How do YOU determine a timeshare's value?

[VegasBella]

Hi there!
I'm new to timeshares and planning to buy one sometime in 2013. I always thought they were complete scams and I stayed far far away. But a couple recent experiences have changed my mind.

From what I've learned from reading this and other forums/websites is that there are some good options and lot of bad options. I've determined that buying resale is the best bet. And just like buying a used car, you want to do your research first to make sure there won't be a lot of large extra costs in the future.

Anyway, just wanted to say HI.

Also, I wanted to ask a question that seems to have a lot of different answers and opinions... How do YOU determine a timeshare's value?

Some methods I've heard/seen people use are:
- Costs of a hotel over a set period of time (6 years, 10 years)
- Profits if rented out (over period of time)
- Profits if resold at higher price
- Comparing to similar list prices for other similar resales
- Comparing to sold price for other similar resales (that info seems hard to get)
- Emotional value of consistent, preplanned and prepaid vacation
- Costs of unloading it
- Others???

 

[buzglyd]

I'm still a rookie but after reading TUG and several years in the industry, I just mulled a few things over:

1) Would I go there?

2) Costs (purchase plus maint.) over 20 years (I'm 48).

3) Would it rent for enough to cover my maint fees if I couldn't go?

#1 is really the most important thing to me because it is the only certain thing on the list.

 

[czar]

I'm no expert...

Hi there,

I'm no expert, but I can tell you how I made the decision to purchase and determined value of the second shared ownership we are currently in the process of purchasing (first property was fractional, this one is a fixed week). We spent two years thinking about whether we wanted to make a full-term commitment to a specific property we love and how long we thought we might want to vacation there . We then looked at rental rates for the week we knew we could go and compared that to the MF's and buy-in (i.e., cost). We evaluated what was on the market and what sold recently (and for what price). For the upfront cost and yearly MF, assuming MF inflate with rental rates, we determined a 7 year pay-off, which would be considably shorter than the time we'd plan to go to this one resort because our kids are still so young. Athough we have no expectation of maintaining principle, we also looked at the. 30+ yearhistory of the association, HOA, and resale values, all lf which were considerably healthy. So it made sense financially for us. Finally,we looked at rental market at the property to see feasibility in case we couldn't go some years.

Perhaps our situation is a bit different in that we want to go to this specific resort and that we have 13 other week we can trade, combine, etc., throu RCI weeks.

 

[LannyPC]

Also, I wanted to ask a question that seems to have a lot of different answers and opinions... How do YOU determine a timeshare's value?

Some methods I've heard/seen people use are:
- Costs of a hotel over a set period of time (6 years, 10 years)
- Profits if rented out (over period of time)
- Profits if resold at higher price
- Comparing to similar list prices for other similar resales
- Comparing to sold price for other similar resales (that info seems hard to get)
- Emotional value of consistent, preplanned and prepaid vacation
- Costs of unloading it
- Others???

In my personal opinion (FWIW), #2 is the most important factor. Or, IOW, what is the ratio of what the going rental rate is to the MFs? If the going rental rate exceeds the MFs then you have two good things: (1) It's cheaper to stay there paying your MFs than it is to rent from an owner and (2) if you can't go there, you can rent it out for a nice little profit. So either way, something good's gonna come out of it.

That brings us to your last point of "costs of unloading it". If it has value, you should not have any problem finding someone who wants it and you may even be able to sell it for a few bucks.

OTOH, if the MFs exceed the going rental rate, then you are hit with the converse double whammy: (1) It's more expensive for you to stay there if you own there than it would be to simply rent from another owner and (2) if you can't go (and don't use the exchange privileges), you're going to be labouring to try to find a tenant in hopes of possibly recovering a portion of your MFs. Do you really want to be going through that year after year?

 

[ronparise]

I look at potential profit (rent - mf) to to decide what to buy. How much profit determines how much Im willing to pay. And I like to pay for my "investment" in the first year. But I dont follow a fixed formula to decide. Ill pay more for something special.or for something I intend to use myself.

 

[Sandy VDH]

The true value is what someone is willing to pay for it.

