Posted by William Charles on July 15, 2017
Misc

Published on July 15th, 2017 | by William Charles

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Economics Of Owning A Timeshare

This is a guest post written by The Timeshare Guru. He has previously written ‘Benefits Of Owning A Timeshare‘, ‘Complete Guide To Renting Timeshare Properties On The Cheap‘ & ‘An Introduction To Timeshare Offers‘. If you like those posts or this post please check out his site. 

One of the reasons that timeshares have such an awful reputation is that they are simply not transparent. They lure your into to attend a timeshare presentation and make broad statements of being able to travel around the world in luxurious accommodations for a fraction of the cost. They make these broad statements and then pressure you to make a significant financial commitment during this 2-hour presentation for a financial commitment that can last a lifetime and even beyond.

While a lot of the broad statements are half-truths or partial truths, one of the major issues with timeshares is the lack of transparency. I am trying to fix this major issue by explaining the systems and showing readers how to maximize timeshares.

Timeshare Transparency

In order to do so, I think one of the best things that I can do is to show readers how I use one of my timeshares. I currently own a 2-bedroom unit at the Hyatt Beach House in Key West, Florida. I HAVE NEVER BEEN TO THIS RESORT AND I LIKELY WILL NEVER GO!

It’s hard to imagine purchasing a timeshare or owning a timeshare in a destination that I have never been and may never go, but the truth is that I bought this Hyatt timeshare solely for the points.  Click here for an overview of the Hyatt system in case you are interested in learning more.I purchased my Hyatt timeshare on the resale market in 2007, just before the recession. I purchased this unit for about $6,500. During the 5+ years following the recessions, weeks like mine were selling for $1.00 or possibly a little more but way less than what I paid. A similar week purchased from the developer were selling for somewhere around $25,000. Compared to the developer pricing, I got a discount but definitely did not purchase at the very bottom of the market.

My Hyatt Week

The Hyatt system is a hybrid system where I can use my week or exchange my week into points. As I said, I never use my week and likely never will as the points provide me a tremendous amount of value. For my week, I receive 2,000 Hyatt Residence Club points. Hyatt can trade through their internal system or through Interval International. Knowing whether a particular timeshare trades through RCI or Interval International is intensely important as I think that the best value is actually exchanging your unit through these external exchanges. Internal exchanges do provide some value but I think that the external exchanges can be the most advantageous.

External Exchanges With Hyatt

With Hyatt, if you elect to convert your week into points, you can transfer them into Interval International or make an internal exchange. For my particular week, I pay approximately $1,200 per year for maintenance fees. When I originally purchased my week in 2007, I was paying about $900 per year so it has been a decent jump in fees. This seems like a decent amount of money for one week but through exchanges, I can get almost 4 weeks of vacation. Here is how I do it. As I mentioned, I receive 2,000 Hyatt Residence Club points. These convert 1 to 1 to Interval International points. Here is the exchange chart for Interval International:

As you can see, they have three different seasons. Generally, I would ignore yellow and green as these are low demand areas and generally will be at times and resorts that you will not likely to go. There are some exceptions but almost all my exchanged weeks are “red” weeks.

For families, a 1 or 2 bedroom is likely needed as these are generally fairly large and far surpass a hotel room. A 1 bedroom unit is generally bigger than most “suites” that I have received in hotels. Truthfully, many studio units are actually bigger than a lot of “suites” that I have received through Marriott and Hyatt hotels as I have held top tier status of both of these chains. For couples, studio units are very spacious especially if you are comparing it to a hotel room. Since most DoC readers are likely points fanatics like I am, for this post, I will use Studio units as they are the best comparison to a hotel room.

Four Weeks Of Vacation With One Timeshare Week

By doing some quick math, (2000 / 430 = 4.65), you can see that I can get over 4 weeks in a studio for my one Hyatt week. Exchange fees are expensive so you need to factor this in to see how much a week will cost.

