Why I Buy Timeshares (instead of a second home)

[bizaro86]

You would need a lot more than 5-10 weeks to cash flow 25k-50k per year, unless they were super premium (expensive even resale) type weeks.

 

[vacationhopeful]

Your plan might need to be ... 5-10 weeks per year you and your family will use EVERY year during the PRIME/Gold seasons. And SILVER season units can be mostly had thru RCI or renting under the cost of MFs.

When you chose OTHER vacation options over USING your PRIME weeks, rent them (must be able to at least cover their MFs cost) and use other cash or on going searches for vacation options.

MFs go up each and every year; retired people with disposal keeping getting to be fewer each year, IMHO.

I used to get LOTs of Canadian renters .. til the exchange rate went into the toilet for them. Then they started travelling to Mexico ... and they are still going there instead of South Florida. And I mean, I don't get ANY Canadians now.

 

[jules54]

In 2016 both my husband and myself retired. We both had physically demanding occupations. I was at my work for 43 years and he at his for 38. We are in good health and sons are grown and youngest grandchild is 10. We want to rest for a few years now I want to sleep late, but can't seem too. We discuss a lot about what to do to downsize and spend different seasons in the best weather. We have been in our present home for 4 years. Sold a lake home that I built and lived in for 23 yrs to buy this home so our oldest granddaughter could live with us and finish her high school years. The new home provided the privacy for everyone that the lake house did not have. Grandbaby graduated and went on to college and now has graduated and is working. She no longer lives with us mainly because she has 2 dogs. House is way too large now with 4 bathrooms to clean. Now you have the backstory.

I have one hobby Travel/Timeshare. I retired 4 months before hubby. I used timeshare 101 days in 2016. Most of that traveling was done with Wyndham points. Hubby hobbies his motorcycle and football. We did something this last winter we have been talking about for years. We spent 2 months in Mexico Playa Del Carmen area. Jan.14-March 11. We stayed in 3 different resorts. We had no idea how it would go and if we would be bored by the time our trip ended. We had a housesitter for our home in Lincoln, NE. and we have no pets.

We had a great time and plan on doing it for 2 1/2-3 mos. next winter. Didn't get homesick and was only ready to go home about the last 3 days. Mainly because we knew it was time to start working on taxes and getting the yard ready for spring etc. All the resorts were right on the Caribbean with daily maid service and kitchens. We stayed 5 weeks at our favorite place where I own several contracts and had booked 18 condos for the month of Feb. renting 13 of the weeks and ourselves staying in 5 of the condos. Mexico is not an easy area to rent out. This specific area and resort is very popular with other owners at the resort and their families. It is less expensive for them to rent from me then to buy another contract. I also had 4 new clients this year that found me on different rental sites. The only reason this worked for me is I was onsite to take care of my renters and make sure they got the best rooms with the best views.

I highly agree staying in timeshare is the way to go instead of buying a second home or maybe even any home. We know it will take a lot of purging, but you have to start somewhere. Our biggest problem seems to be storage for toys. We now have a 4 car garage plus a workshop and shed.

I so enjoyed reading all the previous posts and in general love TUG and all the members who take their time to post and share information. Thank you all.

 

[rickandcindy23]

We bought land 38 years ago in Como, CO, which is in Soutpark. The land is beautiful, fully treed, and we had every intention in building a cabin for our family to to enjoy time in the mountains. It's on Vulture Ln and is on a cul de sac. I loved the address on Vulture Ln.

Then came timeshares. I realized my dream is not a cabin in the mountains.

Sometimes I get an itch to go up to our land and see it. I enjoy the drive, but have no desire to stay there (ants and flies everywhere).

I believe the neighbors would love to take some of our land, if not all of it, through adverse possession. They built a birdhouse thing on our property. I know they cut down our trees and burn the wood, but Rick says as long as they don't cut down any that are alive and growing well, he is fine with it. But last year they built a structure, a birdhouse looking thing. I wanted to tear the structure down, and maybe we will take an axe and go for it this summer, but Rick thinks that would be awful of us. It's on our land, and they have a cabin right next to our property line, so I believe it's what they are doing. I would rather sell the land and not have it encumbered by an adverse possession claim.

