Buying a timeshare to rent?

[horsecreek]

Only 5 hours

South Padre Island, fishing, kites, wildlife. The waters are cooler and better (summer) than further north because of currents. Big water park, scuba diving (one day ) and close to 90 in summer which beats 105 here in San Antonio .

 

[ampaholic]

With very prime weeks being given away it just seems that there are opportunities aplenty. I do rent in Orlando, Vegas, this summer in Branson and found a steal in Ireland (not a timeshare). One has to be cautious. But if I try to rent a beachfront, near me, nothing available or very high prices. I bought my timeshare just because I will go every year and want that lower price and availability. My biggest hesitation is special assessments and out of control maintenance fees. With more people wanting out of the low and shoulder periods the resort need to increase cost on those who remain. However I think this is temporary and most people want to vacation, I live for it. :whoopie:


I'm still figuring out retirement investments so I'm not likely to pursue this line of thought further and if it was easy I'm sure many TUGGERs would already be snatching up the good ones.

Part of the reason the prime weeks are selling for so little is that they are hard to rent for a profit.

Even if you buy for free and the MF is $800 - you would need to rent for $1600 to consistently clear a reasonable profit.

But ... if it could rent consistently for $1600 the current owners would tend to "just rent them" instead of giving them away on eBay.

Ask DeniseM to give you her WKORV for free - you can rent it for 2X the MF all day long.

 

[horsecreek]

Not twice the profit.

No, I agree $1600/week not likely/possible but $125-150/night ($875-1050) is still 10-25% return; the resort rents 2b 2b for $275/night. The resort will pay (if they rent all 7 days), after fees, $1155 a 40% return over current maintenance fee. Downside risk is I use the time myself. Remember also if economy picks up there might be some residual value. A two bedroom two bath unit in same complex but yearly use, the majority of the complex actually, is selling for mid to upper $200k. Does that mean $4-5k/week potential value? down the road?

 

[am1]

No, I agree $1600/week not likely/possible but $125-150/night ($875-1050) is still 10-25% return; the resort rents 2b 2b for $275/night. The resort will pay (if they rent all 7 days), after fees, $1155 a 40% return over current maintenance fee. Downside risk is I use the time myself. Remember also if economy picks up there might be some residual value. A two bedroom two bath unit in same complex but yearly use, the majority of the complex actually, is selling for mid to upper $200k. Does that mean $4-5k/week potential value? down the road?

No. Fees are a lot higher. Transfer costs.

 

[ampaholic]

No, I agree $1600/week not likely/possible but $125-150/night ($875-1050) is still 10-25% return; the resort rents 2b 2b for $275/night. The resort will pay (if they rent all 7 days), after fees, $1155 a 40% return over current maintenance fee. Downside risk is I use the time myself. Remember also if economy picks up there might be some residual value. A two bedroom two bath unit in same complex but yearly use, the majority of the complex actually, is selling for mid to upper $200k. Does that mean $4-5k/week potential value? down the road?

A 10% return is a negative result for my money - a 25% return is still a negative for my money - but you may be happy with it (I think in practice you will find it inadequate).

A full use condo is a whole different figure of value and cost - since you don't have many of the costs associated with a TS such as "housekeeping" each week and a "check in/check out" staff.

Apples and oranges

 

[timeos2]

No, I agree $1600/week not likely/possible but $125-150/night ($875-1050) is still 10-25% return; the resort rents 2b 2b for $275/night. The resort will pay (if they rent all 7 days), after fees, $1155 a 40% return over current maintenance fee. Downside risk is I use the time myself. Remember also if economy picks up there might be some residual value. A two bedroom two bath unit in same complex but yearly use, the majority of the complex actually, is selling for mid to upper $200k. Does that mean $4-5k/week potential value? down the road?

What often happens is that they end up only renting the prime days - Fri, Sat, Sun - maybe one more but you get nothing for three or four. But you don't know that in time to plan a trip yourself as they will wait for wallk ins to try to get it rented for you.

It just doesn't pass the "good plan" test. If it did there would be a very large group of owners here who would do it. You won't find more than a hand full that even attempt it for a very good set of reasons.

I may playfully, not seriously as in a put down, add that IF you decided to act on such a plan you may decide to change your moniker here from horsecreek to something closer to horse's "rear end". The plan is THAT bad.

