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Question about Maintenance Fees

LivninSC

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We've been considering either buying a place on Hawaii and have it entered in to the buildings rental program or getting a timeshare and while both options have their pros and cons I'm trying to understand how the timeshare maintenance fees are as high as they are. If I were to buy a place outright a fairly nice resort facility would have a monthly HOA fee of let's say $1,500, $1,000 for the property tax, an additional $500 for electricity (although that's sometimes included in the HOA), and then $1,000 a month for upkeep/upgrades which is basically $4,000 a month or $1,000 a week. That may not be everything but I think it illustrates the point when you compare that to a weeks maintenance fee at the Westin Princeville that is roughly $3,000 for the 2 bedroom. How in the world can it be so much higher? I would expect somewhat of a premium but I just can't see how it's 3x as much.

I really like the idea of a points based timeshare where we could go to our home resort and book early and get a confirmation or chose another island or locale altogether if there is availability but the flipside to that is for $3k I can get a nice place through VRBO for a week or more. Obviously not apples to apples going that route but I'm finding it hard to swallow what seems to be a huge premium on what the timeshares maintenance fees are so just curious what I'm missing. We could purchase elsewhere, looked at the Westin Kierland before as their maintenance fees were considerably more reasonable but don't know if we would always be able to get a week when we actually wanted to get the week given Hawaii's popularity and that I imagine a lot of home resort owners book before the 8 month mark.

Thanks in advance!
 

R1964

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Whatever you do make sure you buy resale and not from the developer if you decide to purchase a timeshare. If you can swing it I would by something outright and rent weeks out. You would get a better return on your investment.
 

LivninSC

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Whatever you do make sure you buy resale and not from the developer if you decide to purchase a timeshare. If you can swing it I would by something outright and rent weeks out. You would get a better return on your investment.

Agreed. I'm more than willing to let them give me a week at a place for $500-700 or whatever with the presentation but I couldn't believe what they were asking for them. We do like the idea of owning a place outright, especially as we could leave everything we needed there and travel very light and we could easily control when we wanted to visit or if there is availability last minute we could go or let family go and not really have it cost anything but for the cost of places in Hawaii and the chunk the person/company who is on island and renting it out takes (realistically 20-40% off the top) it's not the greatest of investments unless you're hoping for appreciation of the property as a whole which can be a bit fickle in Hawaii. Seems better to invest the $ in rental property locally for long term tenants and with the extra proceeds just use it to spend on vacations although deducting plane tickets to Hawaii to perform periodic maintenance does seem like something I would get a heck of a kick out of when I do my taxes :D
 
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BJRSanDiego

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We've been considering either buying a place on Hawaii and have it entered in to the buildings rental program or getting a timeshare and while both options have their pros and cons I'm trying to understand how the timeshare maintenance fees are as high as they are. If I were to buy a place outright a fairly nice resort facility would have a monthly HOA fee of let's say $1,500, $1,000 for the property tax, an additional $500 for electricity (although that's sometimes included in the HOA), and then $1,000 a month for upkeep/upgrades which is basically $4,000 a month or $1,000 a week. That may not be everything but I think it illustrates the point when you compare that to a weeks maintenance fee at the Westin Princeville that is roughly $3,000 for the 2 bedroom. How in the world can it be so much higher? I would expect somewhat of a premium but I just can't see how it's 3x as much.

I really like the idea of a points based timeshare where we could go to our home resort and book early and get a confirmation or chose another island or locale altogether if there is availability but the flipside to that is for $3k I can get a nice place through VRBO for a week or more. Obviously not apples to apples going that route but I'm finding it hard to swallow what seems to be a huge premium on what the timeshares maintenance fees are so just curious what I'm missing. We could purchase elsewhere, looked at the Westin Kierland before as their maintenance fees were considerably more reasonable but don't know if we would always be able to get a week when we actually wanted to get the week given Hawaii's popularity and that I imagine a lot of home resort owners book before the 8 month mark.

Thanks in advance!
If you were to buy a unit outright, you'd probably have to pay somewhere between $500K and $1 million (or more). So, if you assign a value to your money at 3%, or 4%, the annual cost of tying up that money would be $15K to $40K. Plus either taking out a substantial mortgage or taking out a bunch of money from your bank account.

