Help me to understand time shares

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M_to_the_G
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Help me to understand time shares

Post by M_to_the_G » Sat Aug 10, 2013 4:49 am

I remember when I spent a week at the Sheraton in Kauai several years ago. I was there with a friend, and every time we got back to the hotel after a day of sight-seeing, we found that the hotel had left a ton of messages for us to go to a free meeting with our special, personal vacation whatever. It sounded weird and we were way too busy going around the island to waste time with someone from the hotel, so we just blew them off. Never did talk to that person.

I later found out it was someone who apparently wanted to try to sell me a time share. What is the point of a time share, and is anyone actually happy they bought one, or is it considered a scam?
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LordB
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Re: Help me to understand time shares

Post by LordB » Sat Aug 10, 2013 5:20 am

Time shares are basically perpetually renting a hotel for a certain week.

The vast vast majority of the time they are not worth it. You end up paying as much or more than renting a hotel of similar quality would cost and you are stuck paying it every year. Generally you can trade your week and stuff to go other places. Many people end up paying a pretty big lump payment just to find out later when they don't want it anymore that they can't even give it away due to the cost of it per year even without counting the lost money from the lump sum at the start.

There are a few rare exceptions to this, but your average hotel timeshare selling guy is not going to be one of them. You would get ripped off badly.
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JoMoney
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Re: Help me to understand time shares

Post by JoMoney » Sat Aug 10, 2013 5:21 am

Some people do actually like them. Most of the consumer advocates I read/listen/watch talk about them like a scam.
Basically you're buying the use of a condo (usually one week at a time). After you buy it, you then get stuck paying fees/dues/maintenance expenses that are quite often more then what you would pay for a week at a hotel.
Even though you own the privilege to use that week of time, you don't get the benefits or rights that typically come with real estate ownership.
SOMETIMES you can trade the week at "your condo" for a week at some other participating resort. I have a co-worker who loved his time share while he was able to do this, but his resort fell out of favor with the club that negotiated these trades.
Buying one from the developer is usually way over priced considering you can find people that will literally pay you to take it off their hands. People that aren't using their time share want out of the annual fees, but get stuck with them.
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Re: Help me to understand time shares

Post by dickenjb » Sat Aug 10, 2013 7:04 am

Look at it this way - for a salesman to sell a $500K condo, there is a 6% realtor commission to be paid or about $30K in commissions.

To sell a timeshare week takes almost as much effort - a lot of free nights, Starwood points, snorkel cruises are given away to find the one person who will buy. Say it costs $5000 to sell a $20K timeshare week. Now it costs $260K to sell the same condo in 52 little pieces.

That is a 25% "commission" built into the sales price. That is why a TS on the resale market is a fraction of the cost from the developer.

My FIL has 7 or 8 timeshares. When he dies, the heirs intend to refuse inheritance of them as they all have no value.

Many of the TS weeks people bought for $15K to $20K can be had on eBay now for $1.

You can't give them away.

Yes you can swap weeks through Interval International, etc. About as easy as redeeming airline miles for free flights - the popular places and weeks go fast so better know where you want to go a year ahead of when you want to go there.

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Re: Help me to understand time shares

Post by WendyW » Sat Aug 10, 2013 7:19 am

My parents have one.

It forces ya to take a week's vacation away every year, which is sort-of a benefit.

My parents only seem to be able to get off-season weeks, like the Carolinas in November or Vegas in February.

And for what they spend on airfare just to get to these places, they could buy an all-inclusive package vacation to the Carribean.

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Re: Help me to understand time shares

Post by The Wizard » Sat Aug 10, 2013 8:09 am

Timeshares are bad, yes, especially once you're retired with no limits on "vacation time".
I do longer trips now, 10 to 14 days and try to AVOID flying and going through customs on weekends...
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Re: Help me to understand time shares

Post by YttriumNitrate » Sat Aug 10, 2013 8:19 am

deleted.
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Re: Help me to understand time shares

Post by grok87 » Sat Aug 10, 2013 10:47 am

M_to_the_G wrote:I remember when I spent a week at the Sheraton in Kauai several years ago. I was there with a friend, and every time we got back to the hotel after a day of sight-seeing, we found that the hotel had left a ton of messages for us to go to a free meeting with our special, personal vacation whatever. It sounded weird and we were way too busy going around the island to waste time with someone from the hotel, so we just blew them off. Never did talk to that person.