 

[Bailey#1]

We bought land 38 years ago in Como, CO, which is in Soutpark. The land is beautiful, fully treed, and we had every intention in building a cabin for our family to to enjoy time in the mountains. It's on Vulture Ln and is on a cul de sac. I loved the address on Vulture Ln.

Then came timeshares. I realized my dream is not a cabin in the mountains.

Sometimes I get an itch to go up to our land and see it. I enjoy the drive, but have no desire to stay there (ants and flies everywhere).

I believe the neighbors would love to take some of our land, if not all of it, through adverse possession. They built a birdhouse thing on our property. I know they cut down our trees and burn the wood, but Rick says as long as they don't cut down any that are alive and growing well, he is fine with it. But last year they built a structure, a birdhouse looking thing. I wanted to tear the structure down, and maybe we will take an axe and go for it this summer, but Rick thinks that would be awful of us. It's on our land, and they have a cabin right next to our property line, so I believe it's what they are doing. I would rather sell the land and not have it encumbered by an adverse possession claim.

I would sell the land, no sense paying property taxes on something only your neighbors can enjoy! Are your neighbors last name Vulture, that may explain everything?

 

[dundey]

As a past owner of 2nd homes, I could not agree more. We live in South Carolina and we were able to assemble 4 weeks (the month of August) in the Georgia mountains. Our 1500 sq ft freestanding mountain home is under 2 hours from our home in Greenville, but it's a different world, lower humidity, about 10* cooler, one of the best mountain golf courses, tennis courts and a load of fishing places. Surprisingly, there is an abundance of excellent restaurants. We arrive, pick up the key and drop it off at the end of the month. My only regret is we didn't do this years ago. I'm over 80 and hope we can get another 10 years of use from an investment that has returned years of happiness.

Our daughter went to college in Greenville, SC. We love that town!

 

[budnj]

This is a picture of the leaking garbage disposal I just removed from under my kitchen sink. and Im on my way to Lowes to buy a replcement. I have no doubt that I will spend the best part of my afternoon installing the new one. Id be quicker except my 70 year old joints dont bend as well as they used to, and once I get most of me in the cabinet, under the sink, I cant easily get back out, and back on my feet)

Now this is my home, and not my second home, and I rebel paying skilled plumbers rates for doing want I know I can do myself, so I do it without too much complaining, but I cant help but remember my old next door neighbor (from New York) who spent so much of his vacation time doing maintenance on his Florida home; he always seemed to be busy with one project or another, instead of just enjoying another day in paradise

I have some personal experience with this. I also own a second home (a boat) The last time I was there my wife and I spent the first few days, cleaning 6 months of dust accumulation, not to mention the several days I spent sanding and varnishing the teak rails. I have a list of things to tackle on my next trip

Timeshares are different. The place is clean and everything works (most of the time) when I arrive. I can unpack my bags pour a glass of wine, and immediately start enjoying my time away from home.

Boy, does this sound familiar! I just spent most of my Sunday under my kitchen sink, pulling out the old leaky faucet. Finally figured that what looked like a stem with screwdriver slot was in effect a long skinny bolt that could be removed with deep set socket. And, when did that area under the sink get so much smaller?!?!
Anyway, I'm ready to alternate between a ts and a cruiseship!

