How.?.Why?..has your timeshare DEVALUED since purchase..and is it fair ???

[Deb from NC]

EEK, I'm not sure (?) We have never traded it because my husband lives for the golf perks there But I'll try to find out !

 

[ace2000]

At the two resorts where I serve as a Board member labor is approximately 50% of the operations budget - 35% of total budget including reserves.

As Sally properly notes ignoring the extremely high costs of labor to give a timeshare that resort "look & feel" (something that will most certainly NOT be part of a whole ownership condo) creates a false "savings". While I will not argue that some resorts, especially those that continue under Developer management after the majority of sales are done, aren't being grossly overcharged for services that could be done for far less that is not universally true. And as shown by the majority of responses in this and other threads people realize that you cannot directly compare timeshare operations to whole condos.

Don't discount everything e.bram offers up as ideas for better management / value for the dollar as we do need people to be creative. The exact method he chooses to try to equate to differing operations is badly flawed while the concept of holding down expenses - especially management costs - is a very good one. Everything has to go into the mix and hopefully the best balance of expense vs value will emerge. Blanket statements of corruption or price gouging tend to reduce the credibility of what can be valuable ideas to help resorts get more bang for the buck. I find these types of threads very informative and valuable as an owner and a Board member.

I do have to throw out the chaff and focus on the grain of value in many of these arguments.

John, I've got a couple of issues with the whole management concept. What is the incentive to keep costs down? I know there's some incentive based on the feedback from the owners, but there really is not a profit-motive like there is in the 'real' world. And for an example, why have my MFs gone up over 50% in the past 4 years when the inflation rate has been minimal? Have labor costs stayed frozen or do they continue to go up at your resort? I know for me personally, my COLA increases have been frozen for the last 3 years.

 

[timeos2]

John, I've got a couple of issues with the whole management concept. What is the incentive to keep costs down? I know there's some incentive based on the feedback from the owners, but there really is not a profit-motive like there is in the 'real' world. And for an example, why have my MFs gone up over 50% in the past 4 years when the inflation rate has been minimal? Have labor costs stayed frozen or do they continue to go up at your resort? I know for me personally, my COLA increases have been frozen for the last 3 years.

I see management as two very different types. There are the captive, developer based groups that tend to have contracts that guarantee a set income for the management & offer few if any motives for low costs. In fact as they take a percentage a rising fee benefits them!

Then you have the independents who have only performance as the criteria for keeping the contract. They tend to be aggressive in pricing, push for competitive bids for services / supplies / upgrades vs the often "captive" vendors many Developer managements demand (and take % of!).

As an example our resort was paying nearly $1 million in management fees in 2000 to a developer based group. After a lengthy evaluation and change to an independent we brought that down to $280K. Think of what our fees would have been if we had stayed with the old group! By simply changing management we got over a half million PER YEAR to use for resort upgrades & operations. And we did away with percentage based fees and replaced it with flat rate services. In the decade since that change our management fees have been lowered overall but not anything as dramatic as the change to an independent group.

Our labor costs have risen but not due to straight salaries but the benefits that go with them. We have cut staff but still seen an overall increase in labor expense.

I actually tend to agree that IF your resort is managed by the developer you are likely paying way too much for management services. Those groups also seem to be ruining the cost/value to what has been considered to be the top type resorts as fees have risen to levels that make ownership a negative and renting extremely attractive. It seems t be true across the board with the "name brand" resorts recently.

 

[ace2000]

I see management as two very different types. There are the captive, developer based groups that tend to have contracts that guarantee a set income for the management & offer few if any motives for low costs. In fact as they take a percentage a rising fee benefits them!

Then you have the independents who have only performance as the criteria for keeping the contract. They tend to be aggressive in pricing, push for competitive bids for services / supplies / upgrades vs the often "captive" vendors many Developer managements demand (and take % of!).

As an example our resort was paying nearly $1 million in management fees in 2000 to a developer based group. After a lengthy evaluation and change to an independent we brought that down to $280K. Think of what our fees would have been if we had stayed with the old group! By simply changing management we got over a half million PER YEAR to use for resort upgrades & operations. And we did away with percentage based fees and replaced it with flat rate services. In the decade since that change our management fees have been lowered overall but not anything as dramatic as the change to an independent group.

Our labor costs have risen but not due to straight salaries but the benefits that go with them. We have cut staff but still seen an overall increase in labor expense.

I actually tend to agree that IF your resort is managed by the developer you are likely paying way too much for management services. Those groups also seem to be ruining the cost/value to what has been considered to be the top type resorts as fees have risen to levels that make ownership a negative and renting extremely attractive. It seems t be true across the board with the "name brand" resorts recently.

Very interesting... and it appears that your resort is lucky to have you and the others on board. Thanks for the info and for taking the time to answer.