I later found out it was someone who apparently wanted to try to sell me a time share. What is the point of a time share, and is anyone actually happy they bought one, or is it considered a scam?
There is just one thing you need to know about timeshares. They are bad. Let me give you a slightly longer term perspective. When you buy real estate it is valuable because:

1) You can use it
2) you can sell it
3) you can tear it down and rebuild it
4) you can mortgage against it
etc.

with time shares all of these things are either not their or extremely limited
1) You can use it, subject to all their terms and conditions which can probably change at any time
2) very tough to resell a used time share.
3) not applicable
4) nope

when you buy a timeshare, you are basically at the mercy of the time share company. Sometimes they go out of business-even the really high end ones
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ursineogre
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Re: Help me to understand time shares

Post by ursineogre » Sat Aug 10, 2013 12:25 pm

I agree with the previous posters: don't get one.

My parents bought one with my grandparents 30 years ago and my dad has been paying the yearly maintenance fees even though we haven't been going. You could think of it as forcing you to go, or if you can't go, you still have to pay. Each year the fees go up by 5-10%.

Better to budget for a vacation and use it where & whenever you want to.

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Re: Help me to understand time shares

Post by scrabbler1 » Sat Aug 10, 2013 12:49 pm

Don't get one. My ladyfriend had one and when its biannual maintenance fees were about $400 it was not a big money pit even though she was paying back a mortgage loan with 7% or 8% interest. But in just a few years those biannual fees rose to $2,000. Furthermore, it became tougher and tougher for her to ever use the timeshare because whenever she called them up to try to reserve some time, it was always "unavailable" even if it were not a peak period. She was also unable to rent out the timeshare for the same reason. And whenever she had a nibble on trying to sell it, the potential sale was always rejected by "the board."

In the end, just to cut her losses and get out from under the biannual fees, she sold it back for $100 because the worthless money pit was simply too big for her fragile budget. I wish I had known her before she bought it because I would have told her NO NO NO do not buy it.

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wilpat
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Re: Help me to understand time shares

Post by wilpat » Sat Aug 10, 2013 12:56 pm

If it is not the worst investment/expenditure in history it comes in a strong first!
Contrary to the belief of many, profit is not a four letter word!

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Re: Help me to understand time shares

Post by 209south » Sat Aug 10, 2013 1:22 pm

I invested in two 'vacation clubs', which were both disasters - one went bankrupt (Lusso) and the other was very expensive, I was rarely able to visit for the assigned weeks, and 'trading weeks' was more difficult than I expected. Having said that, my uncle bought three prime weeks in Beaver Creek upon retirement, and has used very happily for the past 20 years...for him, it was far cheaper than buying a comparable condo.

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Re: Help me to understand time shares

Post by TomatoTomahto » Sat Aug 10, 2013 2:20 pm

Watch "The Queen of Versailles." Those are the kinds of people who get your time-share money.
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Re: Help me to understand time shares

Post by JW-Retired » Sat Aug 10, 2013 2:46 pm

In some of these timeshare threads I've seen somebody offer to give the OP theirs for free.
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mike143
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Re: Help me to understand time shares

Post by mike143 » Sat Aug 10, 2013 3:51 pm

Timeshares....bend over.....................

http://investorjunkie.com/91/why-buying ... -bad-idea/ I think this guy was banned here but you get the general idea they are never a good idea.
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M_to_the_G
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Re: Help me to understand time shares

Post by M_to_the_G » Sun Aug 11, 2013 9:06 am

It sounds like if you're a pretty stable person with a stable life who really likes one particular place and already goes there every year at around the same time (and can't afford to buy property there), then it makes sense. That's a lot of "ifs," none of which describe me.
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InvestorNewb
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Re: Help me to understand time shares

Post by InvestorNewb » Sun Aug 11, 2013 9:30 am

My friend and his father have a timeshare in the Dominican. The problem is they rarely use it; it was a big waste of money if you ask me.

Besides, who wants to travel to the same spot every year anyways?
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Re: Help me to understand time shares

Post by Texas hold em71 » Sun Aug 11, 2013 10:05 am

I think they are a rip off, but I have four or five friends who have them and love them. All of them are financially astute otherwise. They all tout the portability between resorts and ability to go at different times of the year. One of them described it to me as spreading the payment for vacation out over the year or a period of years. To me, it takes out too much of my flexibility in vacation planning. I want to go where I want to go when I want to go. There are too many rules with timeshares and if I someday become unable to travel, I am still paying for a vacation I cannot take.

