Cost of Living Cap on MF

[klconley]

I was told by a broker that there is a cost of living cap on Mf. So, maint. fees will basically go up with inflation? Is that generally true? I know there will be exceptions, I'm mainly interested in what's happening overall. Thanks. Kelly

 

[Jya-Ning]

I was told by a broker that there is a cost of living cap on Mf. So, maint. fees will basically go up with inflation? Is that generally true? I know there will be exceptions, I'm mainly interested in what's happening overall. Thanks. Kelly

That is not true in most cases. However, WM does has either 5% or cost of living cap on MF. Whichever is greater.

Jya-Ning

 

[Mel]

If you think about it, a cap doesn't make sense. The maintance fees are supposed to be set based on the cost of maintaining the resort. That cost is dependent on many factors, and sometimes rises more than you might expect. If a resort had a cap, the fees collected would be lower than needed, and something would have to be cut from the budget. keep doing that too often, and your resort becomes less and less appealing.

If your furnace stopped working or your roof leaked, would you refuse to replace it because it didn't fit in your budget? No, you would either need to cut something else, or increase your budget
.

 

[klconley]

Thanks

Excellent point. I'm learning so much. Kelly

 

[bnoble]

As I've written elsewhere, I'm in complete agreement with Mel on this.

I'd rather have a prudent, owner-run board of directors setting fees such that the resort is well-managed and maintained, than have some sort of external limit on MFs.

 

[Jya-Ning]

WM as a club has better chance to hold it since they hold all the resort together. Most time resorts will not get hit at the same time, and with broad base, the cost increase (repaire, maintain) will in line as major index.

If it is like Wyndham, you have less chance. And you would not want it to be a just a man made figure which make maintain a very difficulty job.

Jya-Ning

 

[bnoble]

klconley: you seem very concerned about rising MFs. You've been asking this same question in a number of ways. You cannot avoid increases in MFs. You can't predict the increases with certainty---even with WorldMark, if the underlying index on which the cost-of-living metric is based on inflation in some way.

If you own a timeshare, you agree to be responsible for your share of the costs for running the resort, whatever they may be, for as long as you own the deed. The costs of running the resort are going to go up, each and every year. Some years, they may go up by quite a bit, either because of market forces, or because the fees charged have not kept pace with long-term needs. No matter how careful you are in evaluating your purchase, something unpredictable could happen---storm damage, etc.---that requires a significant expense. That expense will be shared by the owners.

In exchange for this additional liability, you have the benefits of ownership---you are getting the lodging for what it costs to operate it, rather than paying additional money in profit to the owner. (True, the management company makes a little, but let's ignore that.)

If that arrangement is unsetting to you, then you should rent, not buy. I think I've said this before in one of your threads, but it's like owning a house vs. renting one. If the water heater breaks, the owner has to buy a new one; the renter just calls the landlord.

 

[klconley]

Bnoble

I'm actually seeing it your way. I was able to download a table of MF fees for all resorts from the wyndham forum and I'm not nearly as concerned about the fees. I analyze by asking questions, even if the questions seem repetitive or ignorant, I really am gaining something. I appreciate your help and patience.

 

[cotraveller]

WM as a club has better chance to hold it since they hold all the resort together. Most time resorts will not get hit at the same time, and with broad base, the cost increase (repaire, maintain) will in line as major index.

Jya-Ning

That is one of the big advantages of a no home resort system like WorldMark. The spreading of the costs across all resorts helps avoid suprises. Unlike many of the systems where ownership is based on a specific resort, WorldMark has never had a special assessment in all of the years it has been in existence.

 

[roadsister]

You're right Fred! Thanks for reminding us.