 

[ccwu]

We are with you for timeshares. We started buying timeshares 20+ years ago. we liquidated some that we do not use by giving back to the resort. The main reason that we have timeshares is that we do not want to clean and change bed sheets during vacationing. We want kitchen and living room, Jacuzzi and swimming pools. We kept purchasing timeshare and treated them like investment for retirement traveling. Now we just take early retirement and we could stay virtually 26 weeks or more in our various timeshares. We have 26 weeks (2 quarter shares) in a ski resorts that operated year round. If we do not use it, the resort rented out for us and share the rent with us (we get 45% of the rent). The rental income the resort shared with us can cover pretty much of our MF and taxes. we skied 40 days in the 2016-2017 too.) Other than the ski resorts, we own mostly points in timeshare and we can travel almost around the world. Most of them will worth very little if we want to liquidate them since majority are purchased directly from developers (before we even know TUG). We would be happy if we can get 1/5 of our points price back. But we are using them and we enjoyed them for many years. We feel it is better than a 2nd home since there is always a top quality resorts and hotels waiting for us with clean sheets, room and other facilities. We rent half of our timeshares in platinum holiday week out and it could cover about 70% of our MF. We travel about 10 weeks (excluding our ski resort) a year. Next year, we plan to visit some of the Vale ski resorts (Already got the EPIC passes). Our traveling goal is that we visit at least one of two places that we never been before. We do not have pet or kid at home so no worry about leave the house alone (we have security alarm monitored by dispatchers)

 

[Beachspace]

All of you made great points about why this over that. As a numbers person in my 30s who worked for Marriott and knows that TS can be a bad investment (retail/developer prices), I was always against it...until I had a child and found this site. We leave Miami on Memorial day every year and usually go to GrandeVista or Harbour lake on a Friends&Family rate from my co-workers that are still at Marriott. Its usually $150-$175/night for a 2 bedroom at either resort. After this last time, we had a lot of people over, we grilled out, we swam, and had a great time. We did the tour and was offered 2000 points for $27k which I laughed at and we left. Then we came home and bid on a Harbour Lake 2 bedroom for a few hundred dollars in Gold Season. Waiting on ROFR now. We love the resort and I do see the non-financial 'value' in owning one so we can go back. And like you all said, it forces us to vacation more (We normally go up Thurs/Fri and come home Monday, now we get a whole week..not to mention trying to get a F&F rate for 7 straight days in the same villa is difficult).

My only critique to most of those that are saying "We don't like a 2nd home because we want to try new areas"..Ever heard of HomeExchange? You swap houses for whatever you want. If you had a 2nd home in a desirable, yet cheap area like Orlando/Kissimmee, you could get 30-40 swaps a year. Granted, we haven't done it in a long time but Pre-AirBnB, we got an offer a week for our 3 bed townhome 10 mins from Disney that cost maybe $100k. We went to San Francisco in a $1ML home, we went to a 3 bedroom ocean front condo in Myrtle Beach, and we almost went to Nice, France before plans changed at the last minute. Years later we moved to Miami and we always left for the boat show in February. We exchanged our loft that was walking distance to the Marina for an Oceanfront 4 bedroom house dead on the beach in St. Augustine. (closer than some resorts).

It seems like a lot of you love exchanging so I would simply say that if you're biggest hold out is being 'stuck' somewhere every year, considering exchanging. We had lots of pleasant exchanges and would much rather stay in a home than a hotel room, park in a garage, etc. For San Fran, we even exchanged cars so we didn't have to rent a car. We used my friend's SouthWest Buddy passes so the whole trip (not including food) was $250 for airfare, car, and lodging.
And if it was a 2nd home, you wouldn't have a lot of 'personal' items (i.e heirlooms, jewelry, etc.) that you'd be worried about someone stealing and can hire a cleaning company or management company for $200/mo to handle everything for you, as well as buy a maintenance contract for the appliances.

For me, I'd do that route and buy 1 TS in a favorite location since you can get them for $1-$500 now a days.

 

[mentalbreak]

I believe the neighbors would love to take some of our land, if not all of it, through adverse possession. They built a birdhouse thing on our property. I know they cut down our trees and burn the wood, but Rick says as long as they don't cut down any that are alive and growing well, he is fine with it. But last year they built a structure, a birdhouse looking thing. I wanted to tear the structure down, and maybe we will take an axe and go for it this summer, but Rick thinks that would be awful of us. It's on our land, and they have a cabin right next to our property line, so I believe it's what they are doing. I would rather sell the land and not have it encumbered by an adverse possession claim.

