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Timeshares – Gasp!

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  • Avatar StatBariumEnema 
    Participant
    Status: Physician
    Posts: 49
    Joined: 01/23/2016
    Earnest refinancing bonus

    Hi all,

     

    I recently attended a timeshare sales pitch (Diamond group) and of course I didn’t buy, but did get a nice gift card out of it. Plus, my wife and I were amused with the sales tactics, although we were very saddened that at least a few people, all much older individuals, appeared to be buying them.

     

    Afterwards, I started looking at the resale market for timeshares because I am not totally opposed to owning one in the future if the value:price ratio makes sense. We do like to stay in nicer accommodations and I have a good deal of vacation time.

     

    I am potentially interested in a points based, flexible system  and was wondering if any of you had experience with the resale market for these. Most people are selling these packages for little to nothing (whereas Diamond wanted at least 40k for their small packages) and of course you have to pay maintenance, but even this appeared less than what Diamond was offering on them new.

     

    My main questions were:

    1.) Has anybody (or know someone who has) bought on the resale market and what has their experience been? Are there many hidden fees when going this route? Are their certain sites I should look at/ avoid?

    2.) How rapidly do maintenance fees rise or is there a way to figure this out before purchasing.

     

    I won’t be considering purchasing for at least two years and perhaps I’m totally crazy thinking of this, but after seeing the cost discrepancy between “new” and “used” timeshares along with our enjoyment from vacationing, I figured I should at least give it some thought. Also when looking at points divided by maintenance fee on the packages with a general idea of what I could get with those points from the pitch, it seemed like a reasonable to potentially good value.

     

    Thanks.

     

     

    #14460 Reply
    PhysicianOnFIRE PhysicianOnFIRE 
    Moderator
    Status: Physician
    Posts: 1533
    Joined: 01/08/2016

    I’ve been to one pitch.  The 90-minute presentation lasted a good 3 hours, and there was no way to get that gift card without the high-pressure sales pitch.

    I later looked up the company on eBay and found people were giving their timeshares away for about 10% what they paid at full “pitch” price.

    Some people love their timeshares, but when you look at the cost of the maintenance fees and taxes (and maybe hidden costs), it seems you would most likely be better off spending your money on renting any property anywhere any time you want and not be tied down to a group of timeshare properties on specific dates.

    With AirBNB, VRBO, HomeAway, etc… you can find just about any accommodation in any locale.  Hotels and resorts are still pretty easy to book and find as well.

    40-something anesthesiologist and personal finance blogger @ https://physicianonfire.com [Part of the WCI Network] Find me on Twitter: @physicianonfire

    FIRE. Financial Independence. Retire Early.

    #14463 Reply
    Avatar chrisCD 
    Participant
    Status: Other Professional
    Posts: 95
    Joined: 01/14/2016

    Have been to a number of sales pitches, but never purchased thankfully.  My parents own a lot of points.  The maintenance fees are what end up getting many people and like POF mentioned these days with some searching you can probably find just as nice accommodations.  We have used my parents a number of times and they have been great.  At some point we will inherit the points, and I’m not sure we will end up hanging on to them all.

    My parents own within Diamond Resorts and I believe the maintenance fees are about $1200 for what would be about 2-weeks.  But, not exactly sure on that.

    BTW, we did use AirBNB once.  It was a nice home on a gulf course, but the owners were also there so a little weird.

    cd :O)

    cd :O) -- Chris Duncan -- "God grant me the strength of eagles' wings, the faith and courage to fly to new heights, and the wisdom to rely on His Spirit to carry me there."

    #14467 Reply
    childay childay 
    Participant
    Status: Physician
    Posts: 919
    Joined: 01/09/2016

    No real experience but I do wonder how AirBNB etc will affect the timeshare business.  Never really thought about that before.

    #14471 Reply
    Avatar StatBariumEnema 
    Participant
    Status: Physician
    Posts: 49
    Joined: 01/23/2016

    I’ve been using VRBO and that’s what I’ll probably continue to do. Was just curious if these resales could be a better option down the road.

     

    For Chris — Do you know how many points that 1200 maintenance fee is for and do you have any idea of how much the fees have gone up with Diamond… For reference with the Diamond points, I saw a listing for 15k points, which as I remember could get you 3-5 weeks reasonably easily, for 2000/ year maintenance with 1k upfront, which seemed like a nice deal. It is strange that the cost of maintenance / point is so variable amongst the listings as I would think this should be standard. Not sure if there was much more I was missing.

     

    Anybody have any 1st or close second hand with these timeshare resales ?

    #14491 Reply
    jfoxcpacfp jfoxcpacfp 
    Moderator
    Status: Financial Advisor, Accountant, Small Business Owner
    Posts: 7748
    Joined: 01/09/2016

    Any clients who have tried to sell have given up. They always start out great but they are eventually disenchanted. We love VRBO, btw.

    Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~
    http://www.fox-cpas.com/for-doctors-only ~ [email protected]

    #14507 Reply
    Avatar PTM 
    Participant
    Status: Physician
    Posts: 54
    Joined: 01/14/2016

    check out redweek.com

    you can buy secondary market timeshares at fraction of cost…but why buy the timeshare deed when you can buy someone’s unused week for fraction of cost?  This way you can go to any resort nationwide of your choice each year, stay in a roomy timeshare condo, go when you want to go, or not go at all some years.  Timeshares are a suckers game all around.  the offer of a lucrative “gift” just to sit thru the pitch should have been a big enuf warning sign.

