.comment-link {margin-left:.6em;}

Three score and ten or more

Tuesday, November 15, 2005

TIME SHARES. Just what everybody wanted to read about.

I mentioned a couple of posts ago that my wife and I stayed in a time-share condo in Williamsburg, Virginia.  For some reason I have an urge to talk about time share real estate.  For those of you who haven’t been spammed by someone, either on line or by phone to attend a time share presentation, prepare for new information. For those of you who have, perhaps this will be useful.  For those of you who have listened to Bruce Williams (economic talk show host) or other “manage your money” folks rail against time share, this may provide both some supporting and opposing information.  My information comes only through participation in time share stuff.

First: we have to define what is meant by a time share.  Somebody buys or builds a group of apartments near a beach or other scenic or entertainment attraction, and resells all of the units one week at a time. (When the time share business first started, time share companies bought motels, added some amenities and sold the individual motel units.) If you buy a time share, at the simplest level, you will own (in some set-ups, lease, on a long term period, say, twenty years) one unit for one week, (say the first week in July), in a traditional condominium set up.  You can go use that week every year for the rest of your life, (if you wish) but, as with any condominium you have yearly maintenance to pay (and that can be expensive.).  You will often be told that this is an inexpensive way to vacation, and that is a crock of bull.  I’d insert here a comment that there may be many honest upright time share salesmen, but the old joke about lawyers is applicable to most time share salesmen and the development companies that they represent.  “How can you tell when a lawyer is lying?  When his lips are moving”..  To protect yourself, substitute the word “time share company representative” for lawyer..  I will get into the expense thing a little again a little later but you first must know how things become expensive.

First, there is the developer.  He/she/ it first buys the property and hires another company (usually this is a subsidiary, but there must be two layers here so that one can blame the other if anything goes wrong) to build.  The developer then sells the units (sometimes a little cheaper if the building hasn’t been built yet, but cheaper is a relative term.) to folks like us.  This can result in a lot of subsidiary benefits to the owner or prospective customer.  The developers often provide free hamburger picnics once or twice a year for all the owners and prospects.  The developer gives away prizes to those who will listen to a sales pitch (some I have received were as cheap as four pieces of  dime store luggage, or a three inch portable TV, guaranteed to pick up any station if you are standing next to the transmitter tower,  others have been wonderful.  One of my favorites in the Orlando area is tickets for the family to Medieval  Times,  a combination restaurant show, where, during dinner you can watch “knights” charge up and down the field jousting, or fighting with swords for the favor or a fair maiden.  Others can range from free tickets to Disney World to (the most common offer in spam on telephone contacting) free or discount  three day-two night reservations in a resort area, often including a couple of free meals in good restaurants, and tickets to local attractions.  Free hotel stays are rare now, and folks like me are probably responsible.  I have traveled from Georgia to California or Washington State a couple of times stopping at time share presentations along the way (and of course not buying).  It provided a wonderful inexpensive trip by car.  Nowadays if you get a time share presentation offer it usually offers three day-two night accommodations for $100 or $150.  

At any rate, when the buildings are completely sold, residents are often in for a shock because a lot of the nice amenities that were “free” (read, paid for by the developer) suddenly cost five or ten bucks, but they are worth it, it is just a shock when it occurs after you have been going to a place for ten years.