Please don't let this happen. My parents lost a significant amount of prime lakeshore land this way. The neighboring land was undeveloped and owned by a church (the actual church was 15 miles away). Still makes me so frustrated!

 

[MOXJO7282]

You would need a lot more than 5-10 weeks to cash flow 25k-50k per year, unless they were super premium (expensive even resale) type weeks.

I can put it into perspective because I rent 20+ Marriotts every year. A Maui 2BDRM OF can bring $2k+ profit per unit. That unit would cost $22k-$25k so you're need to buy 12 units to make approx $25k.

Here's another example, Newport Coast plat weeks usually bring in a $1200 profit and cost about $9k each so you'd need to buy 20 of those to make about $25k in profit. So it takes an investment of about $225K just to make about $25k in profit.

I don't know of any other TSs that can rent for more and cost less but i only know prime Marriotts so maybe there is but i don't think so.

 

[bizaro86]

I can put it into perspective because I rent 20+ Marriotts every year. A Maui 2BDRM OF can bring $2k+ profit per unit. That unit would cost $22k-$25k so you're need to buy 12 units to make approx $25k.

Here's another example, Newport Coast plat weeks usually bring in a $1200 profit and cost about $9k each so you'd need to buy 20 of those to make about $25k in profit. So it takes an investment of about $225K just to make about $25k in profit.

I don't know of any other TSs that can rent for more and cost less but i only know prime Marriotts so maybe there is but i don't think so.

I think the only time you could do $25k with 5-10 units would be event weeks. IE a 3 bedroom oceanfront fixed week 52 at MOC would be very profitable, but also extraordinarily expensive. There are probably others like that (fixed week 7/52 at high end ski resorts, etc) but again, very expensive even resale. I suspect your $225k capital requirement would hold.

 

[MOXJO7282]

3 bedroom oceanfront fixed week 52 at MOC. You're talking $75k+. From what i can determine the rental rate is around $6K for a 3bd week 52 so for me the cost vs. rental profit ratio is not great so you're better off buying multiple 2bd OF.

 

[ronparise]

When I owned rental houses I found that I had a better return on investment with low priced slum property rather than high end condos or houses

I see the same thing with timeshares
12 Marriotts, $225000 invested $25000 profit= 11% ROI.

Compare that to 30 Worldmark rentals at $1500 rent, $700 mf, = $800 profit each = $24000. To do 30 Worldmark week you need to control 300000 credits. Worldmark allows owners to rent in credits equal to twice their annual allotment so own 100000 to control 300000. 100000 credits will cost about $30000. That's an 80% ROI.
more work but a whole lot less invested

 

[Beachspace]

When I owned rental houses I found that I had a better return on investment with low priced slum property rather than high end condos or houses

I see the same thing with timeshares
12 Marriotts, $225000 invested $25000 profit= 11% ROI.

Compare that to 30 Worldmark rentals at $1500 rent, $700 mf, = $800 profit each = $24000. To do 30 Worldmark week you need to control 300000 credits. Worldmark allows owners to rent in credits equal to twice their annual allotment so own 100000 to control 300000. 100000 credits will cost about $30000. That's an 80% ROI.
more work but a whole lot less invested

Wow I had no idea you can make $ from timeshares like that.
It sounds like you buy them for about $3,000 each then? That's not a bad initial investment at all. Are there fees to book reservations for people which eat into the profits?

I was going to focus on Marriott and HGVC but maybe I should consider WorldMark then if i can turn a profit. I'm in Real Estate and a numbers guy so this is right up my alley. Better than flipping cars/motorcycles like I used to do for $1000 here and there.

 

[MOXJO7282]

When I owned rental houses I found that I had a better return on investment with low priced slum property rather than high end condos or houses

I see the same thing with timeshares
12 Marriotts, $225000 invested $25000 profit= 11% ROI.

