2010 Maintenance Fee Thread

[thinze3]

A 67K SO unit used to sell for $1000-$1500 and is still in that range (although listed with old fees)

Read what I said above. This (policy changes and MF's) hasn't yet sunk in to all buyers. Like you, they are comparing "used to". This unit too will be worthless to the buyer soon enough.

Back to the other eBay auction. Who will pay $1650 MF's to get to get 95K SO's? Is there any single place that can be reserved using 95K SO's that cannot be rented for $1650? Remember before you answer that Starwood controls the inventory now, not II, so the most premium weeks are no longer available.

 

[DanCali]

Read what I said above. This (policy changes and MF's) hasn't yet sunk in to all buyers. Like you, they are comparing "used to". This unit too will be worthless to the buyer soon enough.

Back to the other eBay auction. Who will pay $1650 MF's to get to get 95K SO's? Is there any single place that can be reserved using 95K SO's that cannot be rented for $1650? Remember before you answer that Starwood controls the inventory now, not II, so the most premium weeks are no longer available.

thinze - I assume you agree that there is a problem with this particular listing when it comes to finding it with a typical search for Vistana Villages?

You certainly don't want to buy SVV anymore just to go there.

If one wanted to exchange via II they would buy SVR. Buying this makes sense only for SVN exchanges. 95K SOs will get you 8 days in a 1BR in Hawaii or 10 days in a studio, same amount of days for a Colorado ski week, a summer week in a 2BR at HRA or WSJ, or 2 summer weeks in smaller units at HRA or WSJ. If you are willing to go in the "hurricane season" you can get more even more time at HRA (2.5 weeks in a 1BR) and the exchange is probably easier.

The Hawaii exchanges can accomplished relatively easily, especially off season, and some of these other exchanges are very difficult exchanges, but not impossible... If one were persistent and lucky enough, they would still get good value from the SOs, assuming the resort stays afloat and MFs stabilize... (big if)

 

[RLOGO]

95K SOs will get you 8 days in a 1BR in Hawaii or 10 days in a studio, same amount of days for a Colorado ski week, a summer week in a 2BR at HRA or WSJ, or 2 summer weeks in smaller units at HRA or WSJ. If you are willing to go in the "hurricane season" you can get more even more time at HRA (2.5 weeks in a 1BR)

My last 3 exchanges were:

2007 Westin St. John 1BR premimum- President's Week (1 week)
2008 WKORVN 1BR premimum- Spring Break (8 nights)
2009 Harboside 1BR premimum- President's Week (1 week)

 

[Stefa]

Grest trades

My last 3 exchanges were:

2007 Westin St. John 1BR premimum- President's Week (1 week)
2008 WKORVN 1BR premimum- Spring Break (8 nights)
2009 Harboside 1BR premimum- President's Week (1 week)

These were great trades. Persistence does pay off. But, due to space limitations, it isn't possible for everyone to go to HRA or WSJ. Most would-be exchangers will still be shut out.

These SVN units still have value. There's no debating that. The question is do they have enough value to enough owners to keep the resort viable. I'm not so sure about that.

 

[thinze3]

My last 3 exchanges were:

2007 Westin St. John 1BR premimum- President's Week (1 week)
2008 WKORVN 1BR premimum- Spring Break (8 nights)
2009 Harboside 1BR premimum- President's Week (1 week)

Although these are pre Starwood unwritten policy changes -
If Starwood doesn't decide to keep and rent those same premium units in the future, then obviously there is still some value for 95K SO's - using $1650 rental as a baseline.

 

[DanCali]

That is because with those MF's these units are virtually worthless now.

Terry - by the way, other than the above statement, I completely agree with everything else you said (and have voiced similar sentiment). In fact, Starwood destroyed hundreds of millions of dollars in owner's equity by irresponsibe MF increases - and I'm not even sure that it wasn't on purpose.

If someone is looking to buy 95K SOs at SVV, $4000 like in this particular auction may yet prove to be a "good deal" (relative to market values). I think it has no bidders because it's off the radar screen. I try to keep up with the mandatory resorts on eBay and this one didn't show up in my searches...

Starwood has basically destroyed tens of millions of dollars (or more) of their timeshare owners' equity. IMHO this is still the beginning as some people are still buying because they know what last year's resale prices were for some of these timeshares, and they now think they are getting a bargain.

Prices don't go to zero instantaneously. Though you may sometimes see a freefall, in general, prices work their way down. They won't completely settle at their bottoms until after a few months have passed and all of this (policy changes and MF's) sinks in.

