Is there ever a reason to buy a $30k+ week?

[4dabirds]

We have been kicking around the idea of a buying Week 51 and 52 somewhere and I am really torn. Most of the weeks at resorts we would want to go to EVERY YEAR UNTIL WE DIE are in the $30-40k range. When you start breaking that down to "per year of use" + maintenance fees, you start getting into numbers that are really high (ie. +/- $2,500 per week of usage). Over time, maintenance fees will increase, further increasing the cost of usage. In our case, we are considering it because my husband changed industries a couple of years ago and the way we are able to vacation has significantly changed. The only guaranteed time he is able to take is over 51/52 - with any other week(s) we would not be able to plan. He is also one of those people that can't imagine going to _____ without staying at _____ because that is what he knows. Whenever I say things like "this place is available during that time frame instead," he is always non-committal because it's outside of his comfort zone. I guess I'm just questioning how much his comfort zone is worth

Thoughts?

 

[AwayWeGo]

No Way, José.

Is there ever a reason to buy a $30k+ week?

Not just no, but shux no.

Nothing that the timeshare companies sell at full freight is worth the money.

And that goes for Week 51 & Week 52 timeshares in choice locations right along with all the rest.

Buy timeshares resale. Save thousands of dollars on exactly the same thing, or the equivalent, or something even better.

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

 

[timeos2]

NO. Rent if they want that much as the purchase price, as high as it is, is only the gateway to paying far more in annual fees. Even if you average more than the annual fes to rent (and, likely you won't) it would take decades to burn through that $30K+ in upfront costs.

Don't buy it IMO. Rent or trade. You'll save & in a few years you may find them for much much less IF you still wanted to buy.

 

[Pmuppet]

Most of the weeks at resorts we would want to go to EVERY YEAR UNTIL WE DIE are in the $30-40k range.

It doesnt sound like timesharing is for you. Cause imo, timesharing is for people who have LOTS of flexibility in their scheduling. If you have only two weeks available for travel (and those are two of the most sought after weeks in the year), that is not flexible.

Another way to look at it is, you are looking at a $30k purchase price. For the kind of risk (timeshares are very risky investments) you are taking by purchasing a timeshare, you should demand 15% return on your money. That rate of return will net you $4500 EVERY year. This doesnt include the $1500 annual maintance fee (which is on top of the purchase price.

So, essentially you can spend $6,000/year on a rental or $30k on a purchase of a timeshare plus MF and the money would wash (with a 15% ROI).

For $6k, you can rent ANYWHERE in the world during one of the two weeks you are looking to vacation. Including Westin st. John, westin maui, ice caves in europe, zermatt, figi, etc.

Heck, i bet you can travel for week 51 and week 52 at the place you are looking to buy and still come out ahead.

When you have an inflexible schedule, cash is king. Overall, I suspect that less than 5% of timeshare owners successfully utilitize their timeshares to the point that they are better off owning than buying.

 

[4dabirds]

It doesnt sound like timesharing is for you.

Hold your horses there Pmuppet! Timesharing may not be for my hubby, but it's definitely for me, bwahahaha!

On the flip side of that, my math comes out very close to your math and that's the barrier for me...

 

[tschwa2]

Another way to look at it is, you are looking at a $30k purchase price. For the kind of risk (timeshares are very risky investments) you are taking by purchasing a timeshare, you should demand 15% return on your money. That rate of return will net you $4500 EVERY year. This doesnt include the $1500 annual maintance fee (which is on top of the purchase price.

So, essentially you can spend $6,000/year on a rental or $30k on a purchase of a timeshare plus MF and the money would wash (with a 15% ROI).

For $6k, you can rent ANYWHERE in the world during one of the two weeks you are looking to vacation. Including Westin st. John, westin maui, ice caves in europe, zermatt, figi, etc.

Heck, i bet you can travel for week 51 and week 52 at the place you are looking to buy and still come out ahead.

For the places I stay in a $30,000 unit makes no sense but a quick look at westin.com shows that a week in a studio at Westin Riverfront in Avon, CO goes for $7200 for the week. A 2 bedroom villa goes for $15,000 for the week. For the kind of person who is happy to spend $7200 on a studio it certainly makes sense to buy a 2 bedroom guaranteed for $30,000 plus MF's. At Westin St. John there are 0 rooms available at any price for Christmas week. True someone might find rentals in the $4000-$6000 range but that's not guaranteed.

Now for the kind of family who does not spend $4000-$6000 regularly on a week of accommodations, it doesn't really make sense. It all depends on what you like and what your financial situation is.

