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Timeshare - I don't get it

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Why would people scour the used market for timeshare deals? Even if you pay 5% of retail, you still have to deal with companies that engage in high pressure tactics. I am referring to the stories on this message board of people paying $20k for something they can buy on ebay for $1k.

Elsewhere I have heard every horror story in the book - they say they didn't get the maintenance fees even though people have cancelled checks to prove it, then they try to trash your credit, that kind of crap.

Why would you enter into an agreement at any price, even 5% of retail, where they can jack up the maintenance fees as high as they want in perpetuity and you have no recourse? Is it worth the headaches? Why not just pay on the spot for a hotel?

At some point the industry is going to work itself out and timeshare overcapacity will get converted to hotel-style resorts where you deal cash on the barrel head, none of this smoke and mirrors of points or this or that program or signing up for maintenance fees for the rest of your life or until you unload it on someone else.
 

DianneL

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Timeshare works for us

I would agree that timeshares are not for everyone. However, my husband and I hate to go on vacation and have only a hotel room. And many times we take our family with us, four additional people, which requires a two- or three-bedroom unit. I can think of no instances of our travels since using timeshares that we could have rented condos for the amount of our maintenance fees. Granted, maintenance fees do increase, however, with inflation so do condo rentals and hotel rentals. Just my opinion. I would say that everyone should look at the whole picture and do what works best for them.
 

emmitt

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My maintenance fees are $380.00. To stay in a 2 bedroom unit with full kitchen for approx $55.00 a night is a great deal. I normally travel with another couple, so it works out to $27.50 a night for both couples. When travelling with children, the extra space and conveniences(washer, dryer etc) is well worth it.
 

Robert D

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If you're selective and do your homework, you can find real bargains on the resale market. I only buy TS's in high demand markets where you can use it during the peak season. I also make sure that I can get a good return on my money (at least 10% and usually a lot more) by renting the week when I don't use it. If you can't rent your week at this level of a return, then you probably paid too much. If this is the case, you need to be sure you're going to use it most every year. If you can consistently rent a week at about the cost of the maintenance fee, then I agree with you that there's no reason to buy that week - just rent it when you want to go. But in peak season in high demand areas, rents are a lot more than maintenance fees.

Although there is a lot of slime in the industry, that tends to be on the sales and marketing side. I have not found that to be the case on the management side. The homeowners association controls the maintenance fees and they should be operating in the best interest of the owners.
 
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Thanks for the info. I am here because I know someone who got FLEECED BIG TIME by purchasing retail from a major operator who I won't name here.

I hate to break it to him that his points that he paid mid-5 figures for are only 'worth' about $3k-$5k max. Never used it once, way too late to rescind, he is in way over is head, can't keep up with the principal and maintenance fees and he is going to have to file BK. Yes, he is a dumbass with absolutely no common sense who was separated from a large chunk of his life savings by someone more sophisticated than him, but I think any reasonable person would conclude that these practices border on unconscionable.

So I am here gathering info about how these schemes work to see if anything can be done to help this person. Not much from what I can tell. It would only add insult to injury if he saw me buy his same number of points for $3k.

Robert A. Booey
 

DanM

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I just spent a long vacation weekend in a B&B on Nantucket where my son is working this summer. The room was lovely and had a private bath and free breakfast...with cookies and tea in the afternoon. My wife and I had a very nice time and agreed that we had no interest in going back to Nantucket again unless we landed an exchange. The value simply wasn't there compared with what we had become used to.Three nights cost me more than my timeshare exchanges to a two-bedroom unit in Steamboat last Christmas week and a two-bedroom in Vail for a week the previous March, combined. Nantucket is a very tough trade, but someone on the sightings board reported seeing last minute availability for the week after we could go, and I could have had my choice of several flexchange or last minute rentals (II and RCI) choices on Cape Cod over the past month for less than the cost of one night in that lovely B&B.
 

DanM

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Thanks for the info. I am here because I know someone who got FLEECED BIG TIME by purchasing retail from a major operator who I won't name here.

I hate to break it to him that his points that he paid mid-5 figures for are only 'worth' about $3k-$5k max. Never used it once, way too late to rescind, he is in way over is head, can't keep up with the principal and maintenance fees and he is going to have to file BK. Yes, he is a dumbass with absolutely no common sense who was separated from a large chunk of his life savings by someone more sophisticated than him, but I think any reasonable person would conclude that these practices border on unconscionable.

So I am here gathering info about how these schemes work to see if anything can be done to help this person. Not much from what I can tell. It would only add insult to injury if he saw me buy his same number of points for $3k.