Many timeshares have $0 value, because no one what them.

However, other properties have proceived value or real value (ROFR). Disney (all), Hilton (most), Marriott (some).

What are you looking for and why?

 

[classiclincoln]

Welcome VegasBella,

The value of a timeshare is just like the value of anything else; what a willing buyer will pay and what a willing seller will accept.

Now, if you are asking how I determine if I get monetary value from a timeshare, I have a method I use that I think is pretty valid. I have a spread sheet and here's what I do:

• Start with the total purchase price, including all fees and interest if financed.

• 
  Add in all on going fees; TUG membership, II membership, exchange fees, MF, etc.

• 
  Each time I take a trip (exchange or home usage), I subtract the value of the trip. To get the value, I go onto Trip Advisor and see what the week would cost if I was going to pay for it.

Using this method, we paid off the developer bought Grande Vista unit purchased in 2005 in 7 years. We "owe" about $10,000 on our Grande Chateau unit we bought resale in 2008, not counting the trip we're taking Xmas week 2013 (exchange still pending). Our Ren Aruba unit we bought in 2010 was paid off in 2012 (obviously resale) and just picked up resale real cheap a unit at Kauai Beach Club.

Just for what it's worth; something to think about.

 

[Timeshare Von]

Value to me . . .

1. Low MF

2. Somewhere I want (and can afford) to go to

3. High TPU with RCI for exchange value

 

[VegasBella]

In my personal opinion (FWIW), #2 is the most important factor. Or, IOW, what is the ratio of what the going rental rate is to the MFs? If the going rental rate exceeds the MFs then you have two good things: (1) It's cheaper to stay there paying your MFs than it is to rent from an owner and (2) if you can't go there, you can rent it out for a nice little profit. So either way, something good's gonna come out of it.

That brings us to your last point of "costs of unloading it". If it has value, you should not have any problem finding someone who wants it and you may even be able to sell it for a few bucks.

OTOH, if the MFs exceed the going rental rate, then you are hit with the converse double whammy: (1) It's more expensive for you to stay there if you own there than it would be to simply rent from another owner and (2) if you can't go (and don't use the exchange privileges), you're going to be labouring to try to find a tenant in hopes of possibly recovering a portion of your MFs. Do you really want to be going through that year after year?

This makes perfect sense to me. Of course, however, there's always the risk that the market will change or that something about the resort changes. Either could flip the numbers.

Plus, there's the initial cost. Nothing I'm interested in buying is a "$1 on eBay" kind of situation. So how many years do you count the initial cost? 7, 10, 20?

 

[DaveNV]

I have three criteria:

A big factor for me is what it would cost me as a renter to stay at the resort where I own.

In some resorts, such as the one I own on Kauai, it's an easy exchange to get there, but exchangers rarely get the prime oceanfront units. (There is a substantial difference in feeling between being oceanfront and not being oceanfront at this resort.) Renting from an owner can get me an oceanfront unit, but at a cost higher than maintenance fees. As an owner of an oceanfront unit, I can reserve that oceanfront unit for my use time. Best of all, maintenance fees at my resort are the same for oceanfront vs. non-oceanfront units, based on number of bedrooms and bathrooms owned. So I'm getting the most bang for my buck.

A secondary factor for me for any timeshare I might buy, since I buy resale off eBay for pennies on the dollar, is the ongoing cost of ownership based on maintenance fees and any potential special assessments. I don't consider purchase price a factor, because it's essentially free. Similarly, when time comes to pass it along, I'll give it away, as I've gotten my ownership value from it.

So for me, if I can stay at my timeshare for around the cost of renting there, but I get better value from owning vs. renting, then it works for me. If I was traveling with kids, or wanted the perks of higher-end ownership programs, the equation might be different.

The third factor for me is exchange value, if I choose not to stay where I own. I've bought and sold enough timeshares now to know I want to own where I most often want to stay. But if I can't stay there one year, I need to know I can exchange away for a reasonable value, and get an exchange to a place where i want to go. I have that with what I own. I've never tried renting out my units, because I've always been able to use or exchange them.

Great questions. Good luck with your research!

Dave