Please don't buy into the idea this is a buying opporunity

[BocaBum99]

Boca, seriously, how come when I disagree with your opinion, it's something you're entitled to take offense to? But when you disagree with my opinion, I'm not?

I mean, jeez, it's a message board.

I disagree with your opinion. I think you have an obvious bias in this discussion. I think it's completely irresponsible to tell people they "will earn a superior return" if they're smart enough to buy the right timeshare now, given the current economic conditions.

But you came here. I never mentioned you by name. And then you point out you "have nothing against me"? I mean, seriously, I never thought you did, we just disagree very strongly on this point.

Edited to add: You and I obviously view the words "will earn a superior return" very differently if you insist you never say anything is guaranteed. That sounds as close as you can come to guaranteed without using the word guaranteed. I don't address your logic because it's a bit like when someone who believes in supply side economics asks me to address their logic - my answer would be that there's no real logic there, it's just opinion dressed up as logic. And since our positions are clear, I really don't want to fight with you over opinions much more.

Fine we will leave it at that. We disagree. Now that we have had this complete discussion. Readers can make their own decision.

I just want to point out that the title of your thread is "Please don't buy into the idea this is a buying opporunity"
I have laid out logic that indeed suggests it is a buying opportunity either as a purchase or as a potential investement opportunity. You even say that there are circumstances wher it is a good time to buy.


I believe strongly that there are purchases in the high end timeshares where the purchase for owners is almost no lose. If they buy it to use. They will get a great deal. If they make the right purchase, they can make a positive return on that purchase especially if and when the developer resumes purchasing back units via ROFR.

 

[ondeadlin]

That's somewhat disingenuous, Boca.

Anyone who reads that original post can see you were using the word "guess" in relation to the buying price, and "will earn" in relation to return.

Look, as I said above, we completely disagree. The difference is, you're making money off people who buy timeshares. You don't think that matters, I do. You suggest we let the readers decide, I agree with you.

Please, continue to push for your view. I respect your background and your belief in the timeshare industry. I hope you can find room to respect the fact that someone might have a little bit of knowledge (might have even flipped a few timeshares for profit) and yet still very much disagree with you.

Enjoy the rest of the evening.

(Guess we cross-posted there, I was addressing your other post. Sounds like we're done. As I said, enjoy the night)

 

[SpikeMauler]

I'm for team Boca.

 

[BocaBum99]

That's somewhat disingenuous, Boca.

Anyone who reads that original post can see you were using the word "guess" in relation to the buying price, and "will earn" in relation to return.

Look, as I said above, we completely disagree. The difference is, you're making money off people who buy timeshares. You don't think that matters, I do. You suggest we let the readers decide, I agree with you.

Please, continue to push for your view. I respect your background and your belief in the timeshare industry. I hope you can find room to respect the fact that someone might have a little bit of knowledge (might have even flipped a few timeshares for profit) and yet still very much disagree with you.

Enjoy the rest of the evening.

(Guess we cross-posted there, I was addressing your other post. Sounds like we're done. As I said, enjoy the night)

Thanks for the debate. I don't mind it. I think we were both respectful to each other. When reasonable people disagree and present logical arguments then that is the opportunity for most people to learn and make up their own minds.

I really would like your opinion of the scenario I laid out above as the pre-conditions for a smokin' great deal that would not be possible a year ago. What I am going to do is look for a scenario just like the one I described. And, I am willing to share the complete details of my lifetime of ownership of that purchase if I can find it.

I'll buy and hold it until Marriott starts exercising ROFR again and I'll end up selling it back to Marriott via ROFR. I really believe I can pull it off. And, I believe I'll be able to earn a huge profit. I give myself about a 75% probability that it will pay off within 3-4 years.

Just so you know. I don't view that as a great return on investment. I usually hold timeshares for 6 months or less. I just want to see if I can do it as a sort of science project. And, during the time I hold it, I'll be taking some great vacations waiting for the payoff.

 

[BocaBum99]

In addition to HGVC prices going up over a several year period once they started exercising ROFR, the same holds true for Disney Vacation Club points for the past 4 years excluding this past 9 months. And, for a while, when Diamond Resorts was buying back timeshares, prices indeed were increasing.