Robert A. Booey

Saw the reason for your post after I posted my comments, and that's a whole different story. I think timeshares have worked very well for me, but whenever anyone asks me about buying them I tell them not to even think about it unless they are willing to spend weeks reading the TUG BBS first. Anyone who doesn't is going to get fleeced, or, at best, buy the wrong thing even if it doesn't work out badly. Mind you, I research almost everything I buy from cell phones to houses just as carefully, and don't really have a lot of sympathy for people who don't. At least my mistakes are informed mistakes :)
 

Charlie D.

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Robert, you should consider joining a Motel 6 or Super 8 forum. Do you think for one minute that hotel costs are going to stay at zero percent while MFs increase? Hotels are still going to get used if a timeshare that someone owns is not nearby. I personally think that timeshares are all about vacations. We can do an over-nighter in a hotel but would plan a vacation to a large, pretty plush resort unit.
 
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You can call me Bob. Nice subtle jab with the motel 6 comment. I used to work in sales and I know all the psychological tricks.

Sure hotels will go up but if you sign up for a lifetime contract where the other party cat set maintenance fees wherever they want, you are pretty much locked in. Timeshare 'points' can be diluted at the whim of the operator. Whereas with hotels you can choose not to stay there.


Robert, you should consider joining a Motel 6 or Super 8 forum. Do you think for one minute that hotel costs are going to stay at zero percent while MFs increase?
 

sfwilshire

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Bob,

I calculate, by the time I pay all the fees and memberships, and add in the initial cost, that my timeshares cost me about $100 a night. It might actually be less than that, and there are certainly others on this board who have made smarter purchases and have costs significantly lower.

That equates to about $85 for a hotel room by the time you add taxes to the hotel. I have kids in school, so can't travel off season (when hotels and rental timeshares would probably make more sense than owning). It hasn't been too many years since I could find at least a basic hotel room in the $75 range, but I'm not finding any now. Most half way decent places are at least pushing $100, and that's just for a room. Some of the timeshare units we exchange for are bigger than our first house. We stayed a night here and there in a hotel on our 22 day Canadian trip, and believe me, we missed having multiple rooms to hang out in, multiple bathrooms, and our full kitchen.

Sheila
 

Blondie

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Bob- if you have read as much as you say then you obviously realize, what with your background in sales and all, that there are MANY satisfied customers here on these boards. The ones we sometimes do hear from are the ones who have an axe to grind because they did something really dumb and now they can't get out of it. Often they do not know what they bought, never figured it out, and don't plan to. Timeshare is like any other purchase- do your homework, research the product/market, don't spend more than you can afford to and if it is too good to be true it isn't. It's that simple. If you have more money than brains, well, that won't last long now will it? I have many success stories/secrets which I elect not to share with you but suffice it to say I am the envy of my friends because of how cheaply I travel. In fact, I now assist them with their timeshare purchases. :banana:
 
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I agree with you Blondie and Shiela. I'd be happy with saving on accomodations if I got in for a good price up front and fees were contractually constrained in some manner or I had some influence over them (like an association). It seems to me that this only makes sense for people who have free time to vacation, and who have free time to learn how to work the system. In my case it makes more sense to stay in a hotel because I want the flexibility rather than trying to find the best price.

For me to get into it there would be a long list of IFs:

IF it is someplace I want to go regularly and is relatively convenient to get to (like say Whistler BC)

IF there is minimal BS involved

IF I can get it for a song

IF maintenance fees can't be arbitrarily jacked and the points can't be arbitrarily diluted.

In the case of the dumbass I was talking about before, who was separated from mid-5 figures, hotels would have made more sense for him too. Other than visiting his girlfriend's family a couple years ago and staying at their place, he has not taken any vacations in the last several years to my knowledge. Clearly he was not a big spender on high-dollar discretionary items or into the lesiure/travel lifestyle. He did zero homework, walked in not knowing what he was getting into, and was blind sided. The unfortunate thing is they got him not once but twice. It was only some time after the second time (the 'upgrade') that he realized he was in serious financial trouble.
 

rickandcindy23

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You can call me Bob. Nice subtle jab with the motel 6 comment. I used to work in sales and I know all the psychological tricks.

Sure hotels will go up but if you sign up for a lifetime contract where the other party cat set maintenance fees wherever they want, you are pretty much locked in. Timeshare 'points' can be diluted at the whim of the operator. Whereas with hotels you can choose not to stay there.

Why come to a forum where people love timeshare? I don't get it.

We like to stay in condo instead of a hotel. Our maintenance fees have risen with inflation. We have owned our first timeshare since 1981, and the value is still there.
 

calgarygary

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Bob if you were to survey many of the folks here, you would find a large percentage of them paid full retail from the developer. You shouldn't be looking at why your friend got "fleeced" but rather, now that he has the timeshare, how can he maximize his benefit of it. You will find some great advice here on TUG about doing so, especially if you provide the specifics of the resort.

