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Vacation Village - Trouble for owners?

timeos2

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I have had a chance to see the 2010 & 11 Budgets for Vacation Village at Parkway - a popular resort with RCI Points members as it gives great value in Points vs annual costs. But nothing is free. Looking at the budgets there are some very troubling items:
  • Reserves are $51.82/week. That is a number that is about where our Orlando resort was at in 1995 - and we were seriously underbudgeted then!
  • To get a number that low they have estimated the life of unit furniture & fixtures to be 20 years!!! Can you imagine what it will look like after 10 - not to mention 20 - years of hard, timeshare type use?
  • 8 years for exterior painting? Even 5 years in the Florida sun/weather is a stretch for paint no matter what quality/name used.
  • 20 years for common area fixtures? Are you kidding? Most are lucky to survive 5 years and look even half decent.
  • Less than 3 million budgeted for reserves - a completely unrealistic number for a resort that size (and STILL growing). No wonder reserves are low - they are completely dreaming on future expenses. This is a setup for an unbelievable special assessment when work is actually required. One of the worst cases of Developer artificially holding fees too low I've ever seen
  • No estimate of annual real estate taxes. Have they challenged them as the County tends to overvalue timeshares (they base it on 50% retail value rather than the true, open market value for the first 10 years. Then it can be reduced if properly challenged)
  • The management contract is on a every 3 year, automatic renewal - the latest being on 10/31/10. There is a 60 day & out clause but it requires a super majority, owner vote.
  • But my favorite of all - as they seriously shortchange Reserve contributions with a TOTAL of under $3 million/year they are paying themselves $ 3,383,016 in management fees! When we were able to remove our Developer (auto-renewal too) management in 2001 we were paying them $1.1 MILLION in annual fees. Our new, independent management charged $375,000 in 2001 and we reduced it to $345,000 (plus future, planned increases for the life of the contract averaging 2%) in a new contract penned in 2005.
This is owner abuse to the first degree. How can they be charging a 15% management fee, pay more in management fee than annual reserve contribution and feel they "earn" that money?

I'll say they spell it all out but why aren't the owners up in arms? This is a monster development that will be in serious financial trouble in a few more years. Now is the time to start planning to replace this management group in 2013 when the next opportunity comes around to do so. The owners are not getting value despite a low fee.
 
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Gophesjo

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Thank you

Based on some other posts, I was thinking of picking up a tri-ennial for the points. Now I know better!
 

AwayWeGo

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[triennial - points]
Ducking & Dodging Those Dreaded Special Assessments.

Based on some other posts, I was thinking of picking up a tri-ennial for the points. Now I know better!
It's a crapshoot -- not if costs will escalate, but when.

That is, the timeshare companies are famous for skimping on reserves as a way of keeping fees attractively low -- also, apparently in this case, to camouflage the whopping fees paid to the company's captive management company.

So as long as they keep pushing full-freight sales, they're apt to keep on low-balling reserves. With more large buildings recently completed, others under construction, & more planned at that particular resort, they're apt to keep on selling full-freight units for several more years.

After that, look out !

Full Disclosure: We own 2 Vacation Village At Parkway triennial points units -- 1 dinky & 1 semi-dinky -- & we are in the process of adding 1 more triennial points unit (non-dinky), recently purchased via eBay. When our name is on the non-dinky deed, we will be offering the dinky & semi-dinky units as el freebo giveaways.

More Disclosure: At a completely different (non-points) Orlando timeshare, we managed to dodge major special assessments, twice. We bought right after a special assessment, then resold right before another (bigger) special assessment. After the bigger assessment was over, we bought back in again for less. All that was sheer, blind luck -- no special shrewdness on our part. So it goes.

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

ampaholic

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I have had a chance to see the 2010 & 11 Budgets for Vacation Village at Parkway

I can assume you are an owner at VV@P John?
 

Talent312

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I'll say they spell it all out but why aren't the owners up in arms?... The owners are not getting value despite a low fee.

The owners are clueless, 'cept for you and those who read your post.
Most owners couldn't be bothered to examine a budget, or if they did, could not make heads or tails of it. To them, its mostly gibberish. They figure that, the lower the MF's, the better, and as long as they're relatively low, the board must be doing its job.

At an older resort where I own, I wish the MF's would be raised high enuff to cover some updating. Instead, the board thinks its more important to keep MF's low than to bring the resort into the 21st century. Thus, units look like they were furnished in the 60's, with tube-TV's in the BR's. Its like a stepping thru a time-portal into the past... kind'a cool, I guess.
 

pedro47

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I think what John is simply saying low MF & low reserves fees spell trouble for a resort and its owners in years to come.
 
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timeos2

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Not an owner but seen it all too often

I can assume you are an owner at VV@P John?

I have come close twice as the points/fee ratio is extremely high there. But I never have completed a buy as I decided the lack of Owner control makes it too risky (the same reason we have now dumped our Wyndham, Wastegate and DVC ownerships over the years).

However my sources include owners there who were kind enough to send the budgets for 2010 & 2011. That gave me a chance to fully review how this Developer based Management was actually billing and spending the dollars collected. I was shocked to see how plainly they spelled it out and how little we hear from owners there on how they are seriously under budgeting for reserves while paying themselves like drunken sailors! Apparently not many are reading what they send out or don't realize what a serious issue a lack of proper reserves really is to an Association. I hope to raise the issue for those owners before it is too late to avoid the almost inevitable special assessment this type of underfunding nearly always leads to.
 

TSToday

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Issues

Your analysis was thorough. Dues paying owners need to dust off their governing documents and read them. Concerned owners need to attend their resort's owners meetings to get answers to key questions.

Industry experts say that there are about 730 owner-controlled timeshare HOAs in the U.S., as many as 30% are in trouble and may face insolvency or bankruptcy within the next few years. I recently formed Timeshare Board Members Association (www.tbmassoc.com) for Members of owner-controlled Boards. Through TimeSharing Today and TBMA we are proactively looking into:
Governance
Fiduciary responsibility
Board Member Liability

Failure to maintain adequate reserves, collections of delinquent maintenance fees from non-paying owners and mis-management are critical issues. Aging resorts, aging owners, transfer companies that take title and don't pay maintenance fees and the current economy are adding fuel to the fire. Please visit the TBMA website and urge your Board Members to join. Membership is free.

You can send comments to staff@tstoday.com

Shep Altshuler
Publisher - TimeSharing Today
Executive Director - TBMA
 

Gophesjo

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Thank you, Shep

Thank you, shep - I appreciate your post and your perspective and work in this arena.

I was President of my 'whole ownership' residential condo Board and tried desperately to alert our owners to some problems coming down the pike due to the economic collapse and related governmental mortgage policy changes - to no avail. I also tried to convince the owners that we need professional management to keep on top of all of the rapid changes - to no avail. It was very frustrating! (We've been hit harder than we needed to be as a result, and are seeing values at 50% of what they were before the bubble burst, in a market that is generally down only 20%).

People want to keep their heads buried in the sand. My only hope is that in our TS Board elections we all pay close attention to the qualifications and perspectives of the candidates!
 
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