Also I know that you should never look at timeshares as investments but there are examples of fixed weeks at Marriott's and Westin Christmas and New Years week increasing in value, but you shouldn't buy with the idea that it will be worth anything when you are ready to sell.

 

[Beefnot]

For the places I stay in a $30,000 unit makes no sense but a quick look at westin.com shows that a week in a studio at Westin Riverfront in Avon, CO goes for $7200 for the week. A 2 bedroom villa goes for $15,000 for the week. For the kind of person who is happy to spend $7200 on a studio it certainly makes sense to buy a 2 bedroom guaranteed for $30,000 plus MF's. At Westin St. John there are 0 rooms available at any price for Christmas week. True someone might find rentals in the $4000-$6000 range but that's not guaranteed.

If one is comparing to retail rental rates, $30k can seem like a bargain. When comparing to resale values and/or exchanging strategies, then I don't see it. Not even when you start talking about perks and hotel-chain rewards status, the financial justification in virtually all circumstances just ain't there.

 

[Beefnot]

Overall, I suspect that less than 5% of timeshare owners successfully utilitize their timeshares to the point that they are better off owning than buying.

You may be right. Occupy TUG...I am the 5%.

 

[Pmuppet]

Hold your horses there Pmuppet! Timesharing may not be for my hubby, but it's definitely for me, bwahahaha!

On the flip side of that, my math comes out very close to your math and that's the barrier for me...

Lol, sounds similar to our household. In my case, i am the one with lots of vacation, but my wife isnt as fortunate in that area. She does have flexibility on when she takes time off, so limited timesharing works for us. If it were up to me, i would spend four weeks every year traveling.

 

[Pmuppet]

Now for the kind of family who does not spend $4000-$6000 regularly on a week of accommodations, it doesn't really make sense. It all depends on what you like and what your financial situation is

now, that is the crux of the issue. You should ask yourself are you willing to commit $4-$6k each and every year for the rest of your life for a week of accomadations? That is a preety steep price to pay, imo.

While i agree that a rental isnt guaranteed at WSJ for new years for $6k, i suspect the challenge isn't the rental rate. The issue is there really isnt a forum for "make me rent" pricing. If you can avoid the pricing terms in a rental situation, the likihood of an agreement is much more likely. Pricing usually is the biggest reason deals dont work out.

And for $6k for a week, i imagine the majority of 2bedroom owners at WSJ would agree this is a fair rental price. Doesnt mean everyone would rent to you, but that price would make a substantial percentage of owners willing to rent.

Of course, i wouldn't pay $6,000 for a rental week cause there is risk there as well. But that is another discussion.

 

[BocaBum99]

We have been kicking around the idea of a buying Week 51 and 52 somewhere and I am really torn. Most of the weeks at resorts we would want to go to EVERY YEAR UNTIL WE DIE are in the $30-40k range. When you start breaking that down to "per year of use" + maintenance fees, you start getting into numbers that are really high (ie. +/- $2,500 per week of usage). Over time, maintenance fees will increase, further increasing the cost of usage. In our case, we are considering it because my husband changed industries a couple of years ago and the way we are able to vacation has significantly changed. The only guaranteed time he is able to take is over 51/52 - with any other week(s) we would not be able to plan. He is also one of those people that can't imagine going to _____ without staying at _____ because that is what he knows. Whenever I say things like "this place is available during that time frame instead," he is always non-committal because it's outside of his comfort zone. I guess I'm just questioning how much his comfort zone is worth

Thoughts?

Yes, there is. If the market value of the whole condo is over $2M, then it makes sense to pay $30k for a week 51 or 52. That is as long as the maintenance fees and taxes are $1500 or less.

I just looked at Ocean front whole condo properties on Maui last week. I was surprised that many of the high end timeshares are holding their resale value for oceanfront units relative to whole condos. Maintenance fees are higher, but resale prices aren't bad.

 

[Beefnot]

Yes, there is. If the market value of the whole condo is over $2M, then it makes sense to pay $30k for a week 51 or 52. That is as long as the maintenance fees and taxes are $1500 or less.

How did you arrive at that conclusion? Are you dividing $2M by 52 weeks?

 

[Pmuppet]

Yes, there is. If the market value of the whole condo is over $2M, then it makes sense to pay $30k for a week 51 or 52. That is as long as the maintenance fees and taxes are $1500 or less.

Are you talking about the liquidated rate of the property if they bulldozed the buildings, scraping what they could, sold the property, and divided the land up amongst the owners?

I would love to see your math on your calculations, cause i am not following.

