Would you buy a non transferble TS, if there was no cost to give it back and you were guranteed rental income annually when you didn't use it?

[boyblue]

I've already setteled this point but I thought I'd still ask the question. So the TS would have been transferable only to family, and could only be rented through the resort in conjunction with one of the booking companies, who would receive a smaller negotiated comission because of the bulk deal.

For the record, I believe an owner should have the right to sell their TS for pennies or even give it away, but the idea of non transferable ownership was proposed for the purpose of maintaining unit market value and keeping the rent rate at market value.

Mind you, the thought was not to lock someone into a deal, to take advantage. Remember, there would be no cost to return the week and the MF would be significantly less than the $2,000 you'd likely get renting.

The issue was settled because it was realized that the week's resale value has nothing to do with the developer's sale price. TS's that sell for tens of thousands are routinely sold for little to nothing on the resale market. It's a reality that cannot be avioded, especially by restricting owners's rights.

 

[sponger76]

I've already setteled this point but I thought I'd still ask the question. So the TS would have been transferable only to family, and could only be rented through the resort in conjunction with one of the booking companies, who would receive a smaller negotiated comission because of the bulk deal.

For the record, I believe an owner should have the right to sell their TS for pennies or even give it away, but the idea of non transferable ownership was proposed for the purpose of maintaining unit market value and keeping the rent rate at market value.

Mind you, the thought was not to lock someone into a deal, to take advantage. Remember, there would be no cost to return the week and the MF would be significantly less than the $2,000 you'd likely get renting.

The issue was settled because it was realized that the week's resale value has nothing to do with the developer's sale price. TS's that sell for tens of thousands are routinely sold for little to nothing on the resale market. It's a reality that cannot be avioded, especially by restricting owners's rights.

I don't see how you could guarantee rental income. What if nobody rents the week if fixed, or if floating, very few weeks in the season get rented? Also would be difficult to guarantee that rental rates would be well above MFs or that MFs would be low, or even sub-$2,000 due to lots of cost factors that aren't easily controllable, if at all. This would be especially true in places with extremely high labor costs, taxes, utility or insurance rates.

 

[WorldT]

If the cost to purchase is zero (or small enough ) and the MF is reasonable to me for the use I get, then absolutely. I don't buy a unit with the intent to sell it or rent it.

 

[boyblue]

I don't see how you could guarantee rental income. What if nobody rents the week if fixed, or if floating, very few weeks in the season get rented? Also would be difficult to guarantee that rental rates would be well above MFs or that MFs would be low, or even sub-$2,000 due to lots of cost factors that aren't easily controllable, if at all. This would be especially true in places with extremely high labor costs, taxes, utility or insurance rates.

The longer explanation is that an owner would have had the option to pay MF and receive all of the rent proceeds net of broker commission or not pay the MF and have rent cover it and split the balance with the resort. In the latter case even if the unit did not get rented the owner would have been given credit for paying. The risk inherent in the latter scenario is the split would not hve been a fixed percentage, the more units rented the lower the resort's percentage and vice versa.

 

[boyblue]

I don't see how you could guarantee rental income. What if nobody rents the week if fixed, or if floating, very few weeks in the season get rented? Also would be difficult to guarantee that rental rates would be well above MFs or that MFs would be low, or even sub-$2,000 due to lots of cost factors that aren't easily controllable, if at all. This would be especially true in places with extremely high labor costs, taxes, utility or insurance rates.

There would not have been a gurantee of rental income but a good likelyhood. This was not meant as a universal solution, just a solution for a place where there are too few TS. Last year there were 1,719,980 overnight visitors and looking at RCI availability for 2025 there are currently 55 units available.

 

[boyblue]

If the cost to purchase is zero (or small enough ) and the MF is reasonable to me for the use I get, then absolutely. I don't buy a unit with the intent to sell it or rent it.

There are too many zero priced TS for Tuggers to consume and for new developers timesharing is too high maintenance. Rather than TS salesmen and thousands of small valued units/owners, they can sell a 40 unit development out with no more than a couple hundred fractional sales.

 

[davidvel]

What is this all about? Is there another thread that this refers to????

