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Completely confused...making profit off timeshares?

Passepartout

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And not to rain on the parade, there's an ongoing thread in the Mexico forum about increasing MFs. One TUGger said his Mexican RTU MF was up 80% in 10 years. No protection from an owner-controlled HOA or BOD there.

Here's a link to the thread: http://www.tugbbs.com/forums/showthread.php?t=162367

Jim
 
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rrlongwell

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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.

This can also be said of a number of other markets in the U.S. Be careful, for the 1st go, you may want to see if a Tugs renters might take you under his/her wing to teach you the ropes of that business for a percent of the rental. They would not make much but most are great people.
 

MOXJO7282

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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.

I'm afraid this is the truth. You will find even a super nice reosrt in Mexico will be difficult to rent because of all the reasons Denise mentioned. Check out Redweek.com that will give you a perspective on if there is a rental market for your property. If you see some activity perhaps you can find some renters but take it from another owner who rents successfully, if there is no market on Redweek, its likely there is no market for your property.
 

MuranoJo

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You can rent successfully in MX if you reserve a holiday week or other high-demand week at a good location. Just like the U.S. or other areas, prime times & locations have an advantage.

For Christmas and New Year holidays, I've been able to rent for 2-4x my m/f, depending on the economy at the time. The challenge is to get a membership that will let you reserve holidays.
 

stevedmatt

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Based on the OP's thought that he can sell those 2 extra weeks, it sounds to me that they were deeds that were thrown in to the transaction. These are weeks that are almost certainly unrentable and practically unsellable. The problem is that you are still responsible for the maintenance fees with those fees are likely the same as the one week you received that may actually have a value over $1.
 

DeniseM

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You can rent successfully in MX if you reserve a holiday week or other high-demand week at a good location. Just like the U.S. or other areas, prime times & locations have an advantage.

For Christmas and New Year holidays, I've been able to rent for 2-4x my m/f, depending on the economy at the time. The challenge is to get a membership that will let you reserve holidays.

The OP bought summer weeks from the developer -
I ended trading my Worldmark timeshare in for the Grand Luxe - Vida Vacations. Yes, I paid thru the nose. But you know what, I am perfectly happy with my decision and I got what I wanted......

I recently bought a fractional ownership in Cabo during peak summer vacation
I'm sure part of the sales pitch was that he could recoup some of his money with fat rentals, and I'm sure they told him that summer was peak season.
 
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BocaBum99

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999 times out of 1,000, the only value in a timeshare is in its use. It is possible to make money "with timeshares", but few people do, and those who can find it is a surprising amount of work.

This is false. There are only about 5700 resorts worldwide. If only 1 in 1000 units are good to own as rentals, that would mean only 5-6 resorts qualify. There are hundreds of resorts that are great renters. I would say 90 times out of 100 the value in a timeshare is in its use.
 

MuranoJo

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Never mind. I was just saying there are exceptions in MX. Agree Cabo in Summer can be hot and not to be considered peak time to rent. Plus, yes, the salespeople lie about rental income.
 
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bnoble

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I would say 90 times out of 100 the value in a timeshare is in its use.
Fine, I engaged in a little hyperbole. The point was: "It's harder than you think." If we're only arguing about the number of nines in the "not a good rental" number, we can agree on that, no?
 

JudyS

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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 own a bunch of timeshares that I rent, and the past few years, it's been tough just to break even. And, that's with years of timeshare experience.

The salesman lied to you. There are hardly any timeshares that rent for $1700 a week. With most timeshares, you would be lucky to get $700 a week in this economy. In fact, with many timeshares right now, it is hard to find a renter at ANY price. Renters are very skittish about booking an unknown resort from an unknown person. Even if you can find a renter, it is often a TON of work. One prominent poster here on TUG had a renter email her 63 times about a single rental.

The two bonus weeks the developer offered will either have additional MFs associated with them, or will be worthless. In any event, they will not be available with most eBay resales.

If people could make money off of these weeks, they would not be for sale for $1 on eBay. (There is occasionally something of value for $1 on eBay, but it's rare, and you really need to know the market.)
 

BocaBum99

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Fine, I engaged in a little hyperbole. The point was: "It's harder than you think." If we're only arguing about the number of nines in the "not a good rental" number, we can agree on that, no?

It is certainly harder than the OP thinks it is. I do think the number of 9s matters. If it is 999/1000, then finding a good timeshare to rent is like finding a needle in a haystack. If it is 90/100, then it may be worth the time looking for it.

I would say that prior to 2008, timeshare rentals was pretty easy. I would say that in 2012, timeshare rentals are not easy for the average timeshare owner. However, timeshare rentals are booming. There is no doubt about that to me.
 

timeos2

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It is certainly harder than the OP thinks it is. I do think the number of 9s matters. If it is 999/1000, then finding a good timeshare to rent is like finding a needle in a haystack. If it is 90/100, then it may be worth the time looking for it.

I would say that prior to 2008, timeshare rentals was pretty easy. I would say that in 2012, timeshare rentals are not easy for the average timeshare owner. However, timeshare rentals are booming. There is no doubt about that to me.