 

[horsecreek]

you're sounding personnal

I've already agreed with your arguments earlier and am glad I was able to discuss the idea I had on this forum. However I'm surprised you feel that if I choose a different course you would view me as a horses **s.

 

[MOXJO7282]

But ... if it could rent consistently for $1600 the current owners would tend to "just rent them" instead of giving them away on eBay.

Or is it that there are many distressed owners who simply need to get out and right now the rental market isn't helping?

I have no experience with non-Marriotts but from what I've read, before the economy crashed the rental market was fairly good as it seemed like many were able to rent. Then things changed and the economy tanked and renters weren't as numerous and in some cases non-existent.

Some could weather the storm but many can't so many good timeshares that used to rent no longer do and had to be put up for sale or given away in the extreme case.

I know in 2009 and most of 2010 it was a major buyers market for top Marriotts. I know I scored a few low ones but the Marriotts that I watch bounced up from record lows and has since stablized.

Maybe that will happen with the good timeshares that are now being sold for pennies on the dollar. I would think when more people get back to work, in 2013/14, the rental markets will also greatly improve across the board, so maybe it is a time to pick up a few very good weeks on the cheap that fall into this category.

I always wanted to create a thread that asked "does your TS consistently rent for MF +400?" because I wanted to expand into nice places that didn't have Marriott and I thought $400 was a minimum profit I'd want to achieve.

Then the rental market crashed and I saw alot of threads that spoke of the difficulites of renting and it answered alot for me. Even though I saw some good deals, 90% of the renters were looking for Marriotts so I stuck to what I know works and stayed loyal to Marriott.

The question is what are those weeks, that in a few years, God willing, when employment gets back to 6%, will be more in demand. I assume it would have to be a beach location, perhaps ski?

 

[timeos2]

I've already agreed with your arguments earlier and am glad I was able to discuss the idea I had on this forum. However I'm surprised you feel that if I choose a different course you would view me as a horses **s.

As I said - I was using it not as a put down but as a potential feeling you could have should you decide to take that route. I am in no way suggesting you are or would be - just having a little fun with things. I wouldn't see you as such - I was saying you may feel it should you decide to take the plunge.

You sound very reasonable in your thought process so I seriously doubt you'd decide to take the potentially flawed choice of trying to buy to rent.

 

[horsecreek]

I do appreciate this site very much.

I am someone who loves a bargain. I've bought a timeshare I can enjoy. I am looking very hard for a ski week, every other year, in Colorado but am patient. I just wonder too. I recently got caught up in the stock market (two years ago) and have found some luck while learning. I'm at a stage in life were opportunity seems all around and am weighing all the opportunities. I do want to make the best decisions for my family both now and in the future. Information is easy to obtain but deciphering it all is daunting. I value this site with all the experience people write about.

 

[Gophesjo]

Not everyone is willing to do the legwork work that renting requires, especially if the profit is only $300 - $400 per rental. I think there is a personality type/perspective that might always tend to leave a little something on the table.

But ... if it could rent consistently for $1600 the current owners would tend to "just rent them" instead of giving them away on eBay.

 

[JudyS]

Renting out timeshares for a profit is MUCH harder than it looks. I am a timeshare addict (there, I've confessed it) and own way more than I can use. So, I rent some out. But it is tough, tough, tough, in this economy.

There are a ton of factors working against timeshare owners who want to rent. A lot of renters want just a weekend, not a whole week. Even if you could find another renter for the weeknights (which you probably can't), many resorts are just not set up for having two different parties in one unit in one week--they may not have a way to clean the unit, may have no way to charge phone calls and incidentals to two different parties, may not even be able to handle two reservations for the same week.

If the resort will handle rentals for you, then you may be able to rent to several parties per week. But more likely, you will end up with just a few nights renting, and it may not be enough to cover your MFs.

Most of the public don't understand timeshares. You will get a ton of people who ask you to change your fixed Saturday-Saturday week to Sunday-Sunday. You will get people who think you are a hotel and won't give you a definitive answer until 8 pm on the day of check-in -- by which time the front desk may be closed.

The big problem, though, is marketing. Probably 90% of the public doesn't even realize they can rent a timeshare. Of the 10% who do, many of them are afraid you will rip them off or that the place will be a dump, and will not rent from a private owner.

