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Completely confused...making profit off timeshares?

Immuno

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Let me start off by saying I am completely new to not only this board, but also to the idea of timeshares, so I apologize for my naivety. My husband and I just returned from a caribbean vacation where we agreed to sit through the timeshare presentation. We chose not to purchase at the end of the sales pitch, because I am not one to make spontaneous decisions. I like doing my research first. I have always heard that timeshares are a scam, but from the things the salesman said, it seems like a person could easily make a yearly profit off of it. I am hoping you TUG users can help clarify a few things and let me know where my thinking is flawed on all this! :)

Here is what I was told my the salesman: I would receive one primary week, one bonus week, and one wholesale week per year (so 3 weeks total) for a price of $13,500. I know there would be NO profit to be made if i actually paid this price. However, I also know that I could easily buy a timeshare resell on ebay for $1 (assuming I am patient and can find a desperate buyer who agrees to pay the resort transfer fee and no closing costs). If i bought a timeshare from the same resort from ebay, would i still have the 3 weeks mentioned above, or were the extra two weeks some type of "developer incentive?"
The salesman also told me I could easily give my wholesale week or primary week back to the resort, and they would sell it for me for the weekly rate of $2500. They would keep 30%, but I would still get 70% of that which would still be a nice check. They also told me I could sell the week myself for 100%. I don't foresee being able to sell it myself for more than $1700 so giving it back to them seems like the best option, ASSUMING they actually are able to sell them.

Basically, I don't understand how I would NOT make profit from owning a timeshare. Say I bought a timeshare for $1 on ebay and had maintenance fees of approx. 800 per year. I could give 2 of my 3 weeks back to the home resort and receive two checks for $1700. That totals to $3400. Of course i would pay my maintenance fee of 800 which would knock down my yearly profit to $2600. Still, a profit. I could actually use that $2600 profit for flight, meals, etc on my 3rd week and have a free vacation every year. Or, if its not that easy to just sell back to the resort, I could sell my week on ebay and once again cover my maintenance fees.

I realize timeshares are not exactly an "investment" if bought from the developer for thousands of dollars, but if I basically got one free from ebay, why wouldn't I make money off of it every year? What is the catch?

I am so confused! Thanks in advance for all of your help :)
 

Passepartout

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Welcome to TUG!

First- salesmen lie! The only sure way to tell this is to watch their lips.

Second- If there was any money to be made by returning a TS to the resort to rent, don't you think the resort would just rent the units and eliminate having to pay the owners? No one EVER made a bundle doing this.

Yes, you can buy TS on eBay or TUG marketplace, or bargain deals for a buck and you really don't have to be all that patient to find one where the owner will pay closing, the current years' maintenance and throw in an already booked vacation

If you are interested in learning about TS, you've come to the right place. We are a bunch of addicts, but I think we all realize that TS isn't for everyone. Read the newbies stickies, explore the various systems, ask questions. Evaluate how YOU vacation.

The value of TS isn't trying to rent them to make money. The value is in their use to provide great vacations and lifelong memories for your family.

Again, Welcome!

Jim Ricks
 

vacationtime1

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The value of TS isn't trying to rent them to make money. The value is in their use to provide great vacations and lifelong memories for your family.
This is the best single piece of advice to follow.
 

Immuno

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Thank you for the response. I hope I didn't come across as ONLY wanting to buy a timeshare to make money. The sole reason I would buy is because my husband and I absolutely love traveling. However, we can't afford to spend several thousand dollars a year on vacation. I was hoping that the money I might could make off of the first 2 weeks could be used to pay my maintenance fees and therefore give us a "free" vacation week altogether. Of course I would still have airfare and meal costs, but if I made any money on the first two weeks above and beyond the $800, then part or all of that may be paid for as well. Basically, I'd be buying a timeshare in hopes of getting a "free" vacation every year rather than coming out of the year with a net profit.
 

DeniseM

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Passepartout

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Most of the systems and exchange companies have 'bonus weeks' for lack of a better term. They all call them something different so it's hard to keep up. RCI has 'Last Calls' and 'Extra Vacations' sold (rented actually) for cash as low as $250 for a week without counting against what you own. Some exchange systems offer an extra week if you exchange through them. Interval Int'l has their bonus programs too.

So in short, you don't have to own additional weeks to have low cost vacation options.