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Re: Help me to understand time shares

Post by gerrym51 » Sun Aug 11, 2013 10:10 am

depends on what you mean by timeshares.

there are 2 kinds.

you buy 1 total week every year

you buy points that can be converted to days/weeks any time of year. more valuable times use more points.


I have owned Disney Vacation Club(DVC) since 1993. it uses the point system.

what it really is is highly discounted vacations at the higher end at resorts in the Disney properties. Although they can be used also with RCI i think the best value is Disney resorts with the points.

i suggest you go here

http://www.tug2.net/

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deanbrew
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Re: Help me to understand time shares

Post by deanbrew » Sun Aug 11, 2013 10:41 am

While I won't encourage anyone to buy one, I'll stop short of the "scam" and "rip-off" and "worst whatever" in the previous posts. If (and I'll concede that's a big "if") you own one, you have to know - and then relearn - how to best use them. If you like to vacation at the same place every year at about the same time, AND you want to have more than a standard hotel room, I'd argue that a time share can be a good idea. Or if you are able and willing to plan far in advance and learn the intricacies of how to trade to other locations, it can work out.

The big advantage of a time share is that you are getting much, much more than a hotel room. I've stayed in many time shares with my family (the one my MIL owns, ones we've traded for and ones we've rented for a week), and have always enjoyed having two bedrooms, two bathrooms, a living room and a kitchen, as well as all of the amenities you find at most time share resorts. To me, staying in a hotel room as a four-person family is NOT a vacation. Giving the kids their own bedroom and bathroom makes a world of difference.

Off the top of my head, I think we've stayed about 10 weeks in time shares over the past 15 years, plus I take a golf trip and stay at a time share every few years. Now. that doesn't mean you have to buy one. There are lots of websites where you can rent a week from someone, or even rent a week from the developer. If you really want to learn about timeshares, visit the TUG (timeshare users group) website and read the forum, as well as the for-sale and for-rent classifieds.

Again, I'm not arguing anyone should buy a timeshare. But there are ways to make it work, particularly if you buy a resale at a price far below the developer's inflated price, and if you get a unit that has a lot of trading power. Or just rent a week and enjoy the extra living area and amenities.
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Re: Help me to understand time shares

Post by TomatoTomahto » Sun Aug 11, 2013 11:21 am

deanbrew wrote:Or just rent a week and enjoy the extra living area and amenities.
That works well. It's like the difference between being a grandparent or a parent; as a grandparent, you enjoy the kids and then get to hand them back to the parents :D
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Re: Help me to understand time shares

Post by M_to_the_G » Thu Jan 08, 2015 4:07 pm

Apologies for resurrecting a thread from the dead, but it was my post to begin with, and I’ve been thinking about this subject recently. You see, I spent this past Christmas with my aunt’s family in New Hampshire, and I learned that they have a timeshare. They use it religiously every year on the same week. The property is in the mountains of New Hampshire somewhere, not terribly far from where they live. I know my uncle and my aunt. They have zero initiative for big projects like trips and vacations, and if it weren’t for their timeshare, they probably wouldn’t ever go anywhere. But they tell me that they really enjoy their week-long trips to the mountains every year… they just need a little nudge to get going, and the timeshare week gives them that nudge. Make no mistake; I am sure someone sold it to them hard, and they got sold. They are like that. My aunt’s favorite TV show is QVC, after all. And they have serious financial difficulties stemming from irresponsibility with money.

But still... last year was another year in which I’ve lost annual leave because I had accumulated too much. Part of that is just the way the cookie crumbles as I’ve been very busy at work. But part of that is my fault. I think I’m a bit like my uncle in that regard – I just can’t be bothered to make it happen. Looking back at that time in Kauai six years ago, despite having had an absolute blast there and constantly promising myself every year that I will go back, it has yet to happen. Life in my profession is such that you can’t neatly plan to take leave on the same week every single year, but again, looking back, I probably would have made much more of an effort to get back to Kauai knowing that I stood to “lose” a week of prime vacation time every year. I think I might actually be one of the small percentage of people who could "benefit" from a timeshare.

That said, I know I’m not going to do it, ever. And I might not ever get back to Kauai. :oops:
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Re: Help me to understand time shares

Post by Yooper » Thu Jan 08, 2015 4:25 pm

M_to_the_G wrote:
But still... last year was another year in which I’ve lost annual leave because I had accumulated too much.
You could always donate some when the request for leave donation telegrams come out.

