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Why I Buy Timeshares (instead of a second home)

CalGalTraveler

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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.

Thanks, we plan to convert the rental back to our personal retirement residence at the new location and will live in it for at least 2 years. Our CPA will guide us on the plan so we don't mess this up.
 
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JohnPaul

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We leave in a week for our Florida home. ..... 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.

I can see your point about doing the moving between timeshares as you get older. I think our ownership in various point systems (Worldmark, Vacation Internationale, Shell) will help when we get to that point because we will just book longer stays at the same resort.

We are already getting into a pattern of staying two weeks at a time in both spring and fall at our VI resort in Sun River, OR. There are 3 two bedroom cabins right on the Sun River (granted it's a small river) that we have been successful in booking.

When we bought our first minimal VI every other year package in 1987 we went to Hawaii and met senior citizens spending a month or more at the resorts. (Now we could be those people!!)
 

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For me, as a R. E Broker, I agree on the hassle but also the capital cost. The average person like myself would have to get a loan and buy a rather expensive home in a place like Maine/NH near the coast or mountains. I could slowly string together multiple $5k-$8k weeks at 1 place until I get 4-6 weeks rather than get a $250k-$350k loan with a substantial down payment and worry about renting it the other 11 months. Granted I could get a profit (assuming I got a good Property Manager).

But on the flip side, after 20 years of going there and paying $5k/year+ in HOA fees, I will have nothing but the minimal cost of the TS to sell vs a home that's probably worth another $100k-$200k in value and all my money back. Its definitely a trade off and If me and my wife were both high earners ($200k+ each/year), we would probably buy the vacation home rather than the TS. For other months, i could just use Homeexchange if I didn't need it rented each week and that way I'd have vacations in nice places all over the world each year (for free, no II/RCI bogus 'fees').
 

CalGalTraveler

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A vacation home is not a panacea. The one thing that hasn't been mentioned is that maintenance on a vacation home can be a large burden. Maintenance, property taxes, reserve, and things like snowplow and shoveling, deck refinishing, painting, frozen pipes etc. add to the cost of maintenance. We didn't realize how much we were spending until we documented the expenses which can easily run $12,000 - $15,000 a year.

Renters add wear and tear to the furniture and carpets. Every season we need to replenish towels and sheets because they disappear. We need to pay a local to be on call to assist our renters if there are plumbing issues in the middle of the night or assist them if they get locked out, and to document whether there is any damage or missing items after the rental. Our kitchen is 20 years old. Will need to be updated soon and we need to have a reserve to pay for it. Rental insurance is twice the cost of second home insurance. It is hard to get reliable carpenters and maintenance people to fix things. Sometimes they charge a lot because every vacation homeowner in the area needs these services. It can be next to impossible to get them during the season because of the backlog.

I love the financial options that a vacation property brings because it will increase in value and it's nice earning rental income in my sleep, however I don't like the worry and on-going cost.
 
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WinniWoman

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For me, as a R. E Broker, I agree on the hassle but also the capital cost. The average person like myself would have to get a loan and buy a rather expensive home in a place like Maine/NH near the coast or mountains. I could slowly string together multiple $5k-$8k weeks at 1 place until I get 4-6 weeks rather than get a $250k-$350k loan with a substantial down payment and worry about renting it the other 11 months. Granted I could get a profit (assuming I got a good Property Manager).

But on the flip side, after 20 years of going there and paying $5k/year+ in HOA fees, I will have nothing but the minimal cost of the TS to sell vs a home that's probably worth another $100k-$200k in value and all my money back. Its definitely a trade off and If me and my wife were both high earners ($200k+ each/year), we would probably buy the vacation home rather than the TS. For other months, i could just use Homeexchange if I didn't need it rented each week and that way I'd have vacations in nice places all over the world each year (for free, no II/RCI bogus 'fees').


My very well off brother owned vacation condos in North Carolina and Florida. He quickly sold the one in North Carolina after like only a year and, after using the Florida one for 10 years decided to sell it. Even with a management company, after renting it a couple of times, decided he didn't want to anymore and this past summer decided to sell. He said he is going to rent a house in Florida from now on until which time he decides to retire. He has one booked for the month of February.
 