 

[AwayWeGo]

Once The Timeshare Is Built & Sold, The Timeshare Company Is No Longer Needed.

I see management as two very different types. There are the captive, developer based groups that tend to have contracts that guarantee a set income for the management & offer few if any motives for low costs. In fact as they take a percentage a rising fee benefits them!

Then you have the independents who have only performance as the criteria for keeping the contract. They tend to be aggressive in pricing, push for competitive bids for services / supplies / upgrades vs the often "captive" vendors many Developer managements demand (and take % of!).

Just 1 more illustration -- as if any more were needed -- of the reality that The Timeshare Industry & high-quality timeshare resorts are 2 different animals.

Given the way that the basic condo documents stack the deck to the advantage of the timeshare companies -- no surprise, because the documents are written & recorded by timeshare company lawyers -- it is semi-amazing that independent HOA-BODs can summon the determination & the energy & the stamina to take on a timeshare company & win.

Then when they do win, their prize is the ongoing responsibility for running the timeshare resort strictly in the interests of the regular walking-around fee-paying timeshare owners -- & the timeshare company can go whistle.

Even so, it remains the task of the independent, owner-controlled HOA-BOD to work out budgets & maintain collection vigilance & build up reserves so that every dollar spent returns value to the owners, & so that the owners can count on high-quality resort experiences year after year without worry about special assessments & huge fee spikes.

That's a neat trick, if they can do it. Hats off to those with the savvy it takes to succeed at it.

-- Alan Cole, McLean (Fairfax County), Virginia, USA.​

 

[sally13]

Ace did ask about inflation..

If we are to believe the bls cpi #...inflation is running at 1.8 to 2% year over year...

lets look at what the REAL inflation rate is..If we go back to the late 1980's...the cpi included most everything a family would spend $$$ on to live...Food ,energy of all types,fuel,housing , cars ,education, medical,apparel,..and so on..

In the early 90's,they changed the way they calculated the cpi #..

To controll government program spending and keep short term interests rates low,they excluded Energy ,fuel, and food,from the calculation . ..
They said these items were too volatile...

Then they used a formula of hedonics on the rest of the costs..

Each item,through this NEW way of calculation was masked ,as barely increasing ,all based on a lower standard of living..

If we go back to 1980's true cpi reporting (YOU KNOW THE ONE THAT INCLUDES FOOD AND ENERGY)and also tracks costs as costs..without cute little false interperatations...we have year over year inflation running at between 8.5% and 12% and even higher...

Now...can you see why costs and labor are so high??

The price of energy alone is enough to triple a m-fee in no time at all..

 

[ace2000]

If we go back to 1980's true cpi reporting (YOU KNOW THE ONE THAT INCLUDES FOOD AND ENERGY)and also tracks costs as costs..without cute little false interperatations...we have year over year inflation running at between 8.5% and 12% and even higher...

Now...can you see why costs and labor are so high??

The price of energy alone is enough to triple a m-fee in no time at all..

I don't buy this one... what energy prices are you talking about. Energy prices are exactly where they were 5 years ago, and even lower than they were in 2008, when they peaked. I haven't noticed food costs going up at all until recently.

Want to tell us where you get these numbers? I'm not buying it.

 

[sally13]

If you do not believe me...

I cant help you...These facts are known by any good economist..I have even heard these statistics from the lips of the coveted,CNBC schills,..As Alan says..you could look it up..

Just google...Manipulated C.P.I. numbers...plenty of info on the way reporting has changed over the years...

I am NOT selling anything..do the research

[Political comments deleted - DeniseM Moderator]

If you have not felt the pinch of ever escalating energy bills ..You may not be paying the bills...Pay my electric,my natural gas, how about the$4.00- $4.50 a gallon gasoline ,that convienently arrives on cue every year??I remember Gas at $1.50 and lower...You have GOT TO BE KIDDING..

How about schooling costs...medical premiums??shall I go on??

also ..ever notice how $100 . only fills a third to half a grocery cart up??..
not long ago..I would almost need 2 carts!!

How about the fact you now need 2 good incomes to (MAKE IT)in this world???

 

[ace2000]

I cant help you...These facts are known by any good economist..I have even heard these statistics from the lips of the coveted,CNBC schills,..As Alan says..you could look it up..

Just google...Manipulated C.P.I. numbers...plenty of info on the way reporting has changed over the years...

I am NOT selling anything..do the research

[Political comments deleted - DeniseM Moderator]

I understand what you are saying about real inflation. However, you mentioned this in coorelation to the rise in maint fees over the past 5 years. I've looked at energy prices over the last 5 years and am telling you that they have remained stable. Now, I'm sure the next 5 years will be drastically different.