 

[sponger76]

The longer explanation is that an owner would have had the option to pay MF and receive all of the rent proceeds net of broker commission or not pay the MF and have rent cover it and split the balance with the resort. In the latter case even if the unit did not get rented the owner would have been given credit for paying. The risk inherent in the latter scenario is the split would not hve been a fixed percentage, the more units rented the lower the resort's percentage and vice versa.

If the owner doesn't use the week and it doesn't rent, the owner still gets credit as if they paid MFs? That's a quick way to guarantee that your fantasy business proposition will go under. Where do you expect the funds will come from to cover resort costs for weeks that don't rent? You forget that timeshare HOAs are nonprofits and that MFs are based on projections on how much it will actually cost to run the resort for the year. That expense is supposed to be paid by the owners through MFs. If certain owners aren't paying, and no rental income is realized for their weeks, those costs get passed on to other owners who are actually staying at the resort through increased MFs. At many resorts with numbers of non-MF-paying owners, you see a line item in the budget for bad debt. And you want to give people an out to not pay even if their week doesn't rent? Wishful thinking doesn't make for a good business plan. You're just hastening the death spiral for the timeshare as MFs quickly increase due to bad debt and an ever-increasing percentage of owners opt not to pay for MFs because of it. The only way around that is if you are successfully renting a high number of units year round, which means less owners actually staying. At that point it might as well be yet another regular hotel and not a timeshare.

 

[WaikikiFirst]

must be som ekind of theoretical brain tease someone is subjecting himself to
or a billionaire developer decided to do mkt research here before he/she breaks ground on the next multi-$100M project ... LOL

 

[chapjim]

What is this all about? Is there another thread that this refers to????

Agree! I was going reply to the OP that people shouldn't post on the internet when they've been drinking. Seems some people know what this is about so I'm glad I didn't.

 

[boyblue]

There are too many zero priced TS for Tuggers to consume and for new developers timesharing is too high maintenance. Rather than TS salesmen and thousands of small valued units/owners, they can sell a 40 unit development out with no more than a couple hundred fractional sales.

Nah, it was just an observation. The big developers have a tried and true formula that results in a lot of low priced resales which a lot of owners are happy to pick up. It's a perfectly symbiotic relationship. No harm, no foul. With the growth of larger [than weeks] fractional vacation ownerships, small developers now have alternative markets to pursue.

 

[boyblue]

If the owner doesn't use the week and it doesn't rent, the owner still gets credit as if they paid MFs? That's a quick way to guarantee that your fantasy business proposition will go under. Where do you expect the funds will come from to cover resort costs for weeks that don't rent? You forget that timeshare HOAs are nonprofits and that MFs are based on projections on how much it will actually cost to run the resort for the year. That expense is supposed to be paid by the owners through MFs. If certain owners aren't paying, and no rental income is realized for their weeks, those costs get passed on to other owners who are actually staying at the resort through increased MFs. At many resorts with numbers of non-MF-paying owners, you see a line item in the budget for bad debt. And you want to give people an out to not pay even if their week doesn't rent? Wishful thinking doesn't make for a good business plan. You're just hastening the death spiral for the timeshare as MFs quickly increase due to bad debt and an ever-increasing percentage of owners opt not to pay for MFs because of it. The only way around that is if you are successfully renting a high number of units year round, which means less owners actually staying. At that point it might as well be yet another regular hotel and not a timeshare.

Because rent rates are more that twice MF you would need to rent only 50% or even less to cover the missing MF. That's the problem with the traditional method. When you have no use for your TS you shouldn't be burdned by it. Again this is not a universal solution, there has to be heavy demand. The important thing is the resort must be top notch.

 

[boyblue]

Agree! I was going reply to the OP that people shouldn't post on the internet when they've been drinking. Seems some people know what this is about so I'm glad I didn't.

My apologies, there are a couple threads that started different but are now running together.

 

[sponger76]

Because rent rates are more that twice MF you would need to rent only 50% or even less to cover the missing MF. That's the problem with the traditional method. When you have no use for your TS you shouldn't be burdned by it. Again this is not a universal solution, there has to be heavy demand. The important thing is the resort must be top notch.