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Re: Help me to understand time shares

Post by surfstar » Thu Jan 08, 2015 4:29 pm

I sat through a presentation to get a $75 Amex giftcard once. An acquaintance had to beg me to go (he was getting $ for sending people that way) and I had time to burn. The sales pitch was so hard and they truly acted astonished that I wouldn't be giving them any money.

Score one for the opposition.

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Re: Help me to understand time shares

Post by Impromptu » Thu Jan 08, 2015 11:19 pm

Before going to a presentation watch the YouTube training videos on sales pitches. These timeshare salesmen are very good. They can make even the most anti-timeshare person wonder if buying one really is a good deal. You will almost never come out ahead financially, though.
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Re: Help me to understand time shares

Post by CMartel2 » Fri Jan 09, 2015 1:20 am

My parents have been religiously going to their timeshare weeks in Kauai now for years. They have accumulated 3.5 weeks in the winter and have made a tradition of it. Some years they bring friends or the grandkids or a combination. They don't have to worry about upkeep, and real estate is too expensive there, anyway. I think it has worked well for them, and they aren't cramped in a hotel room but a condo.

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HomerJ
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Re: Help me to understand time shares

Post by HomerJ » Fri Jan 09, 2015 1:33 am

M_to_the_G wrote:I think I might actually be one of the small percentage of people who could "benefit" from a timeshare.
Really? You want spend a couple thousand more than necessary every year because you're unable to make yourself take a vacation?
That said, I know I’m not going to do it, ever.
Ok good...
last year was another year in which I’ve lost annual leave because I had accumulated too much.
So plan a vacation right now... Don't let another year's worth of vacation slip away...

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HomerJ
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Re: Help me to understand time shares

Post by HomerJ » Fri Jan 09, 2015 1:36 am

CMartel2 wrote:My parents have been religiously going to their timeshare weeks in Kauai now for years. They have accumulated 3.5 weeks in the winter and have made a tradition of it. Some years they bring friends or the grandkids or a combination. They don't have to worry about upkeep, and real estate is too expensive there, anyway. I think it has worked well for them, and they aren't cramped in a hotel room but a condo.
Thing is, they could probably rent a condo there every winter for less money than they have paid over the years.

(You pay a bunch up-front, and then "maintenance fees" every year... which usually cost nearly as much as just renting a place would cost)

I too, love condos instead of hotels on vacations... Love having a full kitchen when we're on vacation... But there's plenty of good rentals out there. Much cheaper overall than buying a time share.

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Re: Help me to understand time shares

Post by deanbrew » Fri Jan 09, 2015 9:36 am

HomerJ wrote:
Really? You want spend a couple thousand more than necessary every year because you're unable to make yourself take a vacation?
Owning a timeshare doesn't cost "a couple thousand more than necessary every year". I'm not going to try and convince anyone to buy a timeshare, but don't resort to glaring inaccuracies against it, either. Maintenance and owners fees can easily be many hundreds of dollars, maybe even more than a thousand dollars. But compare that to renting similar accommodations for a week.

Selling timeshares is a racket, no doubt. But owning one can make sense if you use it or trade it every year, and get to stay in a non-cramped apartment in a resort setting. If you are a couple who doesn't mind staying in a hotel room, then a timeshare (either buying or renting) probably doesn't make sense. But for a family with kids, or two couples, one hotel room isn't even remotely similar in terms of comfort or amenities.
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Re: Help me to understand time shares

Post by gerrym51 » Fri Jan 09, 2015 9:41 am

classic timeshares are a loser.

I however own Disney Vacation Club(dvc) for over 20 years and it has been a winner for us. I would recommend it only if you like going to disney parks(wdw) although you can also use it with other time sharing options companies.

you buy 'points' not weeks and they can be used in a variety of ways. :mrgreen:

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Re: Help me to understand time shares

Post by TheTimeLord » Fri Jan 09, 2015 9:47 am

This is very interesting discussion. I have known multiple people with timeshares that are very pleased and recommend them. Usually they own either multiple timeshares or multiple weeks. Maybe they are the outliers.
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Re: Help me to understand time shares

Post by investingdad » Fri Jan 09, 2015 10:06 am

gerrym51 wrote:classic timeshares are a loser.