 

[london]

Thread Gets Off Topic At Times

Threads with many posts, and just a few posters, seem to get off topic alot of the time.

That's okay, and it is interesting to see how various people value components of the whole timeshare model.

Not one size fits all for sure.

 

[ace2000]

Threads with many posts, and just a few posters, seem to get off topic alot of the time.

That's okay, and it is interesting to see how various people value components of the whole timeshare model.

Not one size fits all for sure.

Yes, I was thinking that some of the discussion between some individuals is a carry-over from previous threads, but don't have the time to dig into it. Ain't these forums great ?!?! LOL.

 

[DeniseM]

I have deleted a political comment from this thread - please don't go there.

 

[sally13]

5 years???

who said anything about 5 years??I was talking about the previous 15....Some here have M-fees at $300. or $400. ...

I said that is ridiculous,( to want to,) not to pay more..you can not rent a condo anywhere for a week for that in season...It is unhealthy for the health of the resort!


Also. these low prices that units ARE presently renting for,is because this is within an economic DEPRESSION ..that ironicly started about 4 years ago...

When you say there has been no inflation ,I cringe....

 

[John Cummings]

Alan(and others):
Read my post. I included extra for interior(of the unit) replacement and maintenance as well as cleaning service.
My condo has indoor and outdoor pools,exercise room , billiard room, tennis courtS etc.
Gooogle it on Google Earth. The Shores, 45 Ocean Ave, 07750.

You still haven't accounted for the resort management to handle reservations, etc., and the personnel at the front desk. Cleaning service will be more expensive because of new tenants every week. Wear and tear will be heavier again because of different tenants every week.

 

[John Cummings]

A big contributor to rising maintenance fees in the last couple years are owners that haven't been paying their fees.

 

[equitax]

e.bram's condo

Equally missing from e.brams costs are the cost of capital - presumably you will have forked out more $ for the condo at the onset than you would need to for a TS. I will be the last to say that the developers and mgmt companies are not raking it in, but you got to admit that you have alot more administration on 1500 "units in a timeshare (x 52 = 78,000 "tenants") than you do over 1500 condos. One of the things paid for in the convenience factor - you don't worry about HVAC, Orkin, or anything else - its all done for you. Condos switch hands less often than TS, and regardless of the fact that your interest is "deeded" TS does not store value in the same way as real estate does, so again no point in comparing apples to oranges. Many can afford to buy a condo and let it sit empty for 11/12 months when not in use, but more often people can't or don't want to, and that is but one of the ways that a TS is good. TS is not an investment, as the initial cost is often far less than the fractional ownership interest held (hence one reason why they don't hold value). a "real" condo (for lack of better terms) should , for all intents and purposes (if managed properly by the HOA) retain its value and appreciate over time in line with inflation.

Ebram should also ask the HOA on your condo how many times per year you can rent it out (yes they probably limit you to once per year or two years). I have had an HOA tell me I could not rent out a owned condo unit after I had to evict a tenant for Non-Payment of rent. (Condo rules said change of occupant once every 24 months unless change of ownership to be occupied by new owner.) Did not listen to the condo association and "outplayed" them with legal threats. Owning a condo has downsides too, and trust me 2200 sq ft PH on the Golf course in Avetnura FL costs plenty if sitting empty...

You still haven't accounted for the resort management to handle reservations, etc., and the personnel at the front desk. Cleaning service will be more expensive because of new tenants every week. Wear and tear will be heavier again because of different tenants every week.

 

[Passepartout]

Not to appear to be joining in the 'whup e.bram' posse, but in the last condo I owned wholly, if owner occupancy in the community fell below 80%, the insurance and taxes made a humongous jump in cost. Entities like timeshares and rental multi-occupant housing pay far more than 1/52 per week of the individual unit's taxes and insurance.

Jim Ricks

 

[e.bram]

All i know is I paid $100,000.00 for my condo about 20 years ago and it is worth about $400,000.00 now.(worth a little more a few years ago).
My few hundred dollar Tses are worth less.
Why is the Manhattan Club $1.00 and PCC bait? High MFs. Manhattan condo fees and RE tax are not very high but the values are astronomical. Check it out.


Reservations could easily be handled by my condo's staff with a computer. (They would drink less coffee)

 

[dan_hoog]

I think Sally deserves this months engaging thread award. I don't agree with much of what surfaces, but also find stuff to shift my perspective here and there.

I think we drift into economics more often because it is on everyones mind, even where we disagree. Most agree we tread near uncharted territory. What it means to timeshares - obligatory on topic reference - we can't be sure. We can have opinions though.