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For me, as a R. E Broker, I agree on the hassle but also the capital cost. The average person like myself would have to get a loan and buy a rather expensive home in a place like Maine/NH near the coast or mountains. I could slowly string together multiple $5k-$8k weeks at 1 place until I get 4-6 weeks rather than get a $250k-$350k loan with a substantial down payment and worry about renting it the other 11 months. Granted I could get a profit (assuming I got a good Property Manager).

But on the flip side, after 20 years of going there and paying $5k/year+ in HOA fees, I will have nothing but the minimal cost of the TS to sell vs a home that's probably worth another $100k-$200k in value and all my money back. Its definitely a trade off and If me and my wife were both high earners ($200k+ each/year), we would probably buy the vacation home rather than the TS. For other months, i could just use Homeexchange if I didn't need it rented each week and that way I'd have vacations in nice places all over the world each year (for free, no II/RCI bogus 'fees').


Im not a broker, but I am a licensed real estate agent in Florida. I have also been a licensed stockbroker (series 7 and 63) and I know something about investing and real estate and investing in real estate.

I am not impressed with the argument that the money you invested in real estate will have appreciated in 20 years

why?...for 3 reasons.

1) because the money I didn't invest in real estate with which I bought a high quality dividend/growth stock mutual fund has appreciated in value too
2) my personal experience is that my timeshares did appreciate in value
3) while you were maintaining your vacation home, I was enjoying my vacation
 

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Im not a broker, but I am a licensed real estate agent in Florida. I have also been a licensed stockbroker (series 7 and 63) and I know something about investing and real estate and investing in real estate.

I am not impressed with the argument that the money you invested in real estate will have appreciated in 20 years

why?...for 3 reasons.

1) because the money I didn't invest in real estate with which I bought a high quality dividend/growth stock mutual fund has appreciated in value too
2) my personal experience is that my timeshares did appreciate in value
3) while you were maintaining your vacation home, I was enjoying my vacation

#1 - That's stocks vs Real Estate, totally different argument and not relevant here
#2 - Timeshares are NOT worth more in the future than they are today. Otherwise, I wouldn't be buying $2k-$5k weeks that people paid $25-$50k for..I can assure you in 20 years my $5k timeshare won't be worth more than $5k.
#3 - I won't be in Maine maintaining a home, a hired professional will be doing all that. I will be enjoying year round trips from home exchanging, tax deductions, and have a nice nest egg after 20 years.

Also regarding #3, I clearly stated why I agree with timeshares for the average buyer and the aggravation of maintenance & renters. I said the 2nd home/vacation home works for people that are higher earners. And those people aren't fixing pipes on a Saturday in another state, I can assure you!
 

rapmarks

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there are two kinds of second homes, one you go to for trips and get aways and one in a different climate. When we first started looking for a location for our second home we did a combination of timeshares and rentals and we looked for five years for multiple weeks. there is one thing missing when you stay in a timeshare or airb&b and that is a sense of community. We are in the autumn of our lives, we are not spending our time in an apartment surrounded by strangers. We will do that soon enough. When you are young enough, travel all you can and do the activities you can't do in your main residence. But if you no longer want to travel but you don't want to stay in a cold climate, get into a community situation whether that be renting or buying. One poster said everyone he knows regrets having a second home. We have a community with at least six hundred second homes and I hear very little complaints. But there comes a time when you have to give it up and we see it happen, we know it will happen to us too.
 

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#1 - That's stocks vs Real Estate, totally different argument and not relevant here
Of course it is relevant.

To see why, suppose you've got $X, and want a vacation solution. There are two possible scenarios to compare.

Scenario 1: You could spend all of $X buying a nice vacation home. Down the road, when you are no longer able to vacation for one reason or another (and that reason always comes eventually), you/your estate will sell that home, hopefully pocketing an appreciation at the sale. Say that appreciation is $Y.

Scenario 2: Or, you could spend 1/10 (or maybe 1/20) of $X on timeshares, and invest the other 9/10 (or 19/20) of $X in the investment of your choice. When your vacationing days are over, you/your estate gets zero from the timeshares, but any investment gains delivered by investing the remainder.

Ron's point is that the investment gains in Scenario 2 may be very close to (or even more than) $Y.
 

CalGalTraveler

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#3 - I won't be in Maine maintaining a home, a hired professional will be doing all that. I will be enjoying year round trips from home exchanging, tax deductions, and have a nice nest egg after 20 years.

Also regarding #3, I clearly stated why I agree with timeshares for the average buyer and the aggravation of maintenance & renters. I said the 2nd home/vacation home works for people that are higher earners. And those people aren't fixing pipes on a Saturday in another state, I can assure you!