 

[Beefnot]

I'm guessing BocaBum is saying if a wholly owned personal-use condo is worth $2M, then a sub-divided interest TS is worth 1/52nd of that? I dunno where the $1,500 MFs come in, although if the 1/52nd calc is what's being run, then I would expect to see many more TS worth more than $0, which is not the case today.

 

[Ridewithme38]

although if the 1/52nd calc is what's being run, then I would expect to see many more TS worth more than $0, which is not the case today.

See thats the problem with the current market, they are WORTH more then $0, its just that no one will pay it...

Right now, A US Penny from between 1909-1982 is WORTH .025 cents in melt value...BUT because of the demand in the market, people only pay .01cents for them

 

[BocaBum99]

Are you talking about the liquidated rate of the property if they bulldozed the buildings, scraping what they could, sold the property, and divided the land up amongst the owners?

I would love to see your math on your calculations, cause i am not following.

No, I evaluated the expected returns on whole condos on Maui as an investor, specifically oceanfront properties. I hope to purchase an oceanfront condo as a rental property when I can get the right deal. In other words, when I can squeeze the owner down by $200-300k lower than my valuation of that property based on its rental value to me. Having come down by around 30% so far, I am getting close to my trigger point. I can improve what the owner has done from an occupancy point of view because I am in the business and have a very strong wholesale network. In addition, I can reduce the management costs by 20% by doing it with my own people rather than paying the high percentages required by full service management companies. I feel I have a very solid model for whole condos on Ka'anapali Beach and Lahaina.

Then, I looked at resale values of oceanfront units at the top timeshare resorts. Not the resale list prices, but the actual sales prices and ensuring that ROFR rates were below those levels. There is good support for values of oceanfront condos at the valuation of 1/52 of the whole condo equivalent. If I were evaluating the condo as an investment property, I would never do that analysis. However, when buying to own and use, I might. That's because if the market is hovering around the level of the underlying condo, I believe it will be the price support for those condos at that level will be provided by the surrounding rental properties. I am NOT doing a discounted cash flow model. I am saying that owning at that price seems to have price support in the market so when you want to sell in the future, you have a good chance of getting most of your money back.

 

[simpsontruckdriver]

Still, having a Fixed Week may work for 4DaBirds. They can buy a Week 51 or 52 single-bedroom resale at Orange Lake CC East Village (timeshare with golf) in Kissimmee FL for less than $2000. I personally enjoyed our stay at OLCC last year with my parents-in-law, there is a HUGE amount of stuff to do without leaving the resort! And a car would only be needed if they want to go outside the resort, since the resort has a shuttle service that goes to all the pools and private golf courses.
As a side note, the OLCC "convenience store" is VERY overpriced, but there's a Publix grocery store at the gate with average priced food.
So, there are great fixed week resorts nationwide available on eBay that fit their needs!

TS

 

[BocaBum99]

I'm guessing BocaBum is saying if a wholly owned personal-use condo is worth $2M, then a sub-divided interest TS is worth 1/52nd of that? I dunno where the $1,500 MFs come in, although if the 1/52nd calc is what's being run, then I would expect to see many more TS worth more than $0, which is not the case today.

Each market needs to be evaluated on its own. I am only talking about Ka'anapali Beach and Lahaina. I then suggest a model for evaluating it.

I just looked at my message and I realized that I did make an over generalization of the market. My mistake. I should have put a qualifier on my statement that I believe that there are markets where it is true. Obviously, if we are talking about Orlando, then it would never be true.

I am saying that there are some circumstances when paying $30k might make sense. For instance, I might buy a $25k oceanfront unit at Westin Ka'anapali if I could get a guaranteed week 52.

Also, if such units were being bought and sold on the resale market around $35k, I would by buying at $30k every chance I got.

 

[MOXJO7282]

I am saying that there are some circumstances when paying $30k might make sense. For instance, I might buy a $25k oceanfront unit at Westin Ka'anapali if I could get a guaranteed week 52.

Also, if such units were being bought and sold on the resale market around $35k, I would by buying at $30k every chance I got.

No doubt there are units worth that much if you're talking super prime resorts and weeks in areas like Maui, and Aruba and its the lifestyle you can afford and want.

These types of weeks rent for big coin if you can't use so the ROI is very strong if you know how to manage.

Buying retail is too much but if you buy resale at a good price, it will still be a big expense but IMHO under the right circumstances well worth it.

 

[MOXJO7282]

For instance, I might buy a $25k oceanfront unit at Westin Ka'anapali if I could get a guaranteed week 52.

I'd buy these everyday of the week and twice on Sunday, the problem is that price point your don't see very often, if even.