Compare that to 30 Worldmark rentals at $1500 rent, $700 mf, = $800 profit each = $24000. To do 30 Worldmark week you need to control 300000 credits. Worldmark allows owners to rent in credits equal to twice their annual allotment so own 100000 to control 300000. 100000 credits will cost about $30000. That's an 80% ROI.
more work but a whole lot less invested

I personally don't agree with this. I certainly respect what you do but Ron you're an expert so I question how easy someone could duplicate what you do. Also there is no doubt what you're suggesting is a lot more work than managing 12 MOC weeks.

Managing the rental of 12 Maui units really is very simple. I would say it takes about 5 hours a week from January to March and then they're rented and you're done for the year. With Redweeks ads you just update them year after year and at least with high end Marriotts it's works without fail every single time.

Also with the Marriotts you have about $200k in value where I think your exit strategy is much different. Of course you have to have capital to do what I suggest. So one model you require low investment and much more management and the other you need capital but much less management. I'm not afraid of the hard work but it's exit ability that would make me select what I do over what Ron does.

 

[ronparise]

I personally don't agree with this. I certainly respect what you do but Ron you're an expert so I question how easy someone could duplicate what you do. Also there is no doubt what you're suggesting is a lot more work than managing 12 MOC weeks.

Managing the rental of 12 Maui units really is very simple. I would say it takes about 5 hours a week from January to March and then they're rented and you're done for the year. With Redweeks ads you just update them year after year and at least with high end Marriotts it's works without fail every single time.

Also with the Marriotts you have about $200k in value where I think your exit strategy is much different. Of course you have to have capital to do what I suggest. So one model you require low investment and much more management and the other you need capital but much less management. I'm not afraid of the hard work but it's exit ability that would make me select what I do over what Ron does.

The only reason I can't get behind Marriott is the initial investment. I've never had $225000 to get started and $25000 a year wasn't enough for me. So the high priced stuff wouldn't work. Even Worldmark cost too much at the beginning. I needed to make something out of nothing

I started with Wyndham that cost me nothing to buy and I averaged about $200 per rental and I financed my growth out of cash flow.

Worldmark is an easy exit, There are several established brokers or do it yourself on eBay.

about the work; what I did with Worldmark was to make 30 reservations; send out an email to my regular customers, send out the invoices and count the money.

 

[ronparise]

Wow I had no idea you can make $ from timeshares like that.
It sounds like you buy them for about $3,000 each then? That's not a bad initial investment at all. Are there fees to book reservations for people which eat into the profits?

I was going to focus on Marriott and HGVC but maybe I should consider WorldMark then if i can turn a profit. I'm in Real Estate and a numbers guy so this is right up my alley. Better than flipping cars/motorcycles like I used to do for $1000 here and there.

Worldmark is a pure points system. You buy points not weeks. But yes, 10000 credits if enough for a weeks vacation and will cost about $3000.

Maintenance fees are about $700

 

[DonnaD]

I am curious, are you renting out the extra homes for income? If you buy real estate in your Roth IRA the income is tax free and can be passed to heirs for tax free income to them. It is best of both worlds. Own appreciating assets and you can take 7--8 months of income tax free without affecting principal which is also appreciating. You need to reserve about 4 months income for taxes, insurance, repairs etc.
My timeshare provides a 9-12 weeks of vacation each winter.

One drawback in plan is loss of my husband but lots of family and friends are delighted to join me in Mexico for winter break from Ohio weather.

DonnaD

Wimps!

I have lots of pet "homes" ...

Auntie's house built in 1702 on 12 acres. And across the stream, soybean field and then the road, is my old 1951 house with 3.5 acres of land ... which I think I will subdivide and keep 1 lot but sell the rest.

The townhouse I am roosting in these days ... which I have owned 35 years .. I am the 1st owner.

And the traditional vacation home near a ski area.

And my oceanview timeshares in South Florida during the winter season.