    #14516 Reply
    Avatar Joseph 
    Moderator
    Status: Physician
    Posts: 197
    Joined: 01/08/2016

    My wife and I just sat through a presentation on our little getaway last week (90 minutes turned into 3 hours).  The gifts did make it worth it for us (helicopter tour, scuba and whale watching, along with a couple blankets and dinner at the resort) but it was still painful to watch people signing up.

    Have you done any good in the world today?

    #14526 Reply
    Avatar rb6p 
    Participant
    Status: Physician
    Posts: 26
    Joined: 01/25/2016

    This is worth reading, especially if you are going with Diamond.

    #14528 Reply
    Zaphod Zaphod 
    Participant
    Status: Physician, Small Business Owner
    Posts: 5900
    Joined: 01/12/2016

    I just dont see how it makes any sense at all. How nice are these places and can you not just get a hotel or rent a place for similar, Air bnb, etc…? You’d also essentially open up the whole world and on your schedule instead of wherever you’re contracted to be at some time frame. There has to be a big discount for that imo, not a premium.

    #14531 Reply
    Zaphod Zaphod 
    Participant
    Status: Physician, Small Business Owner
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    Joined: 01/12/2016

    Otoh, this is an area that seems ripe for disruption by a company with even a modicum of ethics. These guys are doing and bragging about margins in the 100% range, with business practices that are simply shocking and wouldnt be allowed in other sectors. Cant see these practices going on for to much longer, at least one hopes.

    #14533 Reply
    Avatar chrisCD 
    Participant
    Status: Other Professional
    Posts: 95
    Joined: 01/14/2016

    This is worth reading, especially if you are going with Diamond.

    http://www.nytimes.com/2016/01/24/business/diamond-resorts-accused-of-using-hard-sell-to-push-time-shares.html

    Click to expand…

    I hadn’t read the article, but I will say I have been to a number of presentations and only once felt like it was being overly pushed and that was about 12 or more years ago.  But, unless they are offering some great gift, I don’t feel it is worth the time.

    For the points that my parents own, I don’t know the points-to-maintenance ratio.

    cd :O) -- Chris Duncan -- "God grant me the strength of eagles' wings, the faith and courage to fly to new heights, and the wisdom to rely on His Spirit to carry me there."

    #14551 Reply
    Avatar StatBariumEnema 
    Participant
    Status: Physician
    Posts: 49
    Joined: 01/23/2016

    I just dont see how it makes any sense at all. How nice are these places and can you not just get a hotel or rent a place for similar, Air bnb, etc…? You’d also essentially open up the whole world and on your schedule instead of wherever you’re contracted to be at some time frame. There has to be a big discount for that imo, not a premium.

    Click to expand…

    I rented a two bedroom with a full kitchen, multiple pools, tennis court, putt-putt, and playground in Orlando at a Diamond property through VRBO… for 100/ nt with taxes and everything included in Orlando, minutes from Disney. Service is also very good with this limited experience. Pretty sure you can’t get a hotel for that cost.

    You can always rent timeshares and that’s probably the best option. But my quick calculations with ~4 weeks (28 days) at 2k maintenance using the Diamond points would equate to ~70/ night, which is what is being offered on the resale market. Which is why I originally asked if anyone had experience with resales to see if there were hidden costs that mess with my calculations.

    After reading that NYTimes article, it appears Diamond raises their maintenance rates quite often, so this math based on current numbers may evaporate quickly. Of course their sales tactics are quite shady. The salespeople are heavily heavily heavily incentivized to sell right there. Just like many financial advisors and others that have similar incentives. The RESALE market takes away these huge upfront costs/ commissions. Perhaps the person who originally bought the timeshare paid 100k, but they’re willing to sell it for 1 dollar because they can’t afford the maintenance fees anymore. It’s unfortunate that they paid that much, but you are not paying those costs.

    In these points systems, you don’t stay at a single resort a certain week. You have complete flexibility to go anywhere at anytime. The amount of points you pay differs.

    #14554 Reply
    Liked by Joseph
    Zaphod Zaphod 
    Participant
    Status: Physician, Small Business Owner
    Posts: 5900
    Joined: 01/12/2016

    From the reading it looks like maintenance costs were on top of the purchase price so using maintenance by itself vastly underestimates costs. I dont like any asset where you dont truly own it. If you cant choose what/when things happen and cant unload it, you dont really own it.

    I looked on ebay and you can get them on secondary market for firesale prices it seems. I would stay away from Diamond as they seem like an awful company.

    #14577 Reply
    PhysicianOnFIRE PhysicianOnFIRE 
    Moderator
    Status: Physician
    Posts: 1533
    Joined: 01/08/2016

    The documentary, The Queen of Versailles, is an interesting look at a timeshare mogul’s life before and after the real estate bubble.  Spoiler alert:  It won’t make you any more likely to want to buy a timeshare.

    40-something anesthesiologist and personal finance blogger @ https://physicianonfire.com [Part of the WCI Network] Find me on Twitter: @physicianonfire

    FIRE. Financial Independence. Retire Early.

    #14772 Reply
    Liked by Brains428

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