The common thread in the price increases was the Resort Developers program to buy back timeshares from the resale market.

In addition, we have reached an unprecedented level of pricing for a lot of timeshares across the industry where the supply so overwhelms the demand that prices have dropped toward zero in the resale market. Since this is unprecedented, it is possible that even timeshare resorts where ROFR is not present could see a firming up of prices over the next year or two.

I would agree that I would NOT depend on that happening. The only scenarios I believe are high probability long term wins are those where the developer is likely to survive and reinstitute ROFR sometime in the future.

 

[ondeadlin]

Since you asked ... I don't think Marriott will be exercising ROFR again for at least two years and perhaps longer. I genuinely believe this is going to be shakeout of epic proportions in the timeshare industry. So I think models based on past behavior being influenced by ROFR won't work for some time.

I believe we will see properties go into bankruptcy as people walk away from great numbers of units as they've walked away from homes. I think it's already happening and we'll only truly see how much when next year's MF explode to cover the walk-aways. Probably not chain properties, because Marriott or Starwood can't afford to let that happen from a PR standpoint, but the smaller properties going bust will color the industry and keep Marriott, etc. from jumping back in with ROFR for a long time.

Look at the destination club market right now - that's where I see the timeshare market headed. Significant bankruptcies. Tons of lost value.

Not an end to the model, but a very significant blow.

And that's why I cringed when I saw the words "will earn".

Yes, you're an expert. I acknowledge that.

It's why I hope you'll be a little more circumspect with the wording, even if you are completely sincere in your belief. There are many, many people who come here knowing nothing and act on the advice we give them. I think they're owed a lot of caution.

 

[AwayWeGo]

Got To Risk Money To Make Money.

I'll buy and hold it until Marriott starts exercising ROFR again and I'll end up selling it back to Marriott via ROFR.

The weenie is that you'll owe major serious maintenance fees -- & maybe some special assessments too -- between the time you record your bargain-basement deeds & the time you ROFR'm back to the timeshare company.

So either you'll be going on lots of vacations (& having a great time, I hope), or you'll be gambling on getting renters who'll offset those fees & assessments.

Good luck. If anybody can pull it off, you can.

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

 

[m61376]

Maybe I am a bit naive here, but I believe that the economy will turn around- eventually, and people will once again want to enjoy life; like most other areas, vacations will rebound. While it may be several years before we see it, I would venture to guess that people will again seek to buy prime weeks in prime resort locations. It is human nature that, when times are good, discretionary spending increases.

The dip in prices that we are seeing currently is reflective of the economy as a whole, and a result of desperate sellers needing to sell at a time when buyers are reluctant to buy. Whereas previously any such "steals" were grabbed by Marriott, today there are more of them (reflective of the times) and, due to the credit crunch, Marriott is limiting its purchases.

My gut feeling is that Boca is correct and that those purchasing high end units may very well be able to sell them in a few years for a nice profit, as life returns to normal in this country and people again begin to spend. I don't think it is fair to say that we haven't seen this historically, because the current economic crisis is unprecedented. I do think that it is risky, just like investing in the market. Only someone with a crystal ball knows for sure.

I really do believe that if you were considering buying a unit(s) beforehand and are in a secure job position, that this may very well be a tremendous buying opportunity. Prices could dip further, but they could also rebound. I think the prices we see will parallel the economy in general. Maybe it is just being a bit of an optimist, but I think the economy will improve and prices will again rise. Since I've been considering buying another unit for our personal use for awhile, I am going to take the plunge. I don't have the guts to buy several just for profit-taking later on, but my guess is that those steals like MBT for $6100 and that EOY Ko'Olina week mentioned by Terry, and a few of those Aruba weeks, and several other recent Ebay buys,etc. are going to make several of us wish we had bought a few. That's just my opinion, for what it's worth.

 

[Dave M]

And that's why I cringed when I saw the words "will earn".

Yes, you're an expert. I acknowledge that.

It's why I hope you'll be a little more circumspect with the wording...

I don't believe that's any more of an exaggeration or misstatement than your OP wording (bold emphasis added)...