As I mentioned, I pay $1,200 in maintenance fees per year and it cost $179 per week to exchange. Therefore, it costs me approximately $479 per week. $1200 / 4 = $300 per week plus $179 per week for an exchange fee. Therefore, it costs me approximately $68 per night for vacations in a studio unit. $68 for night for most hotels is generally pretty good but it can be an absolute steal for great resorts and during prime seasons.

Comparison To Retail Rates

For example, this year, I am mostly using my timeshare weeks for ski vacations. I currently have reserved three ski weeks in Park City in a studio unit. I have a studio reserved at the Marriott Summit Watch (directly on Main Street) in mid-December, a week at the Marriott Summit Watch in January on the tail end of the Sundance Film Festival and Spring break at the Westgate Park City at the base of the Canyons ski resort (ski-in/ ski-out). These are three very high demand weeks at very high quality resorts.

Retail rates for these weeks are as follows:

  • Marriott Summit Watch (mid-December): Approximately $2,300 for the week
  • Marriott Summit Watch (January – February week): Approximately $3,300
  • Westgate Park City (Mid-March): Approximately $3,300.

Essentially, for this year, I am paying about $479 per week for the above weeks while the going retail rates are 5-8x more.
Can I get the same weeks year after year? Probably not. Can I get the same value year after year? Probably not as well but I would say that I comfortably pay approximately $500 per week for resorts where the current retail rates are around $2,000.

Conclusion

In order to get these weeks, there are various tips and tricks. I generally put in a request as far as possible into the future (about 2 years) and pick multiple destinations that I would like to travel. These can be ski weeks, Caribbean or Mexican weeks, Hawaii weeks, urban weeks (Boston, New York, etc.), Disney weeks or any other destination that has high quality resorts that I would like to visit. I have been doing this for about 10 years since my original purchase and some years, I do better than others in terms of value as compared to retail rates but I almost always get outsized value from the use of my timeshare. I travel multiple times per year so I know that I will use it.

Some years, timeshares do not fit into my schedule as availability is an issue or flights (almost always free due to frequent flyer miles) do not work out properly. In those years, I can simply bank my points to use the next year provided I make that decision early enough in the process.

Again, I say this constantly but timeshares are not for everyone. For me, they work great. For now, with my family, I need larger units where even hotel suites are not spacious enough for my family of four so during some years, I do not get 4 plus weeks but I still generally 2-3 weeks in a 1 bedroom unit which can be very comfortable for a family of four. As you can see, I have ignored the initial cost of the timeshare in my overall analysis. Some will likely fault me for this but I think that even if you included it in my analysis, it would only take a couple of years to recoup your investment provided that you are able to reserve high valued weeks.

My goal is to provide more transparency to a system that preys on unverified promises. Do you own a timeshare and do you get similar value? What have been some of your best exchanges? Let me know what questions readers have so I can provide additional information. As usual, thanks to Will and the Doctor of Credit team for their ongoing support!

Note from Will: Big thanks again to The Time Share Guru for this series of posts. If you haven’t already, check out their site.



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Jack
Jack

Again, it’s not investment

The Timeshare Guru

YES! Not a financial investment at all.

Michael
Michael

I can concur to the value of owning timeshare … however.. as a resale buyer & a former timeshare (non scummy) sales guy.. my advice is NEVER buy onsite from “developer ” . It’s a rip off and will take a lifetime to recoup these fees and enjoy your experience for “free”. Always research and buy resale. My yearly maintenance has gone up, but not nearly as high as this writers. I’m sure it is resort dependent. The exchange companies are great and easily manageable. If your a points person that owns timeshare… use your points for FC or BC anywhere and your timeshare for 5star resorts. 1 thing to note.. timeshares are not (for the most part) full service resorts, more like staying in your own condo type of experience. But really, who goes on vacation to sit in your hotel? Great article by the way.

Sherry
Sherry

Timeshare purchase rules:
NEVER buy from the developer. Always buy resale. Huge initial savings. Buy from a reputable person, preferably a realtor or longtime timeshare site.

Buy QUALITY. Good name and area. That will boost your exchange value and allow you to sell to someone else or rent it. Forget the off-season dump in a place no one wants to go, even if the owner is giving it away for free and will pay closing costs.