I think most Tuggers who make money renting timeshares use points systems, not fixed weeks. But most of the timeshare systems that are in points (Wyndham, say), may never be worth much on the resale market. So, buying now for cheap, renting out for a while, and then selling, probably won't bring in much profit in these points systems.

There are some fixed weeks that rent for way more than the MFs, but these are hotel-brand timeshares in highly desirable locations and times-- a Hawaii Marriott at Christmas, say. No one is giving those timeshares away.

Also, don't forget you have to pay your MFs at the beginning of the year, then wait until maybe July or Christmas before you receive your rent. That ties up money that could have been used elsewhere.

I know why you find this tempting. I keep getting tempted to buy more timeshares. (Like I said, I'm a timeshare addict.) The deals are SO hard to pass up. But anyone thinking of this, be warned -- you may end up doing a ton of work just to break even. That is what has happened so far to me. I hope that when the economy recovers, I will be able to sell the units for more than what I paid for them. But, even if that happens within a few years, the return I'll get per hour of my time may be pretty low.

... If you want to make money renting with no contingencies, then find someone who wants to rent their week; get their set asking price, and find a renter at a higher price and keep the difference. Then you are not held to MFs / usage if you cannot find a renter at more than the MFs/asking price.

Kaio, if you accept money from your renter BEFORE you pay the owner for the week, you will be acting as a real estate broker without a license, which is illegal in most states. It is legal to pay for the unit and then try to rent it out for more than what you spent, but there's a big risk the unit will sit empty and you will be out what you paid in rent.

 

[DeniseM]

Renting is more difficult than it seems - it takes a lot of patience. This summer I exchanged 67 email with one especially difficult renter over just one rental...

 

[horsecreek]

lets change this up a bit.

Buying selling stocks. I'm tired of watching the "experts" on tv for stocks. Is there a site that has the depth this site has for timeshares for stocks? My father-in-law is big on stocks but works on his own research. I would like to have a place to bounce my ideas.

Penn State is taking a lead into the half. '87 graduate and happy with their football.

 

[Rent_Share]

Resurect this thread

http://tugbbs.com/forums/showthread.php?t=150454&highlight=Renting

To the degree iT sounded like a "profitable hobby"

In 2011 we have rented just over 250 units and sold around 15 assorted ownerships. I have acquired another 25 units this year, all summer east coast weeks. I probably spend a couple of hours a day 5 days a week in this timeshare business.
Greg

Then I read this one {Same Poster}

But you do need a primary source if income and a lot of luck.

We kind of stumbled into reselling and renting, just out of re-staging our ownerships.

We did so well in 2005 that we became a business, 2006 was great, 2007 and early 2008 had me thinking of retiring and just doing the rental/resale business.

And then in a 3 week period ATA and Aloha Airlines folded :annoyed: 85% of our rentals and resales were in Hawaii

We had done more volume in the 1st quarter of 2008, than we did for the balance of 2008, and had a serious loss for the year.

2009 wasn't much better, 2010 we started to diversify into Summer Beach weeks on the Mainland and renting prime Summer Mexican weeks to Mexican Nationals and we almost broke even.

Now in 2011 we have pretty much revamped our portfolio and sold off a few weeks that we had picked up for a song, and we have a great group of 2012 rentals that are already starting to rent, so we should see a profit this year.

We are looking at a very good 2012 and beyond, that is until the next great change happens.

It isn't for the faint of heart, or those that can't stand discomfort or answering lots of questions.

jmho,

Greg

 

[kaio]

It is legal to pay for the unit and then try to rent it out for more than what you spent, but there's a big risk the unit will sit empty and you will be out what you paid in rent.

Good point i guess; suppose that is why I do not rent to many brokers. Nevermind Horsecreek, there may be no strictly rental strategy without the high risk.

 

[timeos2]

Also, don't forget you have to pay your MFs at the beginning of the year, that wait until maybe July or Christmas before you receive your rent. That times up money that could have been used elsewhere.

And owning a week on either side of those dates will likely bring 1/2 or less - maybe far less - in both resale value AND rent. In fact it is very possible that the week of Christmas, just due to the near universal demand for virtually any location anywhere that week, could bring a 50 to 250%+ rental over annual fee return. Great. But the week before, and the week after, may very well go completely unclaimed at ANY price. And that applies to 40-50 weeks per year at many seasonal resorts. Those few weeks that almost always have value will resell at an artificially high level that may be hard to ever recover if you sell. The rest, despite being the same resort, same area, same features - aren't worth 5% of what those very limited few weeks a year are. Buying one of those for almost any price virtually guarantees a loss on that cost and rentals may also fall far short of ongoing costs.