Most of us here on TUG, can provide horror stories and can also provide great examples about the benefits of timesharing. For example, I have an upcoming stay at Harborside for the cost of my maintenance fees at Vistana Villages. The nightly rate works out to about $130/night for a 2 bedroom that if you were to try to rent, if successful, would easily renty for almost 4X that cost. There is no added cost to account for the original purchase price for my timeshare as I managed to get it off eBay for $0 inclusive of the transfer.

So timesharing is going to be very good for me.:clap:
 
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I see. If you have the spare time to learn and work the system and are willing to be locked in to some degree, you can get a better value IF you satisfy a list of conditions. I can see how it would become a hobby or obsession if you can repeatedly score good values. If I had more free time I would pursue it and try to score big myself.

The dumbass I'm talking about was not someone who normally takes vacations and was not someone who could eat a mid-5-figure loss. He has zero common sense and got talked into something he didn't need and payed a heavy price for it, more than he could afford. It's too late for him to to try to salvage the situation. BK is his only option.
 

bnoble

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So I am here gathering info about how these schemes work to see if anything can be done to help this person. Not much from what I can tell.
Unfortunately, you're correct here. There is very likely no way your friend could hope to even recover the amount s/he still owes, let alone the purchase price. And, it is absolutely true that the developers prey on such people. It's a harsh reality, but caveat emptor. As you say, your friend is a dumbass.

I'd be happy with saving on accomodations if I got in for a good price up front and fees were contractually constrained in some manner or I had some influence over them (like an association).
This is a good point. However, you don't want them to be contractually constrained, because that can leave your resort in a hole, with no way to cover increasing maintenance costs, etc. For example, consider Proposal A in Michigan. This limits the increase in residential property taxes---which sounds like a good idea, until, say, a community wants to raise more money for their own schools, and constitutionally can't vote to do so.

However, in most timeshares, there is an association which governs the budget and, hence, fees---and a savvy buyer will buy in a resort that has an owner-controlled board of directors, rather than a developer-controlled one. All three of my ownerships are at resorts with owner-controlled boards. An owner-controlled board can still screw up, but if they do, you vote them out and vote in someone who will do a better job. Generally, you'd expect annual fees to increase at roughly the same rate as the cost of rental lodging. But, since your basis is lower as an owner, the gap between owning and renting grows over time. If it doesn't, you need to have a heart-to-heart with your board.

There are other risks---storm damage, etc.---that an owner is subject to that a renter is not. Such are the privileges of ownership.

I have three litmus tests for any ownership I am considering:

1: It must be a resort I would be willing to use myself, within one day's drive. (If a mini-system, it must have at least one such resort "in-system" with good year-round availability).

2: The week must occur during school vacations. If a floating or points week, it must be bookable within same with good availability.

3: The carrying cost must be less than market rental rates by a reasonable margin. I compute carrying costs as 8% of the acquisition costs (purchase price plus closing costs/fees) plus annual fees. If this is close to or more than rental rates, no sale.

You'd be surprised at how many timeshares---even resale---fail test #3. If any of my ownerships have fees rise to the point where #3 is in danger, on the selling block it goes. It's still objectively got value, just not enough for me. But, because all of my ownerships are in decent resorts during school vacation periods, I expect to be able to get rid of them if necessary, even if I have to firesale them on ebay for $1. And I paid very little for those I currently own, so my total capital exposure is low even if I have to firesale.

You'll notice that my criteria are very close to your "long list of IFs" They put me in what I find to be a tolerable risk position, and provide a fair return on investment compared to rental rates.

It seems to me that this only makes sense for people who have free time to vacation, and who have free time to learn how to work the system.
Certainly the first is true---timeshare makes no sense if you can't make time to vacation. The second is not necessary---if you follow a set of criteria similar to my own, and have done your due diligence to make sure the board is owner-controlled, etc. From that point on, you just use what you own, happy with your modest but fair return on investment.

That said, learning how to work the system is where the real money is. For example, I spent 11 days in Disney resorts over the past year. The rental rates from Disney for those resorts would have averaged about $475 per night, before taxes. The "market rental rate," renting from an owner at that resort, would have cost about $320 per night.

Adding up all out of pocket costs plus the 8% opportunity cost on the purchase price of the week I used, the cost to me was approximately $115 per night. I paid less for those nights all-in than an owner would have paid only in maintenance fees, let alone opportunity costs on the (very substantial) purchase price. And that's despite "throwing away" three extra nights that I could have used, but didn't. If I did use them, my cost per night would have dropped to $90.

To be fair the time I spent learning to work the system, if I were billing at my normal consulting rate, is worth a lot more than I saved on those Disney resort rooms. But, this is a hobby---I like the game of cat and, ahem, mouse. :)
 
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To me, a hotel is a place to stay for a night, maybe two, while travelling to or from a timeshare stay. One room? Yikes!!