For instance, I own one RCI Points resort. Out of it's annual allotment I ordinarily get one 'nice' retail exchange (this year it's near Disney Anaheim), one nice Mexican resort week (this year in Mazatlan) and a shoulder season week at Park City, UT. We like shoulder season for the low costs and lack of crowds. We aren't tied to the school year, and that helps too.

Read the stickies, and check out the various systems. I always recommend that you rent a few times to get a feel for timesharing. You can often rent for the cost of a MF or less.

Happy hunting and vacationing.

Jim
 

ronparise

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The value of TS isn't trying to rent them to make money. The value is in their use to provide great vacations and lifelong memories for your family.
I have to disagree here If the only way to determine value was in the value of the vacation and the memories than timeshare are either worthless or priceless...I dont know which

People buy timeshares for lots of reasons for some its the guaranteed accommodations at a certain place at a certain time, for others its the "forced" vacations. I know I wouldnt go anywhere, except that I paid my fees and now by god, Im going to use it.

There are some that have been bitten by the timeshare bug and they have to buy more ...its an addiction or a game with them Some have constructed spreadsheets documenting every expense and every night showing to the penny what they spent per night in their timeshares

Others buy to trade, and take great pleasure in trading their mud week in the mountains for Christmas with Disney

And yes there are some of us that buy to rent...its a risk, but one I enjoy, and so far its paid off
 

Tia

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Going out on a limb-- to rent a ts and make $ off it takes plenty of know how and not every resort is it possible. The beginner won't have such knowledge and even the educated may get stung in current economy.
 

ronparise

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Going out on a limb-- to rent a ts and make $ off it takes plenty of know how and not every resort is it possible. The beginner won't have such knowledge and even the educated may get stung in current economy.
I agree...dont do it..I dont need the competition

Seriously..it is work, but not hard work and not anything that anybody cant learn...If you want to try it. reserve a high demand week in a high demand area, thats not overrun with timeshares. Buy something that you would be happy to use yourself, if it dosent get rented or has a cancellation policy that makes sense....then advertise...if it works, then try it again . (practice makes perfect) before you scale it up. Of the folks Ive talked to here on TUG the most successful seem to specialize. They know the area, know the resorts, know what they are renting. and know the competition. They know the best restaurants nearby, etc etc. Ive gotten to know the folks at the front desk as well as the guest services manager at my favorite rental property. I even know the public transportation schedule so I can advise my renters to leave the car at home, or park it and forget it.
 

presley

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Which Timeshare were you visiting? I'm not familiar with buying a week and getting a bonus of 2 weeks like that. Also, what are you annual dues for all 3 weeks?
 

ampaholic

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Welcome to TUG!

-snip-

The value of TS isn't trying to rent them to make money. The value is in their use to provide great vacations and lifelong memories for your family.
Agree -- Welcome!

Don't confuse the "value" of a timeshare with the "worth" of the timeshare.

Here "value" is really "the value of the use to YOU" whereas "worth" is the "worth" as expressed in dollars by the open market.

Timeshare salesmen try to get you to pay for both the "worth" and the "value" when you buy retail - and top dollar at that.

Resale sellers (on eBay anyway) have usually realized that the "value" is minimal and only try to get what the market will bare - the "worth".

The "worth" to a landlord is perhaps greater - because they know what rent they might get.
 

timeos2

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Use your common sense, of which most timeshare weasel salesmen make you suspend or ignore, and realize if the use REALLY rented for that much so easily then they wouldn't esnt to sell it to you. They would just sit back and rake in the profits for themselves.

The presentation was basically a scam. As someone else said the value is in the vacations not any rental or profit. And as you seem to know always obtain your ownetship(s) resale to leverage the greatest value. All retail purchases mean you paid too much.
 

DeniseM

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Let's not muddy the water here. Of course there is a viable market for timeshare rentals. BUT that has nothing to do with the OP's question.

She cannot make money with the offer she received, and if she accepted it, she should rescind immediately
 

ronparise

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sorry to stray off topic, Im glad to bring it back...

what resort are we talking about?

"I would receive one primary week, one bonus week, and one wholesale week per year (so 3 weeks total) for a price of $13,500. "

to get three weeks for one mf...that sounds to good to be true
 

timeos2

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Let's not muddy the water here. Of course there is a viable market for timeshare rentals. BUT that has nothing to do with the OP's question.