The underlying problem for virtually all timeshares is that the true market for them - people who set out and want to buy - is extremely limited and was filled when only a few timeshares existed. The vast majority of owners never intended to buy, the majority seem to feel they made a mistake and now want out no matter what the cost. Thats why the scammers are able to extract $3000 or more to do nothing!

Even many of those that bought without knowing they "needed" to but learned to use and enjoy their ownership are now reaching the age when the family dynamic has changed and timeshares may no longer appeal to them. It is that vast majority of owners, no longer really happy to own and pay the costs, that undermine both resale and rental values. They understandably want something rather than nothing back for those ever growing fees and that in turn guts both the resale & rental markets. There is no real aftermarket for timeshares and that too hurts all types of sales. As quick as one owner manages to unload what they no longer want two replace them as the ever more sophisticated high pressure sales of systems to the still unsuspecting/uninformed is still luring in new, again largely disillusioned owners that often want out within a short time of buying!

It is an industry with no natural demand and an incredible oversupply of all types of inventory (except those relatively rare 5-7 holiday weeks and a few year round good weather/entertainment areas) that has no reliable foundation. It is beyond a high risk venture to make any assumptions about the future ability to rent or sell any resort or time and a real crap shoot as to where fees and/or special assessments may be headed. A quick look or occasional success story may make it seem that it is an easy way to make some profit, but it isn't easy at all. In fact it is beyond those not willing to put extraordinary effort and money into it for a very doubtful return.

 

[JudyS]

....
The underlying problem for virtually all timeshares is that the true market for them - people who set out and want to buy - is extremely limited and was filled when only a few timeshares existed. The vast majority of owners never intended to buy, the majority seem to feel they made a mistake and now want out no matter what the cost. Thats why the scammers are able to extract $3000 or more to do nothing! ....

Really? I'm sure there are plenty of timeshare owners who want out, given the current state of the economy, but I'm not sure the *majority* of owners want out. And, it only takes a small percentage of owners to keep the PCC scammers in business. So, the existence of the PCC companies doesn't tell us what percentage of owners are unhappy.

John, you have a great deal of experience serving on HOA boards, correct? At the resort(s) where you've been on the board, what percentage of owners want out? I understand that the resorts where you've been on the HOA Board are probably not typical, since owner-controlled boards increase owner satisfaction. Still, if most timeshare owners want out, I'd expect plenty to want out at even at well-run resorts.

There is no real aftermarket for timeshares and that too hurts all types of sales....

Now, THIS I agree with 100%! It's a real problem.

 

[timeos2]

Really? I'm sure there are plenty of timeshare owners who want out, given the current state of the economy, but I'm not sure the *majority* of owners want out. And, it only takes a small percentage of owners to keep the PCC scammers in business. So, the existence of the PCC companies doesn't tell us what percentage of owners are unhappy.

John, you have a great deal of experience serving on HOA boards, correct? At the resort(s) where you've been on the board, what percentage of owners want out? I understand that the resorts where you've been on the HOA Board are probably not typical, since owner-controlled boards increase owner satisfaction. Still, if most timeshare owners want out, I'd expect plenty to want out at even at well-run resorts.

Now, THIS I agree with 100%! It's a real problem.

The aging of the owner base is perhaps the biggest problem facing older, even owner controlled, resorts. These are the core owners who in many cases have been the reliable owners, satisfied with what they bought, and they pay without issue.

Now the original buyers are reaching the age where travel may no longer be an option, families have grown & in many cases scattered, income is now fixed rather than flexible from employment. Without a defined resale market to help them find a new buyer of the same type - those who understand the system and learn to use it for a great vacation at a reasonable price in upscale units - even these previously stable ownerships may get converted to PCC owned/controlled, unpaid weeks or have owners now desperate to be out of a product they have previously enjoyed & supported.