I however own Disney Vacation Club(dvc) for over 20 years and it has been a winner for us. I would recommend it only if you like going to disney parks(wdw) although you can also use it with other time sharing options companies.

you buy 'points' not weeks and they can be used in a variety of ways. :mrgreen:
My inlaws are DVC members and it seems to be a winner for them as well. They also have a timeshare with another major resort chain, not sure that one is working out for the best. My wife and I will likely inherit the remainder of the DVC timeshare from them and are happy to do so. We are frequent visitors and, even after the kids are grown, find the general resort features of Disney World to be relaxing and worth our time to visit.

The demand for DVC points remains very strong since their inception as well.

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HomerJ
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Re: Help me to understand time shares

Post by HomerJ » Fri Jan 09, 2015 10:06 am

TheTimeLord wrote:This is very interesting discussion. I have known multiple people with timeshares that are very pleased and recommend them. Usually they own either multiple timeshares or multiple weeks. Maybe they are the outliers.
More likely they are bad at math.

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Re: Help me to understand time shares

Post by davebo » Fri Jan 09, 2015 10:50 am

I also know quite a few people with timeshares and they seem to love them, although there probably is some survivor bias built in there. As long as you could carve out the time and it's flexible (with points vs. a set week), they seem like an ok deal.

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Re: Help me to understand time shares

Post by ChrisC » Fri Jan 09, 2015 10:53 am

HomerJ wrote:
TheTimeLord wrote:This is very interesting discussion. I have known multiple people with timeshares that are very pleased and recommend them. Usually they own either multiple timeshares or multiple weeks. Maybe they are the outliers.
More likely they are bad at math.
More likely they are sophisticated and very savvy timeshare users, who probably picked them up at resale for nothing and know how to manage their vacations and exchanges well. We've enjoyed the timeshares we've owned since 1999. Once you get past the negative image and the pressure tactics of some outfits that market and sell them, many have been surprised by the product offered by Disney, Marriott, Starwoods, and Hilton and the ability to pick up timeshares on the resale market for nothing in most cases. Timeshares are not for everyone, no doubt, but for many of us they are a good fit for vacation and holiday planning, especially if you have children. And in retirement, they have already given me additional pleasure.

There are many alternatives to timeshares, just as there are alternatives to owning a second vacation home or condominium, or renting places from AirBnb, VRBO, Redweek, etc. I do a little of this, a little of that. In my experience, most people who own timeshares that are math challenged or that have been duped into buying timeshares (and are clueless about how to use them) tend to get rid of them quickly or decide not to pay their annual maintenance fees -- they are not the ones who are very pleased with the product and use them over and over again. Some happy denizens of the timeshare user world would even say they have a secret sauce to buying and using timeshares. You can investigate them at http://www.tug2.net.

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Re: Help me to understand time shares

Post by HomerJ » Fri Jan 09, 2015 10:59 am

deanbrew wrote:
HomerJ wrote:
Really? You want spend a couple thousand more than necessary every year because you're unable to make yourself take a vacation?
Owning a timeshare doesn't cost "a couple thousand more than necessary every year".
I may be exaggerating slightly... but I'm counting the cost of the initial payment. Why pay $30,000 to purchase a time-share, then a few years down the road, end up paying $1500 a year in maintenance, when you can rent the same place for $1800 a week anyway? Note that if you had that $30,000 invested making 3.33%, it would be generating $1000 a year for you... So $30,000 spend on a time-share equals spending at least $1000 a year on that time-share, plus another $1000+ in maintenance fees...

Usually cheaper to just rent a week every year.
But for a family with kids, or two couples, one hotel room isn't even remotely similar in terms of comfort or amenities.
This isn't a comparison of hotels to condos... One can rent condos just as easily as renting hotel rooms. One needs to compare the cost of renting a condo for a week to buying a time-share of that condo. Don't listen to the salesman.. Go on the Internet and check out comparable condos... And remember, those maintenance fees always go up.. They may start at $500 a year, but within 5 years, the odds are good you'll be paying a lot more.
Last edited by HomerJ on Fri Jan 09, 2015 12:49 pm, edited 1 time in total.

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Re: Help me to understand time shares

Post by oharaj » Fri Jan 09, 2015 11:09 am

Strong opinions! Let's move on to something less volatile - like politics....

that said, I'll take the contra POV and continue to stoke the fire. We have owned a top-tier Orlando timeshare for many years and found value in owning it.