Add that to the fact that we almost always travel as two couples, taking friends or family, so we split the cost. For about $60 a night, we usually have a place that is nicer than the condo I call home!!

As for maintenance fees, I suppose my position might be different than some. All of my timeshares have individual boards of directors, who are hopefully personally invested as owners to keeping maintenance fees reasonable, while maintaining the resort.

Timeshares don't work for everybody, but they do for 99.9% of people on these boards.
 
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I see. This can be complicated and you need to know well what you are getting into up front. The sad thing is there are a lot of people who don't do the work up front and have no idea what they have gotten themselves into, and who fall for the sales tactics. The people who are smart about it can benefit.

I told the dumbass if he had balked even slightly at the sales presentation I bet they would have cut it by 50% to 'sweeten' the deal. Standard sales tactic, but in his case he took the outrageous price. Man, I bet they were high-fiveing each other the moment he walked out the door.
 

bnoble

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Probably so.

To me, a hotel is a place to stay for a night, maybe two, while travelling to or from a timeshare stay. One room? Yikes!!
I want to point out that this is a red herring. It is perfectly possible to rent condo/timeshare-style lodging. I came to timeshare primarily because, on my own family vacations pre-timeshare, I was either renting extended-stay style hotels (e.g. Residence Inn) with 1-2BR, or from whole-ownership owners through VRBO and the like. Renting doesn't have to mean "hotel room".
 
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rickandcindy23

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Five points, then I am out of this thread.

1. You keep calling your friend a dumbass for buying a timeshare. That is offensive.

2. A timeshare isn't enough to put anyone in bankruptcy, unless they have no money at all, plus you said your friend has owned the timeshare for a while. $700 a year won't break anyone, either.

3. Points systems don't arbitrarily change point values

4. As Bev already stated, many of us have timeshares that have strong HOA's and fees are kept reasonable.

5. The negative things you are saying about timeshare are not going to get you much agreement here. People are just going to continue to try to tell you that timeshare is great, but you have already made up your mind, for whatever reason.
 
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1. You keep calling your friend a dumbass for buying a timeshare. That is offensive.

A dumbass is someone who finances multiple times his gross annual income on a discretionary item like timeshare points, with fees amounting to 12.5% of his gross annual income (his fees are much much more than $700/yr.)

Thanks for the other answers, like the fact that some places have strong HOAs. Clearly this is something people need to do their homework on. Unfortunately a lot of people don't, and a lot of money is made off of them.
 

Larry

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why Timeshare because it's a fantastic value for some

OK so you don't understand why anyone would buy a timeshare and your getting a free education here. It is true that for those who don't know what they are doing and don't want to invest the time in researching timesharing is not for them. I would never have gotten into timesharing if it didn't make economic sense and knew nothing when I started. I purchased my first week after checking out many resorts on a vacation to Aruba. I bought because I crunched the numbers and it didn't make sense not to buy.

At first we exchanged to close by resorts were we could drive to when our three children were younger and stayed at nice resorts in two BR units in exchange for our studio unit in Aruba. Maintenance when we bought was around $375 and exchange fee in 1992 was about $100-$125. One hotel room without a kitchen at the resorts we were staying in where about $100 per night so two rooms would have cost us $200 per night plus tax so that was about $1,400 for the week plus tax which I exchanged for a cost of about $500.

In the beginning I figured it would take about five-seven years to break even on my original investment which I purchased at the resort for a closeout sale at 50% off the original price. I now rent out the week which after 16 years has maintenance fees has increased to about $525 per week so over time maintenance fee increases just barely = inflation rate.

I currently own 8 weeks ( all subsequent weeks bought re-sale)and rent out 4 weeks which pays for all 8 weeks and then some. So after 16 years of timesharing I owe nothing and make a 15%-20% return on my rentals and have 4 weeks of free vacations. So what kind of value am I know getting on my trades. I can give you several examples but just one is clearly illustrative of how we vacation.

Our next vacation will be to a carribbean island in a two bedroom 2bth villa with full kitchen and with private plunge pool this coming winter. Rental for this timeshare villa on their website is $510 per night plus tax. I traded a resale week that's fully paid for with maintenance fees of $765 plus the exchange fee of $199. So total cost for the week is $965 and I am getting a vacation that would cost a minimum of $2,500-$4,000 with tax whether I purchased from the resort or went on line and tried to get a private rental.

Beats a crummy hotel room every time!:cheer: :banana: :cool:
 
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Thank you for the information. Everyone should read this site to be well-informed before they get into anything.
 

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Baba Booeoey

Baba BOOEY is Howard Stern's producers nickname. While attempting to sound sincere he's doing SHTICK. Nice try.;)
 
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