Buy where you WANT to go. Then you don’t have an exchange fee to go somewhere else and can still enjoy your own resort if unable to exchange. Exchanging is not always easy, especially for specific dates. We are in California and play golf. Our ownerships allow us to book in Scottsdale, Palm Springs and San Diego. We have traded to Florida, Hawaii, British Columbia, Napa, Oregon and many others.

NEVER buy in Hawaii unless that is where you want to go every year. Annual maintenance fees are much higher and you need an airline ticket for everyone going. And everything else is expensive too.

Do NOT plan to sell for more than you paid.

Know how to use the system and plan ahead. If you cannot do these things, timeshare will not work for you.

rrr
rrr

$6500 up front cost + $1200 maintenance fees (that continue to rise forever) + exchange fees + inflexible dates + booking 2 years (!) in advance. This makes no sense at all and is extremely frustrating jumping through all the hoops. Plus, how much does it cost to sell this time share if you ever want out? No thanks.

Peter
Peter

I agree. $1200 maintenance fees is where I lost the math.

The Timeshare Guru

$1200 is expensive for sure but when I spread it out for 4 weeks during prime weeks, it becomes very affordable. I am a points fanatic and have 30+ credit cards but it is very hard to generate enough points to travel in quality places for 4+ weeks.

Some people think that paying $450 per year for a credit card is absurd but if you know what you are doing, you can gladly pay the fee and get more value. Same idea with timeshares.

Sarah
Sarah

Plus that $1,200 is going to have to be spent no matter if you go on vacation or not!!!

The Timeshare Guru

If you do not travel every year, do not even think about getting a timeshare. It will be a horrendous deal. They only make sense if you will travel each and every year!

NinjaX
NinjaX

the idea is that you should force yourself to travel. for some, they dont like the pressure. but points + timeshare strategy is the sustainable model for constant annual travel. if pple think this game will last forever then they will soon see their travel flexibility crumble. I guess people just dont see how awesome those locations are for the 3 weeks booked. good luck using points for those where the math makes sense.

Sarah
Sarah

Um, How old are you? Things outside your control sometimes happen that interfere with your vacation plans. You have to pay $1,200 a year even when you have to cancel your vacation plans.

DSP
DSP

Plus the maintenance fees are clearly outpacing inflation making the value lower and lower over time. The points structure could be changed at any time to reduce the value as well.

Scott
Scott

Point structure cannot change. You own a deeded 1 week worth x points. If they changed the points they would have to give you the equivalent number of points so you can continue to book the deeded 1 week. Partner programs can and do change. But what you buy into is set for life. They can create new properties at different point structures.

The Timeshare Guru

Not really. They generally do not devalue your weeks but they can create new resorts that require more points. It is a devaluation but not nearly as severe as frequent flyer miles or hotel points.

El Guapo
El Guapo

I mean no offense to Charles, but I’m a bit disappointed that you are including these guest posts about timeshares on the blog. For the vast majority of people, timeshares are a losing proposition. Just a glance at the desperate sales listings for pre-owned timeshares shows how common it is for people to underutilize their units, fall behind on payments, or even go into tax foreclosure. It’s gotten so bad that virtually all charitable organizations that used to accept the donation of timeshares have stopped doing so. You literally cannot give them away.

Yes, if you are a hypermiling kind of owner like the guest blogger, you can get a good value. But, even for the average reader of DOC (very detail-oriented, financially responsible, etc.), the acrobatics required to get your money’s worth out of timeshares is just not worth it. See Clark Howard’s posts on timeshares for more.

Dan
Dan

Why would anyone accept a liability?

Why would anyone pay to acquire a liability is even more puzzling.

Aaron
Aaron

I actually feel the opposite. I think some readers may get suckered into a timeshare and this post will help to dissuade them, or at least, enlighten them to the costs and potential pitfalls that come with timeshare ownership.

rrr
rrr

That’s actually a good point.