We don't regret buying our vacation home. How can you regret something that provides memories and doubles in value?

However, in many vacation home communities, the values will be the first to decline and slowest to recover vs.neighborhood where people live. Our second home has only recently recovered to pre-2008 crisis levels. You need to be financially stable to weather the downturns.

Unless they are in the top 1%, most vacation homeowners I know are fixing pipes. Why? because it is a hassle to find good maintenance people and sometimes its much easier to just fix it yourself rather than waiting months or having repairmen who don't show up (It happened this week.) We pay a management company, but they deal with renters and minor fixes - not the big stuff.

I don't view vacation homes v.s. timeshares as an "either/or" - it is an "and". We own a vacation home AND timeshares because both provide different value to our family. Pros/Cons to each.
 
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CalGalTraveler

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#1 - That's stocks vs Real Estate, totally different argument and not relevant here.

You cannot vacation on your stocks. Renting is a risk, a hassle and you don't always get the best unit. Instead of spending several thousand a year on rentals I would much rather put it against something I own whether it is a timeshare or second home. But that's just me.

I can reserve my timeshare a year in advance with no money down. Rentals require up-front payment and no refunds. That's a lot of money to put down upfront a year in advance. You could wait, but then you may not find the unit that you want. Too many moving parts with last minute airfare, rewards flights etc. when you are trying to get several people to a destination.
 
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ronparise

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#1 - That's stocks vs Real Estate, totally different argument and not relevant here
#2 - Timeshares are NOT worth more in the future than they are today. Otherwise, I wouldn't be buying $2k-$5k weeks that people paid $25-$50k for..I can assure you in 20 years my $5k timeshare won't be worth more than $5k.
#3 - I won't be in Maine maintaining a home, a hired professional will be doing all that. I will be enjoying year round trips from home exchanging, tax deductions, and have a nice nest egg after 20 years.

Also regarding #3, I clearly stated why I agree with timeshares for the average buyer and the aggravation of maintenance & renters. I said the 2nd home/vacation home works for people that are higher earners. And those people aren't fixing pipes on a Saturday in another state, I can assure you!

The investment could be a REIT or an apartment building. Or if you want a vacation home you rent out. Or maybe an apartment building at the beach I don’t much care what you do. What I’m saying is that you you can have your cake and eat it too; vacation in a timeshare and invest in something else

And I did ok using timeshares as an investment. Much better in fact, than my real estate investments
 

WinniWoman

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You cannot vacation on your stocks. Renting is a risk, a hassle and you don't always get the best unit. Instead of spending several thousand a year on rentals I would much rather put it against something I own whether it is a timeshare or second home. But that's just me.

I can reserve my timeshare a year in advance with no money down. Rentals require up-front payment and no refunds. That's a lot of money to put down upfront a year in advance. You could wait, but then you may not find the unit that you want. Too many moving parts with last minute airfare, rewards flights etc. when you are trying to get several people to a destination.


That's where travel insurance comes in. I book rentals way in advance and take out insurance with a cancellation component. In fact, I do that for my timeshare weeks as well.
 

CalGalTraveler

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Travel insurance is a good option however priorities change; the reasons don't not always fit within the categories that insurance companies accept. I like how I can change or cancel our timeshares if we are more than 30 days from the reservation for whatever reason. Can't do that with a rental. And it's free.
 

ronandjoan

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there are two kinds of second homes, one you go to for trips and get aways and one in a different climate. When we first started looking for a location for our second home we did a combination of timeshares and rentals and we looked for five years for multiple weeks. there is one thing missing when you stay in a timeshare or airb&b and that is a sense of community. We are in the autumn of our lives, we are not spending our time in an apartment surrounded by strangers. We will do that soon enough. When you are young enough, travel all you can and do the activities you can't do in your main residence. But if you no longer want to travel but you don't want to stay in a cold climate, get into a community situation whether that be renting or buying. One poster said everyone he knows regrets having a second home. We have a community with at least six hundred second homes and I hear very little complaints. But there comes a time when you have to give it up and we see it happen, we know it will happen to us too.
We find that we meet new friends that have become wonderful friends ( and some of you have posted in this thread) in most of the timeshare places in which we stay... and when we return to the same places, especially those we own and return to, we also get to know the locals. We meet more TUGGERS every January at our informal gatherings in Orlando ... (this year's will be Jan 17, 2018. )

Right now we are up at Telemark in Cable, WI for a six week stay and we look forward to seeing the people that live here that we've met and participate with in regular local activities up here. These weeks are floating .. we own 3 and get 3 more bonus weeks (at $200 per week) and are staying in the same large lakefront 2 br condo, thus, not having to move and enjoying the area with friends.