Those resorts that have controlled their fees and offer good value, like SDO, may actually come bouncing back a bit.

 

[Ken555]

RLOGO - how did you find this one?

FWIW, I've been watching this seller's eBay auctions for a while. He doesn't include the standard words you'd expect, so I search for "staroptions" to find them. Take a look at the completed auctions for this term... there was a WKV Premium 1-bed just in the last few weeks which sold for less than $6k (81k SOs, ~$700MF, and still among the best bang for the buck in SVN IMO).

 

[RLOGO]

"A terrible market or a terrible economy is your friend,"

Warren Buffett

 

[LisaRex]

Starwood would be remiss to not fix the SVN system in the near future to address the disparity in SOs and MFs within the system, which currently have no relationship to demand. Here's an example of how they could begin to fix it:

Increase the SOs in Hawaii during high season (summer and whale season) for a 2 bdrm to 196k. For low season a 2 bdrm would remain 148.1k, thus encouraging more exchangers to look at low season. It would also make it more attractive to own there.

People exchanging out would still only get 148.1 SOs.

 

[Fredm]

"A terrible market or a terrible economy is your friend,"

Warren Buffett

Was watching a live interview from Columbia Business School with Warren Buffet and Bill Gates.

Buffet made an interesting observation concerning the current economy.
In answering his own question, he asked if anyone knew what the best performing year for the post 1942 stock market was? His answer was 1955. Up 50%. We were in deep recession, and unemployment did not peak until November 1955.
That was the year he starting seriously buying.

Buffet likes current prospects so much he just invested 38 Billion? to buy Burlington Northern.

 

[DavidnRobin]

FWIW, I've been watching this seller's eBay auctions for a while. He doesn't include the standard words you'd expect, so I search for "staroptions" to find them. Take a look at the completed auctions for this term... there was a WKV Premium 1-bed just in the last few weeks which sold for less than $6k (81k SOs, ~$700MF, and still among the best bang for the buck in SVN IMO).

Damn - I should expand my search - that is a great value - but is due to a poor auction description which results in a very low price - and is not necessarily indicative of the real price for this WKV VOI

 

[Ken555]

Damn - I should expand my search - that is a great value - but is due to a poor auction description which results in a very low price - and is not necessarily indicative of the real price for this WKV VOI

Yup. My brother wants one, and I told him to bid up to $8k or so, but he stopped at $5.5k... /sigh

 

[RLOGO]

Was watching a live interview from Columbia Business School with Warren Buffet and Bill Gates.

Buffet made an interesting observation concerning the current economy.
In answering his own question, he asked if anyone knew what the best performing year for the post 1942 stock market was? His answer was 1955. Up 50%. We were in deep recession, and unemployment did not peak until November 1955.
That was the year he starting seriously buying.

Buffet likes current prospects so much he just invested 38 Billion? to buy Burlington Northern.

I am not saying one should buy a timeshare as an investment but if you are in the market to buy one for vacationing this is would not be a bad time.......of course, if these maintenance fees were reasonable then it would be a great time to buy.

 

[Ken555]

Starwood would be remiss to not fix the SVN system in the near future to address the disparity in SOs and MFs within the system, which currently have no relationship to demand. Here's an example of how they could begin to fix it:

Increase the SOs in Hawaii during high season (summer and whale season) for a 2 bdrm to 196k. For low season a 2 bdrm would remain 148.1k, thus encouraging more exchangers to look at low season. It would also make it more attractive to own there.

People exchanging out would still only get 148.1 SOs.

You have GOT to be kidding. I'm sorry, but this is completely unrealistic. 148.1 is still the magic number and which the entire system is designed around. And given that WKORV, for instance, has more vacancies now with WKORV-N, cutting out the majority of other SVN owners from reserving a 2-bed makes no sense to me.

On the other hand, lowering the SO for a (currently non-existent) low season in Hawaii might work. Remember that you could go either way to adjust the system - lowering the SOs at some resorts will do good, too.

This post, and a few others in the last week, remind me the WLR SO situation a few years ago. Back then, they started with 95k as the 2-bed plat value and then changed it to 148k when sales were extremely soft.

In general, I agree that the SVN system as it currently exists probably won't be able to sustain itself without new properties entering the program every few years. There's an inherent imbalance which will need to be corrected one day.

 

[thinze3]

From what I have read, Starwood claims "delinquincies" have forced this sudden sharp rise in MF's. But if that were the case, why did it mostly happen at select properties only? Why have we not heard this same story with other companies?

Furthermore, has Starwood thought out the consequences of these large increases - especially the drop in resale value? What if people start abondoning their properties? Things will only escalate.

