Hi all. I’m going on a tour at Westin St. John just to get a free snorkel tour. We are actually interested in a unit here but obviously not retail.
A few questions:
1) are developer prices negotiable ? To the price points of resale? I figured I’ll just offer them a market price for the Virgin grand (mandatory) 3 br platinum and see if they bite.
2) what do you think the 257,500 points are worth?
3) my math is a 3-4 year payoff on a three bedroom Virgin grand (mandatory) in highest season. So that would put the value at 8-10k.
Conservative math is: (rental price - MF)x3. Roughly (6000-3100)x3
thoughts?
I am not an expert on this resort but at some point I was looking to buy so here are my thoughts.
1) Developer prices are not negotiable, but the more resistance you offer, the more "extras" they will offer. They don't care about resale prices and as far as they are concerned you're not even supposed to know that market exists...
2) Not sure what you mean by what are 257,500 worth? Worth when buying from developer? When buying resale? Worth as rental value? In general though resale prices reflect what people are willing to pay for those weeks. The resale market for timeshares priced over $2000-$3000 tends to be pretty efficient.
3) The 3 BR Pool villas general rental price is $4500-$5000 on
http://www.westinstjohnrentals.com/ so that's who you are competing with and they already have an established customer base. You will see some prices like $9000 on RedWeek and maybe a New Year's Week might rent for that much (I wouldn't know) - I suspect many of those adjust the price or go unrented. I'll sometimes list a week at an unusually high price if my Plan B is to use it myself. If it rents great and if it doesn't that's even greater! $4500-$5000 seems more realistic to me - I've rented myself at $4500 from that website before, but it was a summer break week.
Which brings me to your math regarding the payback period, which is how I also think of things. I think you're being highly aggressive - that's not a worst case scenario but a dream scenario... At a 3-year payoff you are implying a 30%-35% annual return. A 2 BR Platinum at Westin Kierland Villas has a payback of 4 to 5 years (say $13K resale purchase price and $2500-$3000 rental above MFs) and I think that's super hard to beat.
It's been a while since I shopped around for WSJ but my recollection is that the payback period here is more like 10+ years because the supply is limited (no 3BR on RedWeek now, for example) and asking prices for PP weeks that do list are generally very high, especially after the bump to 257,700 SOs. A 10 year payback period is still a respectable 10% annual return though if resale value doesn't go down, but people don't buy here because of low maintenance fees or an unusually high rental value (Hawaii and WKV high season weeks also can rent for ~$4500). If you care most about payback period, you could maybe do slightly better at WSJ with a summer week (priced lower) , but that 3BR VGV summer week would only give you only about 125K SOs - not even enough for a 2BR island view in Hawaii.
So if you want to be "conservative" think rental value of $4500. If you can get $6000 that's great, but $6000 is not "conservative". On the other end of the equation, you list $3100 for maintenance fees but with SVN fee it's more like $3300 and I'm not sure if that includes taxes.
@DavidnRobin can elaborate more on the tax issue and how it gets billed. So going back to your math - in the end you may not make more than $1000-$1500 over maintenance fees and you're not likely to see a 3BR VGV listed for less than $15K. It's worth what people will pay for it...