We own 5 fixed weeks in St Augustine in January in the same unit (accumulated by eBay purchases that happen to have the same unit come up) and have friends and family there too.

We have still traded also, either with these properties some years or with our Wyndham points. Some of you know we sold our house in Ohio and were totally "homeless" for 7 years, living full time in timeshares. This was after we had discussed second vacation homes or RV travel options and chose Timesharing for many of the reasons you all have listed here. Maintenance is more of an issue as we get older, but as my husband is very handy, he still is continuing to work on house repairs or Projects for either our sons or friends we visit . (I love my BLOG pictures which captions read, "Why is this man on his back on the floor again?"--usually with his head under a sink. ) And I am able to keep up my love of gardening in others' yards too.

We wanted waterfront property, but soon found purchasing it was too costly for our budget, but with the timesharing, we can have multiple waterfront stays... weeks and weeks in fact .

I look forward to meeting more TUGGERS in our continued travels , and thanks, too, to TUG for all the help and information I have learned on this site!
 

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I bought 2 vacation homes about 15 years ago and paid off the mortgages over time. I also bought 10 timeshares. Now that I’m retired, we spend 8 months year in Florida and 4 months in Delaware. Both places are at the beach. We rent the Florida place in the summer which covers the cost of ownership so we only have the carrying costs for 1 Residence. The timeshares we use or rent and take the extra income from those to go on cruises or other travels. Of course the hurricanes have put a big hole in that income source this year since I have 3 Christmas weeks in St. Thomas so it’s not a perfect plan. Stuff happens.
 

rapmarks

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Our second home is at Christmas mountain village, we get full use of all the resort amenities. We bought a half acre wooded lot in 1987 for $11k and it included free golf and skiing membership for the family through the year 2000. When we built we made some decisions because it was a second home. We had aluminum siding installed rather than cedar siding. We did not stain our deck, and it is a big deck. We bought the lot next to us so we would have privacy. We did not cut down all the trees to put in a lawn. We tore out all the blackberry bushes and planted wild flowers, we have no lawn, we do not rake leaves, we do not do much at all outside except to get the deck power washed every few years, it is still as sturdy as when we put it in. The siding looks the same as it did thirty years ago. The house is small, but could sleep twelve (two to a room) and has three bathrooms. We lock it up when we leave. In thirty years we have had one breakin and it was a teenager that rented next door. We had a freeze and leak once. Our maintenance fee is about $325 a year. Many people are scornful of the fact that we don't have a lawn, but we have seen many people build, cut down the trees, put in a lawn, and then complain about all the work and put the house on the market. We did not want our vacation home to be a source of work.
 
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WinniWoman

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Our second home is at Christmas mountain village, we get full use of all the resort amenities. We bought a half acre wooded lot in 1987 for $11k and it included free golf and skiing membership for the family through the year 2000. When we built we made some decisions because it was a second home. We had aluminum siding installed rather than cedar siding. We did not stain our deck, and it is a big deck. We bought the lot next to us so we would have privacy. We did not cut down all the trees to put in a lawn. We tore out all the blackberry bushes and planted wild flowers, we have no lawn, we do not rake leaves, we do not do much at all outside except to get the deck power washed every few years, it is still as sturdy as when we put it in. The siding looks the same as it did thirty years ago. The house is small, but could sleep twelve (two to a room) and has three bathrooms. We lock it up when we leave. In thirty years we have had one breakin and it was a teenager that rented next door. We had a freeze and leak once. Our maintenance fee is about $325 a year. Many people are scornful of the fact that we don't have a lawn, but we have seen many people build, cut down the trees, put in a lawn, and then complain about all the work and put the house on the market. We did not want our vacation home to be a source of work.


Our one and only home is the same. We live in the woods- keep it neat. Just mow a small area around the perimeter of the house. Not really grass- just whatever green is growing. No fancy landscaping and so on. Pay the plow guy per plow. Keep it well maintained and cleaned. Just that the property and school taxes are high.
 
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