 

[gregb]

Starwood would be remiss to not fix the SVN system in the near future to address the disparity in SOs and MFs within the system, which currently have no relationship to demand. Here's an example of how they could begin to fix it:

Increase the SOs in Hawaii during high season (summer and whale season) for a 2 bdrm to 196k. For low season a 2 bdrm would remain 148.1k, thus encouraging more exchangers to look at low season. It would also make it more attractive to own there.

People exchanging out would still only get 148.1 SOs.

Not sure how *wood could establish a "season" in Hawaii since all the units at WKORV & WKORVN have been sold as 52 week float. They cannot, after the fact, assign the units sold as 52 week float to a shorter season. Imagine the howls by someone being assigned to "low season". Besides, if you look at the II demand index for Hawaii, it is fairly even demand throughout the year.

Furthermore, *wood has to make sure they do not sell more StarOptions at a resort than exist at that resort. They also must, over time, ensure that the total number of StarOptions credited to owners each year is less than or equal to the total number of StarOptions available throughout the system. If this is not the case, some owners will be denied access to their units.

Greg

 

[Troopers]

From what I have read, Starwood claims "delinquincies" have forced this sudden sharp rise in MF's. But if that were the case, why did it mostly happen at select properties only? Why have we not heard this same story with other companies?

Furthermore, has Starwood thought out the consequences of these large increases - especially the drop in resale value? What if people start abondoning their properties? Things will only escalate.

I believe delinquencies have occurred all properties (and across all systems). Given our difficult economy, what’s more peculiar…the fact that delinquencies are common in the Starwood system or that we haven’t heard from other systems? Starwood isn’t the lone wolf in experiencing significant delinquencies. If this is true, I’m struggling to understand how other systems are (or are not) dealing with it?

Ignoring the crappy economy, people will start abandoning their properties when the MF is greater than comparable lodging costs.

 

[DanCali]

FWIW, I've been watching this seller's eBay auctions for a while. He doesn't include the standard words you'd expect, so I search for "staroptions" to find them. Take a look at the completed auctions for this term... there was a WKV Premium 1-bed just in the last few weeks which sold for less than $6k (81k SOs, ~$700MF, and still among the best bang for the buck in SVN IMO).

I haven't seen many WKV Platinums on eBay (1 or 2 BR) to even compare if that's a good price, but I would probably prefer that over a 2BR SVV Bella, even before the MF hike.

That said, note that until the recent MF hike a 2BR Bella cost about $3500 and had MFs of $1000. This 1BR WKV cost about $6000 (supposedly a very good price) with MFs of $700. So for a $300 annual savings in MFs relative to SVV you are paying $2500 upfront (or 8 years of MFs savings) which may or may not be recouped upon a resale down the road. Is that a "good deal"? Probably not for everyone. Ken, hindsight is 20/20 but I think your brother was ok to avoid a bidding war at the time...

Turns out that SVV Bella had a huge increase in MFs so now WKV is undobtedly a much better deal if you are buying for StarOptions, but until recently I would not necessarily have rushed to pay the premium, especially if the "true" cost for the 1BR WKV was more than double of SVV.

The WKV 2BR Platinum is a different story, because you can't buy that amount of SOs in Orlando...

 

[LisaRex]

From what I have read, Starwood claims "delinquincies" have forced this sudden sharp rise in MF's. But if that were the case, why did it mostly happen at select properties only? Why have we not heard this same story with other companies?

Good question. My only good guess is that they are trying to squeeze every last dime they can out of us owners because they are in trouble and need immediate relief.

The big money is made selling new VOIs. The WKORV-N-N development is the only thing in their pipeline, and it's stalled. They've already bundled their loans and sold them off. What's left? Maintenance and management. Hence the large increases and the claims of delinquencies, which of course can neither be verified or confirmed by the owners because we are left in the dark.

I can't even get Starwood to respond to my question about the next WKORV-N board meeting. When I asked the rep when elections were to take place, she said one was to happen in the December meeting. Of course, we've gotten no notice about the December meeting. We'll probably get it in our mailboxes two weeks after the fact.

 

[DanCali]

From what I have read, Starwood claims "delinquincies" have forced this sudden sharp rise in MF's. But if that were the case, why did it mostly happen at select properties only? Why have we not heard this same story with other companies?

Furthermore, has Starwood thought out the consequences of these large increases - especially the drop in resale value? What if people start abondoning their properties? Things will only escalate.