The Timeshare Guru

I understand your comments but these posts are for educational purposes. It is a misunderstood industry and there can be value – not for everyone but for many. Even some DoC readers have chimed in and said they love their timeshare.

The success of owning one will highly depend on the system that you purchase. Well known brands do much better than independent systems.

Maria
Maria

“It is a misunderstood industry and there can be value – not for everyone but for many.” -The Timeshare Guru

Completely wrong. It should end with “not for everyone but ONLY FOR A VERY SPECIFIC FEW.” Plus, it’s not a misunderstood industry: everyone knows tineshares a VERY poor investment.

Scott
Scott

A few or many? their are over 9 million households that own timeshares.

Someone
Someone

I like these kinds of posts, I own a timeshare and it enables me to take my family on vacation at a discount with a VIP experience.

Yes, you would need to research and find ways to maximize but isn’t that what this website is for?

Sarah
Sarah

Obvious shill is obvious.

The Timeshare Guru

Thanks for your support! This website is how to maximize your dollars and timeshares can be a great way to travel cheap.

Dan
Dan

You all should stop reading at 1200 a year in maintenance fees.

Basically, you get yourself into a perpetuity and you pay for the privilege. Stupid, stupid, stupid.

The Timeshare Guru

Depending on what you own, you can likely get out. $1200 a year can be expensive but what do you pay for vacation? Even with points, there is a cost to getting them and you may even have to pay resort fees, parking fees or some other ridiculous fees that hotels create.

$1200 for one week can be a lot but sometimes, it is a bargain compared to hotel rates. Again, if you don’t travel, don’t get one as this will be a horrible deal and the fees occur each and every year regardless of use.

NinjaX
NinjaX

TTG. You need to stop trying to defend yourself. If people dont get your position, its because its too advanced for them. Maximizing timeshares is magnitudes more complicated than the points/miles game. Especially because you sign a deeded contract into perpetuity. These people must not own homes because you also pay property tax into perpetuity. I look at it the same way, but its an luxury item which you must utilize effectively.

Some people own private jets and many cant or dont because its too expensive. Its the same thing.

For those who love “forced” annual multi week vacations, an effective mixed points/miles + timeshare strategy will spoil your family into perpetual travelers. thats great.

Please continue your posts and add even more detail to your website. It would be great if your timehare blog turns into hardcore timeshare MS maximizing strategies similar to how these MS deal blogs break down a deal.

BUT, please try to keep super secret timeshare deals off the public space. we dont need 90k+ reddit n00bs all over these deals and blowing up the exchange rates. altho the annual maintenance fees and complexities is enough to keep pple way. thank god.

keep it up man!

Ted
Ted

You can write off a jet purchase right away….. thanks to the IRS, can not say about timeshares

Matt
Matt

I believe you can write off Timeshare interest on mortgage and property taxes. Why else would they send a 1098 to us.

The Timeshare Guru

Thank you!! I really appreciate that comment. I really believe that timeshares are a hidden gem in the points + miles world. I’ll keep at it and I’ll try to keep the absurdly great deals to my email subscribers.

This has been a lot of work to date so I do need this reinforcement as I have put in many, many free hours to get to this point.

Maria
Maria

” These people must not own homes because you also pay property tax into perpetuity.” -Ninja
Poor analogy. People must to live in a residence, whether via an owned-home or rental. Either way, taxes must be paid. No one NEEDS to own a timeshare.

Matt
Matt

People NEED vacations also. My family takes more than 75 days of vacation a year. Most people have nearly a 1/3 of the year off from work (52 weekends, holidays and PTO). We’re happily married 20 years and have very successful, well-adjusted children who own timeshare as well. My family has been to 31 countries and nearly every state and four of Canada’s provinces We have experienced dozen of cultures worldwide and have unforgettable memories and friendships. I figure we save $10,000+ per year on travel. This has allowed us to re-direct the savings into other ventures. Timeshare forces family to commit to “quality time” with the people that matter most to them. If this is a bad thing, I do not see it. If you OWN something then you’ll use it. Timeshare is not for everyone. Just for folks wanting to travel at a luxury level without spending hours on the internet “trying” to get a good deal on their next vacation. We use ALL of our PTO and most weekends away from the home and exploring our beautiful world.