Finding a way to move those ownerships to new owners is a challenge. Most older resorts do not have sales teams anymore and that nagging lack of a resale market hurts across the board. I have seen where an owner friendly points system that does NOT require giving up the voting rights & deed - such as RCI Points or the systems that allow voluntary assignment of use rights to the points system, is a big help min getting new satisfied owners. The other type of system - that actually takes title and thus voting rights - may at first appear to be a great answer but, as the ownership explodes, in fact threatens the very owner control resort Associations fight so hard to obtain. TST has printed an article calling such operations the "strangler fig". A seemingly benign appendage that eventually kills the host.

While saying the majority is dissatisfied with their timeshare may be overstating it a bit the sad truth is that even those that are satisfied now may end up in the dissatisfied group when they eventually are done with the use/ownership. It is that inability to offer a clear and reasonable way out that has now really poisoned the very idea of timeshare for far too many. There are certainly more than enough owners currently falling into the dissatisfied camp to push both rental and resale prices so low as to be basically worthless in far too many resorts.

Thankfully the Boards I have served on are extremely aware of the situation, in large part due to the very positive influence of the independent management of VRI, and actively work to minimize the problem. They have programs to "recycle" ownerships to new generations and have in house sales to help stay ahead of deed backs and foreclosures. It isn't easy or cheap but the very existence of the owner control is at stake. Hopefully they will continue to have success managing a very tough situation.

 

[Carolinian]

I had actually thought about doing this, taking advantage of the cheap market to buy some OBX summer weeks to rent out. Since I have been working in Europe, I have been renting the summer OBX week we have each summer through the local brick-and-mortar timeshare specialist rental / resale brokerage. It works like a charm - I sign the rental contract, they find do all the work to find the renter, and in the end I get the check. They get a reasonable commission, and I still make a nice profit.

So, I thought why not buy some more summer weeks while they are cheap and rent them out, especially at the resorts with the highest rental demand - Outer Banks Beach Club I and II and Barrier Island Station - Duck. The problem was that when I went to the bargain basement of timeshare purchase, eBay, I found they were not quite so cheap. Auctions were running $2K+ and then there were the ripoff closing costs where they would insist on an unqualified closing company. So, it was not the huge bargain that would make owning to rent as attractive. Not a bad price at all for a summer OBX week, but not the steal to make me try to buy a bunch of them to rent out, either.

 

[ampaholic]

I had actually thought about doing this, taking advantage of the cheap market to buy some OBX summer weeks to rent out. Since I have been working in Europe, I have been renting the summer OBX week we have each summer through the local brick-and-mortar timeshare specialist rental / resale brokerage. It works like a charm - I sign the rental contract, they find do all the work to find the renter, and in the end I get the check. They get a reasonable commission, and I still make a nice profit.

So, I thought why not buy some more summer weeks while they are cheap and rent them out, especially at the resorts with the highest rental demand - Outer Banks Beach Club I and II and Barrier Island Station - Duck. The problem was that when I went to the bargain basement of timeshare purchase, eBay, I found they were not quite so cheap. Auctions were running $2K+ and then there were the ripoff closing costs where they would insist on an unqualified closing company. So, it was not the huge bargain that would make owning to rent as attractive. Not a bad price at all for a summer OBX week, but not the steal to make me try to buy a bunch of them to rent out, either.

This is true across the board: units that can rent for 2x or 3x the MF costs are not free and conversely units that are free (essentially) can not rent for even 1X MF time after time.

Again I say to the OP - try to get DeniseM's WKORV for free (ain't gonna happen).

 

[funtime]

If you approach it as a hobby and stay small I think this can be done. The bottem line - will it be fun as a hobby should be? I say yes, one or two beach weeks with summer rentals next to a large city will work. I have a Carlsbad Seapointe week 28 that I have rented each year for the past five years using Redweek. For you, Craig's List might also work. I "clear" about 250 to 350 each year on the rental. In other words, as long as you keep it small enough to still be fun go for it! Funtime

 

[Rent_Share]

But a Week 28 in Carlsbad has a cost to acquire

 

[ronparise]

Im struck by the number of folks here that presume to give advice that starts with...I dont do this and Ive never done this, or Ive tried it and failed....so I know its a bad idea..

I know what the op proposes is possible

Ive talked with folks that are doing it and Ive had some limited success myself

 

[DeniseM]

Ron - very doable with some experience - not something I recommend to a newbie. With your real estate background, I suspect you got up to speed quickly.