What puzzles me is that if SVV has so many alleged delinquencies, why are people not selling the units to get rid of the "liability"? The mandatory units at SVV have a resale value that would cover MFs and they are old enough that most people probably don't have mortgages anymore. Yet there are over 60 units listed for sale from WKORV/N on RedWeek and only 11 from SVV. I'm also pretty sure the Bella and Key West sections (mandatory) have a lot more units than WKORV/N.

Anyone have a good answer to this "puzzle"?

 

[Fredm]

What puzzles me is that if SVV has so many alleged delinquencies, why are people not selling the units to get rid of the "liability"? The mandatory units at SVV have a resale value that would cover MFs and they are old enough that most people probably don't have mortgages anymore. Yet there are over 60 units listed for sale from WKORV/N on RedWeek and only 11 from SVV. I'm also pretty sure the Bella and Key West sections (mandatory) have a lot more units than WKORV/N.

Anyone have a good answer to this "puzzle"?

Maintenance fees.

 

[DanCali]

Maintenance fees.

True, Orlando MFs are much lower than Hawaii, but if 20% (not sure what the number is, but MFs were up 25%-30%) of the Orlando resort is defaulting on MFs I would have expected many of those units to go on sale.

Surely people would prefer to get $3000-$4000 and pay off the delinquent MFs, avoid ruining their credit history, and be done with MF payments forever... At least that's what I would have done if I decided I didn't see the value anymore, especially if the resale value was enough to cover my debt.

I can't make the same argument for SBP, because resale value will not cover MFs, but a delinquent owner at SVV (mandatory phase) has a relatively easy way out - sell the unit!

 

[Ken555]

I haven't seen many WKV Platinums on eBay (1 or 2 BR) to even compare if that's a good price, but I would probably prefer that over a 2BR SVV Bella, even before the MF hike.

I believe it's an excellent price.

That said, note that until the recent MF hike a 2BR Bella cost about $3500 and had MFs of $1000. This 1BR WKV cost about $6000 (supposedly a very good price) with MFs of $700. So for a $300 annual savings in MFs relative to SVV you are paying $2500 upfront (or 8 years of MFs savings) which may or may not be recouped upon a resale down the road. Is that a "good deal"? Probably not for everyone. Ken, hindsight is 20/20 but I think your brother was ok to avoid a bidding war at the time...

Well, I hope so. The 1-bed premium Platinum's are very rare to see on eBay. Buying in Orlando is an option, but Kierland is better for my brother since he lives in driving range so if he prefers his family could make it there easily. And I think the savings actually does matter - I've only had my ownership for four years and I'm sure my brother would want to keep whatever he buys for at least 10 or 15 years, if not longer.

Turns out that SVV Bella had a huge increase in MFs so now WKV is undobtedly a much better deal if you are buying for StarOptions, but until recently I would not necessarily have rushed to pay the premium, especially if the "true" cost for the 1BR WKV was more than double of SVV.

Yup. From the little I know about WKR, it's my belief that costs can be controlled fairly easily at that resort (as compared with some of the others in the program). There is also a big difference in relative demand between Scottsdale vs Orlando, so if SVN folds (worst case) and the resorts are independent, I think Kierland will trade much better than Orlando. Now that the MFs are not a big difference, this makes Kierland even more valuable, in my opinion.

The WKV 2BR Platinum is a different story, because you can't buy that amount of SOs in Orlando...

Well, starting off with a 1-bed premium Platinum week is half-way toward that 2-bed. It's possible to find a 1-bed (small; ie. "deluxe") Plat (though they seem even rarer than the premiums) and then you'd have 148k. This is yet another reason why I think this week sold at well below market value. This is just a great time to buy, not only because of the economy but also due to the time of year with MFs due soon.

 

[Fredm]

True, Orlando MFs are much lower than Hawaii, but if 20% (not sure what the number is, but MFs were up 25%-30%) of the Orlando resort is defaulting on MFs I would have expected many of those units to go on sale.

Surely people would prefer to get $3000-$4000 and pay off the delinquent MFs, avoid ruining their credit history, and be done with MF payments forever... At least that's what I would have done if I decided I didn't see the value anymore, especially if the resale value was enough to cover my debt.

I can't make the same argument for SBP, because resale value will not cover MFs, but a delinquent owner at SVV (mandatory phase) has a relatively easy way out - sell the unit!

More owners are probably upside down.

 

[Fredm]

I am not saying one should buy a timeshare as an investment but if you are in the market to buy one for vacationing this is would not be a bad time.......of course, if these maintenance fees were reasonable then it would be a great time to buy.

Understood.

Just echoing the wisdom in the quote.