Those mock what they don’t understand. Life is a series of choices. The choice of timeshare allowed us to spend weeks a year (every year) with our family away from home. I am very close to my family and have no guilt or regret not having spent the “18 Summers” of my children’s adolescence with them. Try it out. It’s “vacation insurance”. The best type of insurance. We spend $1000’s a year on other insurances. Home, auto, health and life. If you use them, it’s usually a bad day, right (especially life insurance)? What’s the worst thing that happens if you use your vacation insurance? You get to spend quality time with the people that matter most to you in a luxury villa in a great location. It a simple choice, isn’t it?

Zbigniew the Timeshare Buster
Zbigniew the Timeshare Buster

What timeshare company do you work for?

Zbigniew the Timeshare Buster
Zbigniew the Timeshare Buster

A timeshare is not “vacation insurance.” Vacation insurance would be something like compensated you if you tried to take a vacation, paid for it but then tragedy struck (hurricane, illness etc.) and you were unable to do so. You have to pay for your timeshare even if you can’t use it, including maintenance fees and special assessments. Who on earth would buy an insurance policy that (1) covers something that isn’t necessary (you literally don’t NEED vacations in a timeshare) (2) requires you to pay thousands of dollars and (3) you may not be able to use for years, possibly ever?
you can go on vacation without a timeshare. You can see new counties without a timeshare. You can spend “quality time” with your family without a timeshare.

Zbigniew the Timeshare Buster
Zbigniew the Timeshare Buster

Property taxes on a home is a different animal. One, you can deduct those on your income taxes, providing an immediate economic benefit to you. Two, you are building equity in your home while you are doing this, so there’s also a deferred economic benefit when it’s time to sell. Three, I’d have a very easy way to stop paying the property taxes on my home by selling it, making a profit in the process. Selling a timeshare these days usually means selling at a loss.

AL
AL

Great post. Are timeshares for me? Probably not, but never say never. I appreciate seeing detailed info on topics that generally aren’t transparent or have an initial high learning curve. I probably would have never taken the time to research any of this.

I think your numbers make sense for the right person, but certainly not for everyone.

One other question I am interested to know…once you trade your points and pay the fee, are there resort fees you pay upon your arrival? Or, is your $479 calculation really all in?

iahphx
iahphx

I enjoy reading the timeshare posts as I’ve invested very little effort to understanding them — since I’ve always believed they are a terrible deal.

These posts confirm my belief.

While it is certainly possible to game almost any complex system, and the OP seems to be able to do that, I think he’s simply making the most of a bad previous decision. If you hear the word “timeshare,” you should still run away.

Mimi
Mimi

” If you hear the word “timeshare,” you should still run away.”

maybe DH and I are not like many who stay away from TS. In fact when we get invites to attend one for cash gift/hotel stays, very rarely do we turn them down. I guess we have mastered saying NO; we do not feel any remorse because they seek us to invite hoping they can convince us to buy. So far, we have yet to be convinced that it’s a good deal for us. We give them our time to listen to their presentation, we get our rewards.

iahphx
iahphx

Well, yeah, you can take the incentives, but I think I hate sales calls too much to do that. Of course, everyone has their price, so I wouldn’t rule it out completely.

The Timeshare Guru

Generally, there are no resort fees but there can be additional fees depending on the resort. Hawaii timeshares charge some nominal tax and some charge for various items but it is generally less than resort fees.

Scott
Scott

I look at the timeshare maintenance fee as the same thing as CC annual fees. I wonder how many people who are posting about the 1200 maintenance fee have a CSR and Amex Platinum plus a few other cards with yearly fees.
I pay so much in annual fees each year and I am guaranteed so many points wth my HGVC timeshare. The added benefit of a timeshare is my points will have the same value for ever they cannot devalue those points. The fees may change but the points are fixed, they could create new properties in the future that have different point structures but what exists in the program when I purchase is fixed. A good timeshare is a good vacation hedge. Not all timeshare programs are equal that is for sure and spending the points can be complex. And if you don’t have a plan to use your timeshare consistently then it probably wrong for you.