She cannot make money with the offer she received, and if she accepted it, she should rescind immediately
For 95% of all owners and 99.9% of those new to timeshares and with no history with them even considering buying to rent is a guaranteed way to be frustrated with timeshares. Even considering it as just a thought is an error of judgement in those cases. Add that there is no way a retail sale would ever be viable and this is an easy one. Run far far away from even consideration of this "deal". Look for a resale that meets your families likely travel plans and go with that or rent. Those are low risk - high potential value options vs the loss you'd suffer with any rental plans. It's not for the new to timesharing crowd.
 

tschwa2

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Immuno,
In terms of resales most do not include "bonus" weeks. You only get the deeded week. It would usually need to be specifically part of the deed that any additional benefits transfer upon resale. If you are buying resale you will need to do your own research. Often the sellers, especially ones on ebay don't know what benefits transfer so you can't rely on the ads.

The resort won't take your weeks and rent them for $2600. The story that is most often recounted is the buyer calls the resort months later to put their weeks in the rental program and is then referred to another agency that will list the week for an additional fee of $599 and then if paid the buyer never hears anything and the week is not rented. Also many bonus weeks require the buyer to pay the MF on the week if it is used. No MF if not used. Even if the resort was renting inventory from owners they would rent their unused inventory before attempting to rent any owners weeks.

If the resort was an All inclusive every warning is doubled. Renters would still need to pay an all inclusive fee which is usually fairly high.
 

a1000monkeys

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I realize timeshares are not exactly an "investment" if bought from the developer for thousands of dollars, but if I basically got one free from ebay, why wouldn't I make money off of it every year? What is the catch?

I am so confused! Thanks in advance for all of your help :)
The catch is the ones that you can usually get for free can rarely be rented for much more than the maintenance fees.
 

Beefnot

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Here is what I was told my the salesman: I would receive one primary week, one bonus week, and one wholesale week per year (so 3 weeks total) for a price of $13,500.
Those 2 bonus weeks may also be just for the upcoming year, not deeded weeks, although the salesperson makes it seem like you are getting 3 weeks per year. Doesn't really matter though, because buying whatever you need resale will likely make you much happier, at least for your first purchase. I'm speaking from very recent experience.
 

CAGypsy

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I agree...dont do it..I dont need the competition

Seriously..it is work, but not hard work and not anything that anybody cant learn...If you want to try it. reserve a high demand week in a high demand area, thats not overrun with timeshares. Buy something that you would be happy to use yourself, if it dosent get rented or has a cancellation policy that makes sense....then advertise...if it works, then try it again . (practice makes perfect) before you scale it up. Of the folks Ive talked to here on TUG the most successful seem to specialize. They know the area, know the resorts, know what they are renting. and know the competition. They know the best restaurants nearby, etc etc. Ive gotten to know the folks at the front desk as well as the guest services manager at my favorite rental property. I even know the public transportation schedule so I can advise my renters to leave the car at home, or park it and forget it.
I would like to be your competition. :eek:

Seriously, I recently bought a fractional ownership in Cabo during peak summer vacation in an area I love to visit, but with hopes I could rent it out as well. I am leery to take that leap because it is untested waters for me. Any advise to get me over that hump?
 

rrlongwell

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I would like to be your competition. :eek:

Seriously, I recently bought a fractional ownership in Cabo during peak summer vacation in an area I love to visit, but with hopes I could rent it out as well. I am leery to take that leap because it is untested waters for me. Any advise to get me over that hump?
Be well financed and be able to take the loss.
 

DeniseM

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I would like to be your competition. :eek:

Seriously, I recently bought a fractional ownership in Cabo during peak summer vacation in an area I love to visit, but with hopes I could rent it out as well. I am leery to take that leap because it is untested waters for me. Any advise to get me over that hump?
My advice is don't buy in Mexico. Travel to Mexico is depressed, and there is far more supply than demand. It's really difficult to rent in Mexico right now.
 

CAGypsy

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My advice is don't buy in Mexico. Travel to Mexico is depressed, and there is far more supply than demand. It's really difficult to rent in Mexico right now.
Ummmmm..... but I already bought it.

So also, not very helpful. But thanks.
 

DeniseM

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I'm sorry to be so blunt, but the market is flooded with cheap rentals in Mexico. The sad truth is that there is no advice that can change the realities of the market. Mexico is a very weak rental market right now. I'm sure the sales people told you it would be a hugely profitable rental, but that is a common ploy that they use in Mexico and elsewhere, to get people to spend more than they would otherwise.
 
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