1. Bought our timeshare on Ebay for a very small amount about 10 years ago. I agree that buying via a salesman is wasting money.
2. Top-tier resort and prime week allow for switching to many alternate sites and vacation windows. But it requires plenty of advance planning. No (good) last-minute getaways using timeshare weeks.
3. With 3 small children, the cost of a comparable hotel/rental is significantly higher than the timeshare. Having 2 bedrooms/baths and kitchen is a must.
4. Annual fees are trending higher, but an annual comparable hotel/rental is still higher. When it nears the tipping point, I may have to reconsider.

And the final non-monetary benefit is the pleasure in being able to gift a honeymoon week to my niece and future husband for later this summer. They get a much better honeymoon destination than they have budget for, and I'm only "spending" a banked vacation week. Their perception of the value is about twice what my out-of-pocket expenses actually are.
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TomatoTomahto
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Re: Help me to understand time shares

Post by TomatoTomahto » Fri Jan 09, 2015 11:10 am

A while ago, I ran an eBay consignment shop. A number of owners gave up trying to sell their units and offered me a fee if I could find someone dumb enough to take it from them, for free. The maintenance fees were killing them, and apparently you can't just walk away. That's enough of a data point for me.
Okay, I get it; I won't be political or controversial. The Earth is flat.

NorthDakota
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Re: Help me to understand time shares

Post by NorthDakota » Fri Jan 09, 2015 11:14 am

My wife and I sat through a one-on-one Starwood timeshare presentation in St. John's in Feb '14 and it a terrible experience. The guy first came at us for 45 minutes then brought in another corporate lady for 30 min. When we told everyone no about 10 times they left and then another guy claimed he was doing an opinion survey at the end and when he was half way through he started a last chance pitch. It took 2.5 hours out of our trip and we were given $150 resort credit.

I'm not joking he told us that over half of the people who sit through the presentation choose to buy a timeshare. He told us what separates those who choose to get the timeshare and those who don't is what some people would call courage. I burst out laughing. He even told us we could put the $30k cost on our Starwood american express card if we didn't have the money. Just disgusting. Most timeshares are a money pit with fees, and you will ultimately lose money when you try to sell. There is a reason why Starwood is trimming the size of their pay per night hotel/resorts and replacing them with timeshares, it's a cash cow for them. :oops:

We explained that we could pay thousands or dollars in fees annually or just stay for free on points every year and that definitely frustrated them. Such a shady operation.
My points and miles blog: thriftytraveler.com

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dbCooperAir
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Re: Help me to understand time shares

Post by dbCooperAir » Fri Jan 09, 2015 12:36 pm

This is how you do it if you want a Timeshare today.

You buy on the secondary market for pennies on the dollars.
Generally you buy points and not a week contract.
Look a system you like and buy the cheapest contact at a location with low maintenance fees if you are going to be going to different resorts.
Have a end game to get rid of the thing.

And don't be a nice guy and add your kids to the title or your Timeshares, (don't ask how I know about this one)!!!!
Neither a wise man nor a brave man lies down on the tracks of history to wait for the train of the future to run over him. | -Dwight D. Eisenhower-

sign_of_life
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Re: Help me to understand time shares

Post by sign_of_life » Fri Jan 09, 2015 1:16 pm

I think the romanticism of owning a little piece of paradise can be hard to overcome and lead to some blinding denial as to the financial reality of these types of schemes. I have a co-worker who has gushed for years about his condo in the Bahamas. Turns out its a timeshare that he has a couple weeks in the office season. He admits he could probably rent elsewhere for a similar price or cheaper, but the notion that its *his* gives him some internal satisfaction that is worth the financial liability and loss of flexibility.

I have to admit, in the past, I have daydreamed about it. Thankfully, common sense has always prevailed.

ChrisC
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Re: Help me to understand time shares

Post by ChrisC » Fri Jan 09, 2015 1:32 pm

HomerJ wrote:
deanbrew wrote:
HomerJ wrote:
Really? You want spend a couple thousand more than necessary every year because you're unable to make yourself take a vacation?
Owning a timeshare doesn't cost "a couple thousand more than necessary every year".
I may be exaggerating slightly... but I'm counting the cost of the initial payment. Why pay $30,000 to purchase a time-share, then a few years down the road, end up paying $1500 a year in maintenance, when you can rent the same place for $1800 a week anyway? Note that if you had that $30,000 invested making 3.33%, it would be generating $1000 a year for you... So $30,000 spend on a time-share equals spending at least $1000 a year on that time-share, plus another $1000+ in maintenance fees...