I've never seen prices rise after they fell. I think it's irresponsible to suggest they will now....

That's an example that it goes both ways. Both of you have merits to your positions. Neither knows for sure what will happen.

But I know for sure that this discussion is getting a bit disrespectful. Therefore, speaking in my capacity as a BBS moderator to both you and Boca, please stop posting in this thread unless you can do so courteously.

 

[BocaBum99]

Since you asked ... I don't think Marriott will be exercising ROFR again for at least two years and perhaps longer. I genuinely believe this is going to be shakeout of epic proportions in the timeshare industry.

I believe we will see properties go into bankruptcy as people walk away from great numbers of units as they've walked away from homes. I think it's already happening and we'll only truly see how much when next year's MF explode to cover the walk-aways. Probably not chain properties, because Marriott or Starwood can't afford to let that happen from a PR standpoint, but the smaller properties going bust will color the industry and keep Marriott, etc. from jumping back in with ROFR for a long time.

Look at the destination club market right now - that's where I see the timeshare market headed. Significant bankruptcies. Tons of lost value.

Not an end to the model, but a very significant blow.

And that's why I cringed when I saw the words "will earn".

Yes, you're an expert. I acknowledge that.

It's why I hope you'll be a little more circumspect with the wording, even if you are completely sincere in your belief. There are many, many people who come here knowing nothing and act on the advice we give them. I think they're owed a lot of caution.

I agree that your scenario is possible. That's what I mean by the complete meltdown of the timeshare industry. It could happen. And, it's also possible that we enter into another great depression. I just don't think we will.

All timeshare resorts need to go into survival mode. They need to preserve their maintenance fee base. So, if anything, they should be cutting budgets and attempting to reduce annual fees rather than increase them.

I've argued on other threads that there are 2 great reforms required in this industry in order for it to emerge more healthy than before. It must reform its sales and marketing model. Lots of people agree with that point of view.

But, in addition, I believe that maintenance fees and amenities need to be scaled back and reduced so that the timeshare resort can have its own resale program and rental program. The maintenance fees must be lower than the cost to rent otherwise there will be no economic incentive to purchase those timeshares. However, if the opposite happens which is that maintenance fees are low enough where a return on investment for rentals is possible, then new buyers will enter the market to buy up the surplus inventory to make a rental profit. That's a huge stretch to where we are today. I'm not saying it's going to happen. I'm also not saying that it's even possible. What I am saying is that I believe it could be a precursor to saving the timeshare industry. And, I believe it will be saved.

 

[SpikeMauler]

Maybe I am a bit naive here, but I believe that the economy will turn around- eventually, and people will once again want to enjoy life; like most other areas, vacations will rebound. While it may be several years before we see it, I would venture to guess that people will again seek to buy prime weeks in prime resort locations. It is human nature that, when times are good, discretionary spending increases.

The dip in prices that we are seeing currently is reflective of the economy as a whole, and a result of desperate sellers needing to sell at a time when buyers are reluctant to buy. Whereas previously any such "steals" were grabbed by Marriott, today there are more of them (reflective of the times) and, due to the credit crunch, Marriott is limiting its purchases.

My gut feeling is that Boca is correct and that those purchasing high end units may very well be able to sell them in a few years for a nice profit, as life returns to normal in this country and people again begin to spend. I don't think it is fair to say that we haven't seen this historically, because the current economic crisis is unprecedented. I do think that it is risky, just like investing in the market. Only someone with a crystal ball knows for sure.

I really do believe that if you were considering buying a unit(s) beforehand and are in a secure job position, that this may very well be a tremendous buying opportunity. Prices could dip further, but they could also rebound. I think the prices we see will parallel the economy in general. Maybe it is just being a bit of an optimist, but I think the economy will improve and prices will again rise. Since I've been considering buying another unit for our personal use for awhile, I am going to take the plunge. I don't have the guts to buy several just for profit-taking later on, but my guess is that those steals like MBT for $6100 and that EOY Ko'Olina week mentioned by Terry, and a few of those Aruba weeks, and several other recent Ebay buys,etc. are going to make several of us wish we had bought a few. That's just my opinion, for what it's worth.

WOW! M61376 said everything I wanted to say. Good job!