 

[tombo]

8 years ago my brother bought a whole ownership oceanfront 3 bed room condo on the panhandle for $289,000. 4 years ago he could have sold it for $850,000. He waited too long thinking they would just keep increasing in value. He sold it 2 years ago for $350,000. You could now sell the same 3 bed room condo for $250,000 to $275,000 if you could find a buyer and if the buyer could find a bank to finance it. Whole condos (unlike many timeshares) will probably never be worthless, but full ownership condos like timeshares have prices that rise and fall with the economy and with the laws of supply and demand.

 

[equitax]

I am not disagreeing with you, but...

The developer really ends up with an annuity after you "buy" a timeshare - as in you being on the hook to pay MF and all the other stuff they tack on. Compared to a lot of things out there (condo freehold) it is a bad deal.

However , one needs to bear in mind, that when you bought your condo for 100k, the timeshares were probably selling for 8 or 10, so your condo price may have (at the time) seemed inflated. (Your condo obviously being the better deal as far as equity goes.)

TS sells you a dream about vacation "ownership", which I believe is a bit of a crock. My decision to buy at MGV on resale was based solely on cost saving for a few planned trips in the next couple of years, PLUS the fact that I can give the usage to my extended family who WILL use it (and if they don't, I can lose the MF and not even care.) I like the resort and dont want to be bothered with owning an actual condo at this point in my life - I realise I am just paying rent and I am fine with that.

The fractional ownership model, be it with timeshares or private jets, is based on the premise of paying for a fraction of something that you will use a fraction of the time (i.e. netjet membership for 500 hours when there are 12000 hours in a year). Of course there is a huge premium for the "ability" to get exactly the amount you "need" without laying out full capital - more like glorified tenant than owner if you ask me.

Perspective is everything - and this is where I can agree given that you own a condo that many could not afford as a "play" thing, and I give this example: I own two 2010 vehicles and only carry liability insurance, sounds crazy to "risk" $95,000.00 worth of cars? Advice given to me many moons ago was:

"It does not pay to insure anything you can afford to replace".

All i know is I paid $100,000.00 for my condo about 20 years ago and it is worth about $400,000.00 now.(worth a little more a few years ago).
My few hundred dollar Tses are worth less.
Why is the Manhattan Club $1.00 and PCC bait? High MFs. Manhattan condo fees and RE tax are not very high but the values are astronomical. Check it out.


Reservations could easily be handled by my condo's staff with a computer. (They would drink less coffee)

 

[equitax]

Real estate values

Could have, should have, would have, didn't.

Timeshare is basically a more "leveraged" purchase and because it is actually only a vacation (pure luxury) spot, much more influenced by the downturn in the economy. You cant live in a time share full time (even if you could afford it prohibited in the docs!) Developers also grant mortgages to anyone buying direct, and that financing is not as easily available in the resale world.

8 years ago my brother bought a whole ownership oceanfront 3 bed room condo on the panhandle for $289,000. 4 years ago he could have sold it for $850,000. He waited too long thinking they would just keep increasing in value. He sold it 2 years ago for $350,000. You could now sell the same 3 bed room condo for $250,000 to $275,000 if you could find a buyer and if the buyer could find a bank to finance it. Whole condos (unlike many timeshares) will probably never be worthless, but full ownership condos like timeshares have prices that rise and fall with the economy and with the laws of supply and demand.

 

[AwayWeGo]

On The Hook To The HOA (Not To The Developer).

The developer really ends up with an annuity after you "buy" a timeshare - as in you being on the hook to pay MF and all the other stuff they tack on.

Yeh -- kinda, sorta, though not just exactly.

That is, even though the timeshare owner is on the hook for those unending maintenance fees, the fee obligation is to the timeshare resort's homeowner association, which is not always captive to the developer (although it is sometimes, specially at newer timeshare resorts).

-- Alan Cole, McLean (Fairfax County), Virginia, USA.​

 

[janej]

I bought my first Wyndham contract in April 2009. I read a lot before that and paid for about 1 penny per point on ebay. It took me a few weeks to get the deal. I also paid closing cost and MF for the year. My points trade with II and I love it. I then got my sister another small contract and paid for about the same price. Wyndham has gone through big policy changes in the past two year. The points are worthless on ebay now. I got into resort with lower fees so I think I get still give them away without too much trouble. I might do that after I finish with my 6 28k point deposits.

I think the devaluation of Wyndham points are directly linked to the policy changes.

 

[John Cummings]

All i know is I paid $100,000.00 for my condo about 20 years ago and it is worth about $400,000.00 now.(worth a little more a few years ago).
My few hundred dollar Tses are worth less.
Why is the Manhattan Club $1.00 and PCC bait? High MFs. Manhattan condo fees and RE tax are not very high but the values are astronomical. Check it out.


Reservations could easily be handled by my condo's staff with a computer. (They would drink less coffee)

I agree that the M/F at Manhattan Club are astronomical. You can rent a week there for a lot less than the M/F.