I don't see any small independent timeshare resorts that are THAT top notch that you can guarantee that you will consistently rent 50% of the units for twice the MFs. And no matter the resort, there is rarely that much demand where there are no low seasons and therefore will consistently rent that much of the inventory year round, with the remainder of the units having near 100% occupancy by MFs-paying owners. And again, if you need to rent that high of a percentage of the units, why even be a timeshare? Might as well be a regular hotel if that many of the owners are mostly going to rent out their units instead pf staying there. You'd have to have everything go exactly perfectly for this to barely break even for most folks. And if something like COVID or a natural disaster happens where both owner and renter occupancy slackens, as happened at even top-notch destinations during COVID or natural disasters, the resort is bankrupt, no ifs and or buts about it.

 

[RX8]

Your question is seriously flawed. There are no guarantees in the timeshare world (unless you are a timeshare salesman trying to make a sale). Just taking your “no cost to give back” statement, what may be no cost to give back today could be a nightmare to give away tomorrow. There are lots of timeshares that once could be sold for a few thousand dollars on the resale market but those same timeshares today now require the seller to pay someone to take it off their hands.

 

[boyblue]

I don't see any small independent timeshare resorts that are THAT top notch that you can guarantee that you will consistently rent 50% of the units for twice the MFs. And no matter the resort, there is rarely that much demand where there are no low seasons and therefore will consistently rent that much of the inventory year round, with the remainder of the units having near 100% occupancy by MFs-paying owners. And again, if you need to rent that high of a percentage of the units, why even be a timeshare? Might as well be a regular hotel if that many of the owners are mostly going to rent out their units instead pf staying there. You'd have to have everything go exactly perfectly for this to barely break even for most folks. And if something like COVID or a natural disaster happens where both owner and renter occupancy slackens, as happened at even top-notch destinations during COVID or natural disasters, the resort is bankrupt, no ifs and or buts about it.

It's likely that owners will use their unit most years. I was addressing the question of what happens when they don't and are not required to MF.

 

[chapjim]

All the hypotheticals and assumptions keep this discussion from being useful.

 

[boyblue]

Your question is seriously flawed. There are no guarantees in the timeshare world (unless you are a timeshare salesman trying to make a sale). Just taking your “no cost to give back” statement, what may be no cost to give back today could be a nightmare to give away tomorrow. There are lots of timeshares that once could be sold for a few thousand dollars on the resale market but those same timeshares today now require the seller to pay someone to take it off their hands.

No matter how many lies we are told by TS salespeople, what counts even in the worst situations is what is written in your sales contract. As long as it's in there there in clear terms, without exceptions or qualifications, it cannot be changed by the developer. However conceeding to your point somewhat, as far as I know, your HOA would have the power to ammend that provision, so there is a possibility that you could end up stuck.

 

[boyblue]

All the hypotheticals and assumptions keep this discussion from being useful.

‘If one advances confidently in the direction of his dreams, and endeavors to live the life which he has imagined, he will meet with a success unexpected in common hours.’ – Henry David Thoreau

Who knows, in the end we might get somewhere

 

[sponger76]

‘If one advances confidently in the direction of his dreams, and endeavors to live the life which he has imagined, he will meet with a success unexpected in common hours.’ – Henry David Thoreau

Who knows, in the end we might get somewhere

It's a nice quote, but in the real world flights of fantasy about how you want a business to run are usually crushed by the harsh reality of how money actually works. But by all means, if you can get the capital together, try to build and structure your dream timeshare the way you are proposing. I won't buy in, but I'll happily get some popcorn and watch the metaphorical train wreck. And if I'm wrong and it is a long-term success (at least 20 years to see how it withstands cyclical downturns that inevitably happen) and I'm still alive, I'll happily admit that I was wrong.

 

[chapjim]

‘If one advances confidently in the direction of his dreams, and endeavors to live the life which he has imagined, he will meet with a success unexpected in common hours.’ – Henry David Thoreau

Who knows, in the end we might get somewhere

Nice quote, but Thoreau was all about simple living, just about the opposite of timesharing.

Thoreau's "somewhere" and your "somewhere" are at opposite ends of the scale.