 

[ondeadlin]

But, in addition, I believe that maintenance fees and amenities need to be scaled back and reduced so that the timeshare resort can have its own resale program and rental program. The maintenance fees must be lower than the cost to rent otherwise there will be no economic incentive to purchase those timeshares. However, if the opposite happens which is that maintenance fees are low enough where a return on investment for rentals is possible, then new buyers will enter the market to buy up the surplus inventory to make a rental profit. That's a huge stretch to where we are today. I'm not saying it's going to happen. I'm also not saying that it's even possible. What I am saying is that I believe it could be a precursor to saving the timeshare industry. And, I believe it will be saved.

I generally agree with everything you write here.

And, Dave, I'm not attempting to be personal or disrespectful, and aside from a shot or two early on, I don't think we have been. As for the line that contained the word irresponsible ... you put me in a tough spot, because it's my honestly held opinion and you're just disagreeing with it. It's an opinion - nothing more, nothing less, and nothing hostile.

Tone is difficult to read on message boards or e-mail, so let me say again - I do respect Boca's expertise, history on this board and his opinion on this matter.

We just strongly disagree.

And with that I really will bid you goodnight.

 

[m61376]

I also think that the big names have too much of a vested interest in name recognition to allow a complete meltdown. Marriott, Starwood, Disney and the like will likely make sustaining their product a priority as the economy turns around and the credit market loosens a bit.

For example, although Marriott is delaying other projected projects, it is going forward with the Cancun property in late '09. If they hope to be successful, I would think that they will need to instill buyer confidence, and will work hard over the next six months to turn things around. Otherwise, sales at the projected price-point will be nothing but a pipe dream.

 

[m61376]

WOW! M61376 said everything I wanted to say. Good job!

Thanks!!

Now let's hope I'm right....

 

[GregT]

Well, I agree with DaveM's admonition to Ondeadln and Boca -- what started off as an interesting post rapidly degenerated into an incriminating back and forth -- both sides taking/giving too personally.

Ondeadln raises an excellent discussion point -- is this really a buying opportunity, or are such comments just designed to sucker the reader into a bad decision. Boca made his intended reasonable comments, and was immediately on the defensive. Very strange indeed, and I'm glad DaveM stepped in.

A different way of looking at it is to assume that we purchase the timeshare at the current price, and assume we never get anything for it, and it becomes worthless (ie, an EXPENSE). Further, you are obligated to pay ever increasing MF's for that annual/bi-annual usage.

If you are comfortable with a worthless initial investment, and assuming the obligation of an increasing MF of unknown rate of increase, then this is indeed an incredible buying opportunity. Who cares if it goes up or down as long as you can truly afford it. Lock it in, forget about the purchase price, and enjoy it.

I do view this as a buying opportunity if you can consider the purchase price an EXPENSE -- AND I BELIEVE THE BUYING OPPORTUNITY WILL BE HERE FOR THE FORESEEABLE FUTURE. I think, like the stock market, we will see a continuous net selling of timeshare product that will keep prices low and lower. I think new timeshares will just absolutely collapse, but we can benefit from the significant inventory of existing high-quality timeshares combined with forced sellers that are out there.

I personally look forward to when Marriott's new Lahaina and Napili Towers are available for $10,000 - $20,000 for a 2BR. They have significant unsold inventory, and I paid (expensed) $90K for my 3BR. A bad "investment" whose return will not be financially calculable, but which will be priceless.

I would love to get back to the original topic, and acknowledge the insightful comments of other posters also viewing this as an expense versus an investment.

Greg

 

[SpikeMauler]

Thanks!!

Now let's hope I'm right....

I think you are. I just jumped in and bought a Frenchman's Cove resale(I think I got a very good price). I didn't buy it to flip(down the road,when the economy rebounds), I bought it with the intention of using it for the next 15 yrs(at least).

 

[BocaBum99]

Greg,

I completely agree with you. It is a lot easier to justify a purchase today of many high end timeshares just on the economics alone while depreciating the initial capital over a number of years until it has a terminal value of zero. I think that's what you mean by viewing it as an expense.