For points based timeshares - - say Marriott - - they are selling for around $2 a point plus $3 Marriott fees = $5 a point. If you stayed in an efficiency, your points would go much further. But if you wanted to stay in a 3 BR ocean front Maui Tower, you'd probably need around 5,000 points or an investment of $2500 and an annual MF of around $3.3K a year (I'm guessing about $0.65 per point). If you bought into a lower rated resort chain for points like DRI or Worldmark/Wyndham you could shave that cost a bit.

Or if you bought a deeded TS week at a lower rated (but fairly nice) resort like the Sands of Kahana, Kahana Beach, Kahana Falls, Hoholani, etc. your could acquire one week for nearly nothing (perhaps pay the transfer fee and closing) and pay around $1600 to 1700 per year MF for a 3 BR unit. Or perhaps $1400-1500 for a 2 BR. or $1200 for a 1 BR. (These are not precise numbers but are okay enough to mildly explore concepts). I own at the Sands (3 BR, 2 Ba. ~ $1650 MF + property tax) and like it (so I'm familiar with it) but it doesn't have air conditioning in the TS units and - - given the choice - - I'd rather stay at a Marriott.

I think that part of your decision making process is how much you want to outlay and more importantly, how many weeks a year you would likely stay in Hawaii. If it is a low number of weeks, then buying a unit outright and planning to rent out could be a bit of a financial risk. People who did this before the Covid pandemic probably wish that they had not done that. BTW, at the Sands there are some fractional units (like 1/4 ownership, and perhaps 1/12th ownership). I have no idea what the fractional units pay in monthly fees.

There is a fellow tugger @slip who bought a 2 BR condo unit on Molokai and is currently renting out some weeks when he isn't using it. You might want to look at some of his posts and/or ask his advice.
 

slip

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Agreed. I'm more than willing to let them give me a week at a place for $500-700 or whatever with the presentation but I couldn't believe what they were asking for them. We do like the idea of owning a place outright, especially as we could leave everything we needed there and travel very light and we could easily control when we wanted to visit or if there is availability last minute we could go or let family go and not really have it cost anything but for the cost of places in Hawaii and the chunk the person/company who is on island and renting it out takes (realistically 20-40% off the top) it's not the greatest of investments unless you're hoping for appreciation of the property as a whole which can be a bit fickle in Hawaii. Seems better to invest the $ in rental property locally for long term tenants and with the extra proceeds just use it to spend on vacations although deducting plane tickets to Hawaii to perform periodic maintenance does seem like something I would get a heck of a kick out of when I do my taxes :D

I do have a condo on Molokai. It is only a one bedroom though. We plan on retiring there soon. If you have any questions of what I did, send me a PM.
 

LivninSC

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I do have a condo on Molokai. It is only a one bedroom though. We plan on retiring there soon. If you have any questions of what I did, send me a PM.

Thanks, we have family that does something similar so we're relatively familiar with it. The main issue I see with buying and renting it out is the investment and the 20-40% someone would take off the top unless you were to fully manage it yourself but then you've still got the on-island contact you have to pay. We plan on going at least a few times a year and more and more as we age, spend summers there, etc. and while I would be very interested in just owning several weeks through a timeshare the maintenance fees just kind of kill that idea. I just don't understand how they are charging as much as they charge. It's like they want the timeshare owners to foot the bill for the upkeep of the entire property or something that they then rent rooms out on and profit. Not expecting to get anything for free just surprised at some of the costs some/most of them have.
 

slip

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TUG Member
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Location
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Resorts Owned
Pono Kai, 20 wks; Maui Schooner, 1.5 wks; 1 week Ke Nani Kai; WaveCrest Condo, Molokai, HI
Thanks, we have family that does something similar so we're relatively familiar with it. The main issue I see with buying and renting it out is the investment and the 20-40% someone would take off the top unless you were to fully manage it yourself but then you've still got the on-island contact you have to pay. We plan on going at least a few times a year and more and more as we age, spend summers there, etc. and while I would be very interested in just owning several weeks through a timeshare the maintenance fees just kind of kill that idea. I just don't understand how they are charging as much as they charge. It's like they want the timeshare owners to foot the bill for the upkeep of the entire property or something that they then rent rooms out on and profit. Not expecting to get anything for free just surprised at some of the costs some/most of them have.

Many here on TUG are looking at accommodations and comparing the Maintenance fees to a similar condo rental. The high end places do have a premium but renting is usually higher than the maintenance fees.

Ownership is not for everyone but it can work well for many people.
 
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