 

[gottashiner]

Timeshares are different. The place is clean and everything works (most of the time) when I arrive. I can unpack my bags pour a glass of wine, and immediately start enjoying my time away from home.[/QUOTE]


Exactly! Even with the hassles with Wyndham, I love the timeshare units and no maintenance required by me!

 

[klpca]

Friends just returned from a short stay at their condo in Mexico. They spent two days fixing a pipe that burst in a wall at 3am on the first night. They also bought at the height of the market and are still underwater. Timeshare vs condo? I know which one I'd pick.

 

[rapmarks]

We leave ina week for our Florida home. While I am looking forward to it, I am not looking forward to removing all the storm shutters. Power washing lanai and driveway which is surely a mess, and dealing with mess from Irma. Add to that the likelihood that at least one appliance won't work, hoping the cars will start, etc etc. who knows if we will return to our northern home next summer, we are getting old. But I will say there is absolutely no way we could handle eight to twelve weeks moving from timeshare to timeshare any longer. Been there, done that, no more.

 

[CalGalTraveler]

+1 Great thread.

We own a second home in a resort community but enjoy timeshares for the ease in exchanging locations and the ability to enjoy our vacation.

Our vacation home serves a different purpose than a timeshare. Our plan is to eventually trade this as a 1031 tax free exchange to a sunnier locale to eventually become our retirement home. We currently VRBO our vacation home because our kids are grown and we only use it a few ski days per year. Every time we visit there is maintenance work...grrrr. The rentals cover the bills and provide a small profit. At the new location we will rent it out (possibly to one of our adult kids) for a few years until we are ready to sell our current home and downsize to this property. This has tax advantages because I believe you can take the $500,000 homeowners exemption for the gain on each property when you sell. Our vacation property has doubled in value and we only started renting it out recently so the depreciation has been minimal. (I am not a CPA or tax attorney.)

We will continue to own timeshares as our "getaway." Compared to maintenance, taxes, fees, and hassle of a vacation home this is lower cost and much less work. Plus our adult children are bored with visiting our vacation home, but will gladly join us for some quality family time without distractions at a timeshare in Hawaii.

 

[suzannesimon]

+1 Great thread.

We own a second home in a resort community but enjoy timeshares for the ease in exchanging locations and the ability to enjoy our vacation.

Our vacation home serves a different purpose than a timeshare. Our plan is to eventually trade this as a 1031b tax free exchange to a sunnier locale to eventually become our retirement home. We currently VRBO our vacation home because our kids are grown and we only like to use it for a few ski days and a long summer weekend. Every time we visit there is maintenance work...grrrr. At the new location we will rent it out (possibly to one of our adult kids) for a few years until we are ready to sell our current home and downsize to this property. This has tax advantages because I believe you can take the $500,000 homeowners exemption for the gain on each property when you sell. Our vacation property has doubled in value and we only started renting it out recently so the depreciation has been minimal. (I am not a CPA or tax attorney but am researching this.)

We will continue to own timeshares as our "getaway." Compared to maintenance, taxes, fees, and hassle of a vacation home this is lower cost and much less work.

Good plan. The tax-free sale up to $500k gain is only for primary residences. I believe to the IRS that means you lived in it for 2 of the last 5 years. I've seen people move from house to house for 2 years to get it on multiple properties.

 

[klpca]

Read carefully and get professional advice before making any permanent decisions on a 1031 exchange. Use it to the full extent of the law, but don't work yourself into a corner. https://www.expert1031.com/articles...031-exchange-property-your-personal-residence

Also, tread lightly on the self directed IRA's holding real estate. We hold real estate in one of ours, but there are specific rules about what is allowed and what is not allowed. The key idea to take away is that you cannot use the underlying asset for any personal use. The penalty assessed for failure to follow the guidelines is substantial. Again, consult with your tax professional before structuring your deal, not after. https://www.journalofaccountancy.com/issues/2000/apr/thedosanddontsofirainvesting.html