What I've always tried to do is model the buy vs. rent economics of just that. What I could never do is justify a platinum Marriott week. I could never make it work. So, I never bought one.

What has changed for me in this economic environment is that the prices have come down so much due to the temporary suspension of ROFR that I believe it does make sense now.

And, it's possible to get an extra pop later if Marriott starts exercising ROFR again.

 

[BocaBum99]

I think you are. I just jumped in and bought a Frenchman's Cove resale(I think I got a very good price). I didn't buy it to flip, I bought it with the intention of using it for the next 15 yrs(at least).

But how will you feel in 5 years if it increased in price by $5-10k?

Ondeadlin is correct. Owners shouldn't just buy assuming it will happen. But, there is a good chance that it can and will.

 

[timeos2]

Just as a side note does anyone really think the securitization of timeshare loans is going to make a comeback after the real estate/mortgage melt down that helped fuel all this? That was a big part of the model developers have survived on (look at the whining from Westgate about the overnight dry up of those critical funds). But the financial markets now know they aren't worth the bad paper they are based on. That lesson will live long after the economy bounces back is my best guess. You can't act on ROFR (even if you ignore the proven fact that it does nothing to support prices) or easy credit sales of overpriced units if you can't sell the loans for quick cash. That basic change may be the catalyst that forces the timeshare world to alter the whole model. If it drags out a year or two its almost a safe bet that we've seen the end of the old ways.

 

[SpikeMauler]

But how will you feel in 5 years if it increased in price by $5-10k?

Ondeadlin is correct. Owners shouldn't just buy assuming it will happen. But, there is a good chance that it can and will.

I'm not sure what you mean. I bought FC at a VERY LOW price, for these times. My intention is to keep it. If it increased by 5 or 10 thousand over the next 5 yrs? I would only sell it if need be(my financial situation doesn't dictate this, yet) .

 

[BocaBum99]

Just as a side note does anyone really think the securitization of timeshare loans is going to make a comeback after the real estate/mortgage melt down that helped fuel all this? That was a big part of the model developers have survived on (look at the whining from Westgate about the overnight dry up of those critical funds). But the financial markets now know they aren't worth the bad paper they are based on. That lesson will live long after the economy bounces back is my best guess. You can't act on ROFR (even if you ignore the proven fact that it does nothing to support prices) or easy credit sales of overpriced units if you can't sell the loans for quick cash. That basic change may be the catalyst that forces the timeshare world to alter the whole model. If it drags out a year or two its almost a safe bet that we've seen the end of the old ways.

If there wasn't a 50 year history of it, then I'd say no. But, timeshare resorts have been using the same model for decades. As long as the real returns are there, there will be a future market.

There is no question the market will correct. Timeshare Resort sales could drop 50% or more from it's high before growing again. But, I don't think the business model is dead...... yet.

By the way, ROFR definitely provides temporary price supports. Not sure why you believe it doesn't when the facts strongly suggest otherwise.

 

[BocaBum99]

I'm not sure what you mean. I bought FC at a VERY LOW price, for these times. My intention is to keep it. If it increased by 5 or 10 thousand over the next 5 yrs? I would only sell it if need be(my financial situation doesn't dictate this, yet) .

I'm just saying that you are likely to feel you made a good decision. Better than you expect. It's a bit like early Disney owners felt earlier this year.

 

[Dave M]

By the way, ROFR definitely provides temporary price supports. Not sure why you believe it doesn't when the facts strongly suggest otherwise.

In my capacity as a BBS moderator....

As I have stated in other threads on this forum, please do not turn this thread into another debate on whether ROFR is good for owners or not. Please start another thread or latch onto an existing ROFR debate thread for such discussion.

 

[BocaBum99]

In my capacity as a BBS moderator....

As I have stated in other threads on this forum, please do not turn this thread into another debate on whether ROFR is good for owners or not. Please start another thread or latch onto an existing ROFR debate thread for such discussion.

Sorry, I forgot this was an issue. My apologies. Good catch.

 

[SpikeMauler]

I'm just saying that you are likely to feel you made a good decision. Better than you expect. It's a bit like early Disney owners felt earlier this year.

I do feel I made a good, sound and wise decision.(timing is everything).