Usually cheaper to just rent a week every year.
But for a family with kids, or two couples, one hotel room isn't even remotely similar in terms of comfort or amenities.
This isn't a comparison of hotels to condos... One can rent condos just as easily as renting hotel rooms. One needs to compare the cost of renting a condo for a week to buying a time-share of that condo. Don't listen to the salesman.. Go on the Internet and check out comparable condos... And remember, those maintenance fees always go up.. They may start at $500 a year, but within 5 years, the odds are good you'll be paying a lot more.

Exaggerating slightly? I would say exaggerating greatly, if you're talking about the timeshare resale market, where most knowledgeable people would buy timeshares. Buying a timeshare from a developer, for many, is like buying grocery foods from 7-11 or from the hotel gift store. If you do buy a timeshare from a developer, it could well cost you $30-60K at a luxury resort, as an initial payment, but folks buying at that level could be ignorant about the resale market or are wealthy and don't care about the price or hunting for bargains.

There are always bargains to find, whether it's renting houses or condos (or even renting timeshares). Maintenance fees do go up at many timeshares but that's also true with other forms of rentals too.

harrychan
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Re: Help me to understand time shares

Post by harrychan » Fri Jan 09, 2015 1:36 pm

If you have really thick skin and a lot of time in your hands, you can make money or score free stuff off timeshare sales pitches.

I was in Cabo for our honeymoon where a local befriended us (should've been warning sign one). We were at the dock and asked about snorkeling cruises. He said he could offer them for free if I help him out and sit in on a timeshare sales pitched. Our friend who frequented Cabo warned us about this and I politely declined and went on and purchased the tickets. After the show, we purchased ATV and some other excursion tickets from him and he offered to take us back to our hotel (nothing happened but big mistake!). I ran into him a few more times and he started to become more desperate in having us go to the sales pitch. He upped his offers from tickets and now to cash! At the end, he said he was going to give us $400USD CASH if we sit in through a session! I can imagine he must be getting more to simply bring in someone. We didn't want to sit in on some 3-4 hours on our honeymoon and we weren't very comfortable in the environment we were in so we still passed to the dismay of the local.

Locally, I've seen offers to sit in to win tablets and etc...YMMV.
This is not legal or certified financial advice but you know that already.

investingdad
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Re: Help me to understand time shares

Post by investingdad » Fri Jan 09, 2015 2:00 pm

We've stayed at a timeshare resort that we really like in Florida a couple of times, and look forward to going back. It's fantastic there.

We get the standard pitch when we're checking in since we're "guests of owners".

I always reply, why buy when I can just rent points from somebody? Given that renting out points to others is one of the selling points they make, there's little argument they can make.

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HomerJ
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Re: Help me to understand time shares

Post by HomerJ » Fri Jan 09, 2015 2:12 pm

ChrisC wrote:I would say exaggerating greatly, if you're talking about the timeshare resale market, where most knowledgeable people would buy timeshares. Buying a timeshare from a developer, for many, is like buying grocery foods from 7-11 or from the hotel gift store. If you do buy a timeshare from a developer, it could well cost you $30-60K at a luxury resort, as an initial payment, but folks buying at that level could be ignorant about the resale market or are wealthy and don't care about the price or hunting for bargains.
I made my remarks speaking of time-share presentations at resorts.. They are pretty much ALWAYS a bad idea... I'm not an expert on the resale market... You may indeed be correct that time-shares may be worth it, if you can avoid that steep upfront fee.

But maintenance fees are always there... And they increase every year. And you can't get out of them.
There are always bargains to find, whether it's renting houses or condos (or even renting timeshares). Maintenance fees do go up at many timeshares but that's also true with other forms of rentals too.
True enough. But you're FORCED to pay maintenance fees every year... If rental costs go up, I don't have to pay them if I don't want to, or I can go somewhere cheaper.

LeeMKE
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Re: Help me to understand time shares

Post by LeeMKE » Fri Jan 09, 2015 3:25 pm

I have a timeshare in San Francisco. Been going there for over 35 years. Now, it's an annual event for us and our SF friends to get together. We've enjoyed having a very nice place to stay, and the nudge of Use it or Lose it.

When you can purchase from another owner rather than the developer, it is a great deal, provided you consider the issues discussed above.
The mightiest Oak is just a nut who stayed the course.