 

[Ridewithme38]

30k for ONE week? Geez! I'm fighting myself over spending $600 for a Presidents day week!

 

[Pmuppet]

I am saying that there are some circumstances when paying $30k might make sense. For instance, I might buy a $25k oceanfront unit at Westin Ka'anapali if I could get a guaranteed week 52.

While i agree with you that buying a week #52 at the westin maui OF property may be worth it to you, i doubt even a property like that would be benefitial to the OP.

The reason i say that is you have a market so you would be able to leverage the property to extract its maximum rental value. I am assuming the OP doesnt have nearly the network you do to get the rental revenue. I certainly dont have the network to bring down my ROI requirements to make westin week #52 fixed at $25k purchase price an attractive investment (i understand people say dont consider them investments, but i do. If you can rent for thousands cheaper every year you should, imo.)

As a result, you have to go back to my original assessment using $25k purchase price and $2500 MF and a 15% ROI.

Therefore, you are looking at a rental buget of $6,250 with the revised calculations. Really doubt you would have a hard time finding a OF rental at westin maui for over $6k during new years week.

 

[MOXJO7282]

While i agree with you that buying a week #52 at the westin maui OF property may be worth it to you, i doubt even a property like that would be benefitial to the OP.

The reason i say that is you have a market so you would be able to leverage the property to extract its maximum rental value. I am assuming the OP doesnt have nearly the network you do to get the rental revenue. I certainly dont have the network to bring down my ROI requirements to make westin week #52 fixed at $25k purchase price an attractive investment (i understand people say dont consider them investments, but i do. If you can rent for thousands cheaper every year you should, imo.)

As a result, you have to go back to my original assessment using $25k purchase price and $2500 MF and a 15% ROI.

Therefore, you are looking at a rental buget of $6,250 with the revised calculations. Really doubt you would have a hard time finding a OF rental at westin maui for over $6k during new years week.

It doesn't take a network to rent a prime name brand Maui or similar week, its only takes Redweek.

At least I can say that for sure for Marriotts, its actually quite easy.

 

[Pmuppet]

These types of weeks rent for big coin if you can't use so the ROI is very strong if you know how to manage.

I dont understand your point about it having a strong ROI. Cause even with the westin example of buying an OF week #52 getting a below market rate of $25,000 for the week still seems inflated to me. Because the MF are $2500/year which kills the ROI, imo.

Even if you were able to rent it for $5,000 for the week, you are looking at well under 10% ROI (probably closer to 5% once you account for marketing costs and give yourself a hourly wage for the time it took you to find a renter).

I just dont get it from a ROI perspective. Now, when you through in qualitative variables like we like maui and want to go there every year, know the view we are getting, dont have to hassel finding a rental during peak times, etc). Cause time is money and some people's time is worth a lot more than the 20-30 hours it takes to find a rental, negoiate, and confirm the owner is "rent worthy."

It may make sense to buy, but i think people generally buy way too soon before they understand all the factors clearly. I know i did on my first TS. Fortunately, i paid a $100 for a week 52 fixed in fort lauderdale. So my experience wasnt as painful as others...lol

 

[MOXJO7282]

I dont understand your point about it having a strong ROI. Cause even with the westin example of buying an OF week #52 getting a below market rate of $25,000 for the week still seems inflated to me. Because the MF are $2500/year which kills the ROI, imo.

Even if you were able to rent it for $5,000 for the week, you are looking at well under 10% ROI (probably closer to 5% once you account for marketing costs and give yourself a hourly wage for the time it took you to find a renter).

I just dont get it from a ROI perspective. Now, when you through in qualitative variables like we like maui and want to go there every year, know the view we are getting, dont have to hassel finding a rental during peak times, etc). Cause time is money and some people's time is worth a lot more than the 20-30 hours it takes to find a rental, negoiate, and confirm the owner is "rent worthy."

It may make sense to buy, but i think people generally buy way too soon before they understand all the factors clearly. I know i did on my first TS. Fortunately, i paid a $100 for a week 52 fixed in fort lauderdale. So my experience wasnt as painful as others...lol

What is the timeline of your ROI? Why does it have to be 15%? When I started my use/rent program I was 35 yrs old so I have many years to recoup my intital investment.

Westins are alittle more expensive upfront and MF wise than Marriotts so speaking from a Marriott perspective if you're MFs are $1900 and you rent for $3300 - $3700 that isn't enough ROI? There is only the $25 cost of redweek as far as marketing goes. Its that easy with the right Marriott weeks.

If you can sustain that over time, which we've done for 10 years and counting and add that to the 6 Maui trips we've taken also over those 10 years and to me it adds up to a very strong ROI.