 

[boyblue]

It's a nice quote, but in the real world flights of fantasy about how you want a business to run are usually crushed by the harsh reality of how money actually works. But by all means, if you can get the capital together, try to build and structure your dream timeshare the way you are proposing. I won't buy in, but I'll happily get some popcorn and watch the metaphorical train wreck. And if I'm wrong and it is a long-term success (at least 20 years to see how it withstands cyclical downturns that inevitably happen) and I'm still alive, I'll happily admit that I was wrong.

How about this? We cut MF in half and introduce User Fees. Everyone pays MF which covers essentials and UF covers the rest? You don't have to pay UF when you don't use your week. UF is paid by the party using the week. Owner keeps the rental income net of UF and commission? If you do not pay MF and if the resort gets it rented your MF debt is forgiven but the resort keeps the rent proceeds. You can give the week back at any time once it's been paid for? The week will be sold at half the net price (price - all commissions) and proceeds goes into the reserve fund.

 

[sponger76]

How about this? We cut MF in half and introduce User Fees. Everyone pays MF which covers essentials and UF covers the rest? You don't have to pay UF when you don't use your week. UF is paid by the party using the week. Owner keeps the rental income net of UF and commission? If you do not pay MF and if the resort gets it rented your MF debt is forgiven but the resort keeps the rent proceeds. You can give the week back at any time once it's been paid for? The week will be sold at half the net price (price - all commissions) and proceeds goes into the reserve fund.

It still falls apart during periods when owners don't stay and non-owners don't rent. You need GUARANTEED full coverage of costs to run the resort even when less than full occupancy happens. The ONLY way to do that is to charge full MFs to all owners regardless of usage.

 

[boyblue]

It still falls apart during periods when owners don't stay and non-owners don't rent. You need GUARANTEED full coverage of costs to run the resort even when less than full occupancy happens. The ONLY way to do that is to charge full MFs to all owners regardless of usage.

Hotels survive without guaranteed MF, why can't a resort situated in a desired location bet on rental income to subsidize income by renting instead of burdening its owners. Why does ownership have to be a burden. I get that rooms will go unrented in the worst of times and I've sugested that during that time rent would be reduced to MF rates to cover expenses. It's not ideal and I agree that this is the weakest part of the plan, but I don't accept that it gurantees failure. Afterall we're talking about a rate that is equal to seedy motels and love nests

Think about it, wouldn't it be nice to own a TS where if you decided not to use or trade, all you had to do was let the resort have the unit and the responsibility. I don't know if I made it clear that a critical detail is that the decision has to be made a year before use in order to give the resort the best chance to get it rented. It could happen later but then the owner does not share in any surplus.

 

[sponger76]

Hotels survive without guaranteed MF, why can't a resort situated in a desired location bet on rental income to subsidize income by renting instead of burdening its owners. Why does ownership have to be a burden. I get that rooms will go unrented in the worst of times and I've sugested that during that time rent would be reduced to MF rates to cover expenses. It's not ideal and I agree that this is the weakest part of the plan, but I don't accept that it gurantees failure. Afterall we're talking about a rate that is equal to seedy motels and love nests

Think about it, wouldn't it be nice to own a TS where if you decided not to use or trade, all you had to to was let the resort have the unit and the responsibility. I don't know if I made it clear that a critical detail is that the decision has to be made a year before use in order to give the resort the best chance to get it rented.

Hotels survive because they typically charge everyone more than the cost of running the property, both to make a profit (which timeshare HOAs can't as nonprofits) and to have a reserve for lean times. That is why MFs for a comparable unit are typically less for a week than what a for-profit hotel or resort ofthe same quality in the same area charges for a stayof sevennights. In especially lean times, they may take on loans to stay afloat, which timeshare HOAs rarely do because that again ads to future MFs. And even then, hotels often fail, even in popular destinations. These are all basic concepts that I'm not sure if you are just ignorant of or wilfully ignoring.

Yes, it would be nice but sunshine and roses and wishful thinking doesn't make a good plan thatwithstans reality. And even having to choose in advance won't help in amulti-year downturn. It just delays the inevitable, and only slightly. You might stave off bankruptcy for an extra year if you force renters to prepay with no opportunity for cancelation refunds. And that's only if you're fully booked and paid a year in advance for the entire year, and let's face it, you'll attract far less renters with such a requirement.