Dan
Dan

You would need to have 8 premium cards to reach 1200 in annual fee. Shill#2

Beth
Beth

You can cancel a credit card. You can’t cancel your timeshare obligation. Huge difference

Scott
Scott

Beth, That fact that timeshares are “for life” and cannot be cancelled is the key sticking point if you should be a timeshare owner or not. I have been a timeshare owner for 15 years and am happy/blessed to be obligated to travel. Owning a timeshare is not something i would recommend to most people, even though I am a very happy timeshare owner.

The Timeshare Guru

I 100% agree with Scott. Simply put, have a strategy or a timeshare will not be for you.

Zbigniew the Timeshare Buster
Zbigniew the Timeshare Buster

Um, no. I own several credit cards and only one, AMEX has an annual fee. And that’s only a couple hundred dollars. I can also USE my credit cards whenever I want. I don’t have to wait until its mu “use year” or “Dedicated week” to use my credit cards. It’s also ridiculously easy to get rid of a credit card if you get tired of the annual fee. I can simply cancel it and walk away. Try doing that with a timeshare.

J
J

Rather than the author’s $6500 acquisition cost, it’d be helpful to know the current acquisition cost – author, can you please provide it?

It’d also help us to better understand the long term costs.

The Timeshare Guru

Perhaps that can be the next post. The resale market is tough to figure out as it is not very transparent but I’ll dig into that. Also, there are so many variables that I’ll have to pick one system at a time.

Mimi
Mimi

We will never be convinced that maintenance fees will never increase and no company was willing to put that in writing. Since they can’t/won’t put that in writing, we get out of there w/o much pressure.

We are grateful to those who buy TS because we know they’re the ones paying for the cash and/or hotel stays we are enjoying.

LivelyFL
LivelyFL

First, I want to say I have enjoyed reading the guest posts on timeshare. I would not have one, but I enjoy getting information.

Second, my in-laws owned a week in St. Augustine, FL. My mother-in-law always bragged that she could “will” her timeshare. When she got up in age, all three of her children said, “Don’t give to us!” LOL.

Aaron
Aaron

Great post and discussion. Not for me but learned a lot

Paulie
Paulie

Hi. Everyone has a different opinion. It doesn’t make you right or wrong. I have a Disney timeshare and it works for me and my family. I go at high cost times of the year as I am an educator and can’t go at off times. I stay in the “expensive” resorts either connecting to the monorail system or by Epcot. My maintenance fees are much lower than the numbers in this post and that’s based upon the points purchased. I can trade them out and I am not purchasing a specific week. It works in my world and I am not forcing anyone else to enjoy it. Call me shill#3 if you want but I’m not telling anyone it’s for them.

The Timeshare Guru

Glad that it works for you. That is my point. Timeshares can be great but definitely not for everyone. There are many hurtles to overcome but if you know some tricks and tips, it can be very worthwhile!

Shannon
Shannon

I own a small DVC contract. I like the flexibility of DVC. I wish I would have purchased four years ago. The additional discounts with DVC are also a plus!

PAUL
PAUL

Never assume an open-ended liability.

Feng
Feng

I am upset about this post. Timeshare will hunt not only you but also your child, if I understand it correctly. There is no financial sense behind the scene.

The Timeshare Guru

Sorry you feel that way. Don’t buy one to pass it on. If you want one, get one to use it. No one has to take it as it is a liability going forward.

The above math makes sense to me and our vacation style – at least during this time for my family.

GuestA
GuestA

I find the series educational, and I am glad the author figures out ways to make use of it.

Mist Soalar
Mist Soalar

So these guys are the ones listing hotel rooms to Airbnb? Well, thanks for providing competition to the hotel rooms. I’ve been using Ink+/PPDG to get Airbnb gc and getting slightly better rate from these TS owners.

I really appreciate that.

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