who has bought from the developer, I have to say that it isn't always a bad idea, but 99.9 percent of the time it usually is. For my situation, I was ok with it at the time of purchase and I still am.

So my advice would be, don't walk in there blind and purchase willy nilly from the developer. Do your research, and if you can justify legitimate, compelling reasons why you should buy from the developer, then do it and don't look back.

We too bought our first timeshare from the developer and have kicked ourselves for not researching but giving in to extremely high pressure. But then we went back and bought more, also from the developer, and I am so glad we did. Marriott has a new option of the points program that many of the other timeshare companies have had for some time. In Marriott's case, if you buy into the points program(which we did at the very lowest amount available for $1500), you could convert your existing units into points if you choose to. If you buy a resale, the unit may not be included in the points program.

This summer I was able to trade my use year and the little amount of extra points into an Alaska cruise for my granddaughter and I in a very nice oceanview cabin plus port fees, taxes and gratuities. We cruise a lot and this was definitely worth the cost. But my booking for next year is the one that has me excited. For the cost of less than 2 years MFs, we have the very best balcony category on the Celebrity Silhouette for a 13 day cruise around Italy for my sister and I. My MFs for this use comes to the online cost of one fare. Definitely helps to make me feel better about that exorbitant price of the first unit.

Since I don't have any timeshare usage for the next two years, I bought a unit on ebay that is near where two daughters live in Northern California. I know we will definitely all use that one - a problem has been getting everyone transported to my home resort at the same time. This was $1 for a 2bdrm/3ba unit that sleeps 8. No closing costs except for current year's MF. That purchase was so easy and fit into our lifestyle so well that I later bought 40000 RCI points for $601 but no closing cost or MF - only the money to join RCI.

So, for us, both ways of buying did work for different purposes. This coming year my MFs for all will be about $3000 but we will have 2 bdrm units for a week in Newport in January, a week in Texas Hill country in March after a cruise to the Western Caribbean, a week at the beach in July, a week near Yosemite in October and the 13 day cruise around Italy in November.

It is working for us.

 

[PeakRunner]

Depends on perks offered

Now knowing TUG and learning from all advice offered, I conclude buying from the developer is simply too expensive. We have learned our lesson but very late after buying several TSs.

On the other hand, our first purchase in Wyndham was a very good deal. Extra inducements were put on the table -- in addition to the TS itself, for an extra several hundred we obtained both a 4 night and 3 night package in Waikiki Beach, HI, plus free airfare from the east coast. We were able to put together a 3+week vacation in HI, including the first 7 nights in Waikiki Beach, for the cost of one alternate-year TS in SC. Our extra costs were for auto rentals, food, and some entertainment. We visited 4 of the islands in the 3+weeks. For a 40th year anniversary, and a first visit to HI, we were delighted all ways round.

In recent years, with the economic downturn, resale prices have tanked to bottom and beyond (sometimes now people even pay to unload a TS, such as by paying next year's MF for the purchaser). In this climate, my OP is to defray some MF costs by renting. But that takes time and there is a learning curve. So far we are defraying about 30% of MFs, and using the rest of the TSs for ourselves or as gifts to family members.

 

[ronparise]

I bought the smallest package available ($5k) thru the developer at Wyndham Glacier Canyon in Wisconsin Dells.

The reason behind this developer purchase was to give me day privledge access to the resort. It is driving distance from my home and I can have up to 10 guests per day for free at the resort. Waterpark passes in the Dells can cost of to $30/day for a good one. This give me unlimited use for FREE any time I want.

This was the ONLY reason I paid developer prices. To date (2 years) I have saved approx $1,200 because of this purchase.

However, this has to be the right situation at the right location and price to make it worth while.

I live just a few minutes from Fort Myers Beach. But going there in season for a walk on the beach or for dinner at one of the restaurants makes no sense, Because of the traffic it takes forever to get on and off the island. and once there, forever to find a place to park. So we locals either dont go to the beach, of if we do we have to make a day of it. Arrive early and come home late...and changing clothes in the car isnt something I do anymore.....

But there is a timeshare resort there with a big parking lot, a pool on the beach and bathrooms, that offers day use for us locals...an offseason week is just 14k, a whole lot cheaper than the difference between a condo on island vs one off

 

[GHT]

You can't make a living renting out your timeshares

But there are a few circumstances where I think its worth a developer purchase to get the benefits. Specifically if you wanted to make a living renting vacation accommodations. In the Wyndham system thats possible, but the difference between breaking even and profit are often those discounts.

I disagree. You can not make a living renting vacation ownerships at Wyndham. To make the math easy, let's say you have a $1000 maintenance fee at a Wyndham resort, and you just want to recover your maintenance fee by renting it out for a $1000. Wyndham will rent it to someone for the $1000, keep $400 for themselves as a administration fee, and send you a check for only $600. And then to make matters worse, they will send you a 1099 MISC form at tax time stating that you received the full $1000, so that they can dodge the IRS for their $400 they got off the whole transaction.