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dbCooperAir
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Re: Help me to understand time shares

Post by dbCooperAir » Fri Jan 09, 2015 4:07 pm

HomerJ wrote:
I made my remarks speaking of time-share presentations at resorts.. They are pretty much ALWAYS a bad idea... I'm not an expert on the resale market... You may indeed be correct that time-shares may be worth it, if you can avoid that steep upfront fee.
You may indeed buy on the secondary market for .02 on the dollar. I helped out a family member rid of what many consider a decent resort with lower maintenance fees in HI. The contract had enough points to get one week a year for a 2 bedroom condo. I don't have the exact dates but it was bought for $60,000 in around 2004 sold for $2,500 in 2014. In 2013 we could not give it away, the resort would not take it back for free even. Maintenance fees were about $1,800.

There are some good deals to be had if you are going to use them every year and travel a lot. You can find some very cheap weeks that they blowout a month out.

We don't own one.
Neither a wise man nor a brave man lies down on the tracks of history to wait for the train of the future to run over him. | -Dwight D. Eisenhower-

ChrisC
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Re: Help me to understand time shares

Post by ChrisC » Fri Jan 09, 2015 5:56 pm

HomerJ wrote:
I made my remarks speaking of time-share presentations at resorts.. They are pretty much ALWAYS a bad idea... I'm not an expert on the resale market... You may indeed be correct that time-shares may be worth it, if you can avoid that steep upfront fee.
Even here I think your remarks are overbroad and belie any depth of understanding in the timeshare market, developer or resale/secondary market. Some fractional real estate units (also known as luxury timeshares for the affluent) cater to a niche clientele in the market and make sense to those with an appetite for high-end luxury items. It's not something I would buy myself, but they make a whole lot of financial sense to those who don't want a permanent condominium in Hawaii or Florida, but rather have a fractional interest in a Ritz/Carlton residence there. And some timeshares, bought from a developer, like Disney, have withheld value over the years.

HomerJ wrote: But maintenance fees are always there... And they increase every year. And you can't get out of them.
Maintenance fees can be cheaper than renting out a comparable unit, and in fact that's always the case for me! I stayed at this timeshare (2Bedroom villa) on an exchange for a week last year. http://four-seasons-club-aviara.h-rzn.c ... tm?lbl=msn. This resort also rents out its villas. The rental cost for one day there was higher than my cost of exchanging/plus maintenance fees for staying one week. And while the trajectory of maintenance fees is always upward, like most real estate expenses such as taxes, insurance and upkeep, in most cases they remain lower than the increases in lodging rates at hotels or condo rentals.

HomerJ wrote: True enough. But you're FORCED to pay maintenance fees every year... If rental costs go up, I don't have to pay them if I don't want to, or I can go somewhere cheaper.
Well, actually, if maintenance fees go up and I don't want to go to my timeshare unit, I have had great success in renting my unit out online from http://www.redweek.com. I have one unit in which my rent covers 200 percent of my maintenance fees. I can also exchange my units for other places to stay. I think I have greater flexibility for vacationing than you do with timeshares in my portfolio. And with my units I can invite family and friends to hang with us in the 2 or 3 bedroom villas we stay.

Timeshares are not for everyone but they are not the crummy deals you suggest for everyone.

hicabob
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Re: Help me to understand time shares

Post by hicabob » Fri Jan 09, 2015 6:32 pm

LeeMKE wrote:I have a timeshare in San Francisco. Been going there for over 35 years. Now, it's an annual event for us and our SF friends to get together. We've enjoyed having a very nice place to stay, and the nudge of Use it or Lose it.

When you can purchase from another owner rather than the developer, it is a great deal, provided you consider the issues discussed above.

That's a long time. What happens when the building gets really old?

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HomerJ
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Re: Help me to understand time shares

Post by HomerJ » Sat Jan 10, 2015 12:26 am

ChrisC wrote: I can also exchange my units for other places to stay. I think I have greater flexibility for vacationing than you do with timeshares in my portfolio. And with my units I can invite family and friends to hang with us in the 2 or 3 bedroom villas we stay.
I'm not sure why you think you have greater flexibility since I can rent anywhere you can stay, AND all the places that aren't on your exchange. Although possibly you may get some places cheaper.
I have one unit in which my rent covers 200 percent of my maintenance fees
Really? And you can buy these for pennies on the dollar in the secondary market? Why don't you own 100 of them? Sounds like free money. Serious question.

If people are giving away timeshares, and you can rent them out for 200% of the maintenance fees, why wouldn't you own a thousand of them and retire today?
Timeshares are not for everyone but they are not the crummy deals you suggest for everyone.
Sounds to me like you're saying timeshares ARE for everyone.. They sound awesome! There wasn't a single negative aspect to them in your post.

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