They are exploding now - but at average rates that are often less than the annual fees. The hope is that travelers are learning of the value they represent in extra space and features and are becoming comfortable with dealing with timeshare owners for accommodations. That may bode well for a rise in prices - and potential profits - as the purchase price hovers near zero and if fees can be held in check.

I have to agree that chosen extremely carefully for maximum value (which means a prime time that will be in high demand for use, trade and rental) there are timeshares that will represent a great opportunity for those that can properly leverage them. However the vast majority of time - even at the greatest resorts/locations - are seasonal in nature and those off season times will never have high value and in fact my fail to return even the cost of the annual fees. Those are what are clogging up ebay, TUG & every other resale forum with $1 or less offers. The uninitiated thinking they are getting a great buy will be looking to dump them themselves in a year or two. Nothing will ever make them the value of the 20% of top times that are the only real marketable times out there.
 

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Not that difficult

I have a fixed week between Christmas and New Year's at Park City Utah--I have rented the 2 bdrm lock out over the past several years as my children are now out of college and that week is no longer guaranteed availability as it was when I purchased when they were in high school. I advertise in Redweek and usually rent within two weeks of placing the ad, with 2-3 inquiries. I have been very happy and successful with renting and have gotten $3,500 to $4,500 for the week with no problem. I think the key is to be at high quality resort and high demand week. I don't get the exchange thing and have never done so--I can't plan a year out and the sales person made it sound super easy (not).

Good luck--definitely would look for use, not investment. Don't forget, they are not so easy to get rid of if/when you change your mind.
 

DeniseM

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I have a fixed week between Christmas and New Year's at Park City Utah

It is still easy to rent a prime holiday week. But the two newbies in this thread are trying to rent inventory with high supply, and low demand, that they bought from the developer. They do not have prime holiday weeks.
 

bnoble

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timeshare rentals are booming
Not just timeshare rentals. Lots of evidence that travel is recovering. Several hoteliers are reporting improved RevPAR. Air loads and fares are up (though partly due to continued consolidation and capacity reduction). Rental car rates are through the roof (though, again, in the face of past capacity reduction). Theme park attendance and spending were up more or less across all operators this past season.
 

VivianLynne

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When I email or call someone about a rental, I figure they should know the resort and area far, far better than me. They want MY MONEY. They want me to trust them when I feel I KNOW more than them?

I am sure the most successful landlords/rentors can dispell doubt about their ownership of a week within 3-5 minutes of a phone call or personal pictures from MORE than one vacation stay.

Is OP going to do the research and sell their week?
 

gidat1

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We are missing...

Why don't you look at various website that rents resorts in the area and see if you can rent those weeks for $ 1700.00 or far less. If you rent it through the resort it self, they will charge you up to 40% comm fees. Rent it by your self is risky and takes lots of time and expertise.
Goodluck.
gidat1
 

bnoble

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I would say 90 times out of 100 the value in a timeshare is in its use.
I want to come back to this. Do you think 10% of all *resorts* have weeks with potential rental value, or 10% of all *timeshare deeds* have rental value?

The former I believe. The latter seems less clear.
 

ronparise

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I want to come back to this. Do you think 10% of all *resorts* have weeks with potential rental value, or 10% of all *timeshare deeds* have rental value?

The former I believe. The latter seems less clear.

I dont think its important to know the answer..As one who is buying to rent, Im interested in a week at a resort in a place at a time that will be in demand...and the place ought not to to be overrun with timeshares and hotels. ie Im looking for a high demand low supply situation....Also I want a place where Craigs list is active

Whether my "possibles"are ten percent of one list or ten percent of another doesnt matter. The fact is; there are only a few weeks at a few resorts that work for me....but thats enough
 

BocaBum99

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I want to come back to this. Do you think 10% of all *resorts* have weeks with potential rental value, or 10% of all *timeshare deeds* have rental value?

The former I believe. The latter seems less clear.

I wasn't being scientific about it. I was thinking in terms of resorts and orders of magnitude. I believe I could easily find 500 resorts that have rentable weeks that I could purchase and make decent money on.

My own personal screen for a good renter is 50% minimum return on invested capital with a payback of less than 1 year. This rules out most high end renters like Marriott's, but many people on this board do it successfully, just not at a scale that can earn them a living since they would run out of money before they had enough inventory to rent.

Once I find such a resort, then it's just a matter of scaling to make it profitable.
 

MOXJO7282

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I know exactly what the formula is for Marriotts and its quite simple. Renting 2BDRM prime weeks. The question how much can you afford to spend to buy enough inventory to make a living off of it.

Knowing what I know from my ownership any of my properties qualify so let's say you were going to start your business right now.

Here's a few examples

Buy 10 plat Aruba Surf for $15k each. Profit is at least $1500 each easy.

So spend $150k = $15000 annual profit margin

Buy 10 MOW plat plus Ocenside units for $18k each. Profit is at least $1600 each week

So spend $180k = $16000 annual profit margin

So spend $330k and you can generate $30k + annually
 

bnoble

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So spend $330k and you can generate $30k + annually
I think Jim's point is that you could spend much less for the same total return---in other words, better leverage is possible.

I agree with him on this. Another example is DVC. If you actually work it out, the ROI is pretty weak.
 
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