Real Estate Investing

Author

Good idea?

Handcock

2006-09-27, 8:25 pm

This may or may not be the place to ask this, but are timeshares really
a good investment. I mean, when they're trying to sell you one they
make it sound like you will enjoy it forever and it will gain in value
and you can always rent it out of you don't use it. That all sounds
great, but that's when they are trying to sell it to you. Is it true?

I live in San Francisco so I can't really afford to buy a piece of
property. A timeshare would be a way to own a little something and have
a getaway place to relax, but then I start looking around online and I
see a bunch of people complaining about their timeshares and all sorts
of other stuff online like this:

http://www.delphifaq.com/faq/real_estate/f797.shtml

and this

http://www.timesharerelief.com/pages/testimonials.html

Please don't see this as an opportunity to sell me your timeshare.
I'm just looking for some opinions so I can educate myself and make
my own decision.

I do appreciate your advice.
TIA

John A. Weeks III

2006-09-27, 8:25 pm

In article <1159398412.378784.242670@b28g2000cwb.googlegroups.com>,
"Handcock" <C_H_Handcock@hotmail.com> wrote:

> This may or may not be the place to ask this, but are timeshares really
> a good investment. I mean, when they're trying to sell you one they
> make it sound like you will enjoy it forever and it will gain in value
> and you can always rent it out of you don't use it. That all sounds
> great, but that's when they are trying to sell it to you. Is it true?

The definition of an investment is a capital item that purchase,
such as a tool or machine, with the expectation of producing a
product that will sell for more than the cost of the materials.
Ie, something you buy with a profit motive.

Since timeshares 99.999998% of the time go down in value, it is
nearly unheard of to turn a profit. Therefore, it is a bad
investment. In fact, most timeshares are either impossible to
sell, or you have to pay someone to take it off of your hands.
The reason is that they eat--they normally have a $500 to $750
dollar annual upkeep fee. You pay that fee if you use it or not,
so in order to sell it, you have to con someone into accepting
this fee.

Now that we have established that a timeshare is an expense
item rather than an investment tool, the real question that you
likely have is if a timeshare is a cost-effective investment.

The answer is that they can be, in some situations. For example,
if you like to vacation in the same place at the same time of
year, a timeshare ensures that you have a place to stay. If
you buy a used or repo timeshare, and pay maybe $1000 plus
$200 in closing costs, your real costs over 20 years is less than
$100 a year, plus the maintenance fee. Lets say the fee is $650,
for a total of $710 with the $1200 up front cost amortized over
20 years. Lets say that is for 7 days, 6 nights. That is $120
per night. Can you do better than that at a nice hotel? Well,
if you have 4 to 6 people, you need two hotel rooms, so the
timeshare can be a good deal. If it is just one or two people,
and you don't mind staying at the Red Roof Inn, then the time
share is expensive.

If you do buy, be sure to buy used or repo, do compare a lot of
prices first, do get at least a few years of pre-paid maintenance
fees in the deal, and do get a RED week (nothing less), and don't
settle for a sub-par resort.

Finally, don't buy a time share with the idea that you will trade.
First you have the time share fees, second, the trade agencies
have both a membership fee and a trade fee. Next, even after
you pay the membership, it is pretty unusual to get a trade offer.

-john-

--
======================================================================
John A. Weeks III 952-432-2708 john@johnweeks.com
Newave Communications http://www.johnweeks.com
======================================================================

stinastevens

2006-09-27, 8:25 pm

Handcock wrote:
> This may or may not be the place to ask this, but are timeshares really
> a good investment. I mean, when they're trying to sell you one they
> make it sound like you will enjoy it forever and it will gain in value
> and you can always rent it out of you don't use it. That all sounds
> great, but that's when they are trying to sell it to you. Is it true?
>
> I live in San Francisco so I can't really afford to buy a piece of
> property. A timeshare would be a way to own a little something and have
> a getaway place to relax, but then I start looking around online and I
> see a bunch of people complaining about their timeshares and all sorts
> of other stuff online like this:
>
> http://www.delphifaq.com/faq/real_estate/f797.shtml
>
> and this
>
> http://www.timesharerelief.com/pages/testimonials.html
>
> Please don't see this as an opportunity to sell me your timeshare.
> I'm just looking for some opinions so I can educate myself and make
> my own decision.
>
> I do appreciate your advice.
> TIA

Handcock

2006-09-28, 1:25 pm

John A. Weeks III wrote:
> In article <1159398412.378784.242670@b28g2000cwb.googlegroups.com>,
> "Handcock" <C_H_Handcock@hotmail.com> wrote:
>
>
> The definition of an investment is a capital item that purchase,
> such as a tool or machine, with the expectation of producing a
> product that will sell for more than the cost of the materials.
> Ie, something you buy with a profit motive.
>
> Since timeshares 99.999998% of the time go down in value, it is
> nearly unheard of to turn a profit. Therefore, it is a bad
> investment. In fact, most timeshares are either impossible to
> sell, or you have to pay someone to take it off of your hands.
> The reason is that they eat--they normally have a $500 to $750
> dollar annual upkeep fee. You pay that fee if you use it or not,
> so in order to sell it, you have to con someone into accepting
> this fee.
>
> Now that we have established that a timeshare is an expense
> item rather than an investment tool, the real question that you
> likely have is if a timeshare is a cost-effective investment.
>
> The answer is that they can be, in some situations. For example,
> if you like to vacation in the same place at the same time of
> year, a timeshare ensures that you have a place to stay. If
> you buy a used or repo timeshare, and pay maybe $1000 plus
> $200 in closing costs, your real costs over 20 years is less than
> $100 a year, plus the maintenance fee. Lets say the fee is $650,
> for a total of $710 with the $1200 up front cost amortized over
> 20 years. Lets say that is for 7 days, 6 nights. That is $120
> per night. Can you do better than that at a nice hotel? Well,
> if you have 4 to 6 people, you need two hotel rooms, so the
> timeshare can be a good deal. If it is just one or two people,
> and you don't mind staying at the Red Roof Inn, then the time
> share is expensive.
>
> If you do buy, be sure to buy used or repo, do compare a lot of
> prices first, do get at least a few years of pre-paid maintenance
> fees in the deal, and do get a RED week (nothing less), and don't
> settle for a sub-par resort.
>
> Finally, don't buy a time share with the idea that you will trade.
> First you have the time share fees, second, the trade agencies
> have both a membership fee and a trade fee. Next, even after
> you pay the membership, it is pretty unusual to get a trade offer.
>
> -john-
>
> --
> ======================================================================
> John A. Weeks III 952-432-2708 john@johnweeks.com
> Newave Communications http://www.johnweeks.com
> ======================================================================

Thank you John. This is very good information and I appreciate it.

LinkBot