There are three other money making entities which can affect your happiness in a time share.  First there is a management company (usually another associate of the development company, often having the same name, but when you are dealing with them, never the twain have met).  These are the people who hire the desk clerks and the janitors, collect your money when the maintenance fee is due, and generally keep the place running.  Management companies are usually national chains (like Hilton) and  make their income from a percentage of all the money paid in.  They sometime overlap with developers, and can change.  One place I own (yes, I have bought some, not just victimized them for cheap trips) in Panama City Beach in Florida started out with a company called RDI (Resorts Development International) for both development and management, transferred to another company called Blue-Green, and finally though the meetings of the condominium board, fired Blue Green and manages itself through the Condo Board.  It’s a lot cheaper than most and is still a nice  place.  Second:  You will have more or less automatic access to an exchange company.   This can be one of the really good parts of time-share ownership, but, like everything else, it aint cheap. (It used to be, but things change).  You join an exchange company associated with your condo.  The most prominent are RCI (not the RDI mentioned above), and Intervals International (commonly called II.).  RCI was a lot easier to deal with and more effective in many ways before they were purchased by CENDANT, a major tourist company that also owns Avis, about four of five hotel chains and, I thing Orbitz, the online travel agency.  Membership in either of these companies costs 75-100 bucks a year (depending, if you buy a time share the developer will pay (at least) your first year membership.
With these companies you can deposit your “week” and exchange it for a week at some other resort.  There is an exchange fee.  RCI charges $125 bucks for an exchange in the U.S.  I am not sure of the international fee, but when the in country fee was 85.00 the international fee was 125.00.

The various management owner and developer companies have also established a system in which, instead of buying a fixed week, you can buy a flexible week (a major pain in the butt as far as I am concerned, but some people like it)  This means that early in each year you have to contact your resorts and request a particular week you would like to travel.  A second system is where you are given a certain number of “points” or “options” for your unit and you can shuffle through the catalogue or website and take any unit, anywhere if you have enough points.  The main advantage is that the exchange fee is less, though the maintenance fee can sometime be a killer.  The more points you have, the higher the maintenance fee.

How expensive can it be???  Think.  Most time share units at this time sell for a sum between 8000.00 (rare but there) and 25000.00.  Most are beautiful, well kept and comfortable but you pay a yearly maintenance fee that is in most cases over 500.00.  In addition, you have exchange fees and membership in exchange companies.  If you finance your unit through the company they well lend you money for about 13% which is way over the market value (though less than some credit cards.)   If you are paying 250.00 a month payments on your time share, a 500.00 maintenance feel and an exchange membership of 85.00 as well as an exchange fee of 125.00, including all 12  payments, your out of pocket expense for your week of vacation will exceed 3750.00.  Now, just between you and me, in most places you can rent a hell of a hotel room for 3700 a week.
(There are exceptions, but, depending on your tastes, you can find a clean, national brand hotel room in  Orlando, Gatlinburg, Branson or most other resort areas, most seasons of the year, including high season, for under 100.00 a night –I usually find them around 40.00 a night.)  Even in New York City, or Los Angeles, if you use Hotels.com (I do)
You can usually find a place around 100.00 a day.   If you don’t mind me saying so, that is quite a price differential.

Why would anyone buy a time-share?  Are there any advantages?

1.  The facilities are usually among the best in the area.  Clean comfortable rooms, lots of space, usually hot tubs, Jacuzzis in room (not always, but frequently), good concierge service

2.After you finally get the damn thing paid for, your out of pocket expenses drop dramatically (I  have one I bought for under 2000 dollars.  It is now pretty cheap to use or to trade)

3.The travel services (for which you are automatically a member when you join)of the exchange services are pretty good.  You can rent a car cheaper through RCI than anywhere else in the country.

4. You actually can save money (if you plan).  I took my wife, two adult unmarried children, my married son and his wife and four grandchildren to Scotland for two weeks.
We exchanged for several time share units at a time, in two different regions in Scotland, and had a wonderful time for MUCH less money than we would have spent on hotels, with much greater comfort and convenience.  Of course my units (I actually own four) were paid for and I have had a fair amount of experience at managing my trips.

5. The single greatest advantage in timesharing is that it forces you to take real vacations.
It is so easy (especially when you get three score and ten or more years old)  to let yourself vegetate at home or to limit your travels to a week (usually in a crummy bed) or two to visits with relatives, kids or grandkids. (I am not putting down relatives).  But, if you have five or six hundred (or much more, as we showed above) bucks invested, and pre-paid, you (unless you are really foolish) are going to get out and get your money’s
worth, so you are going to see new things (or even familiar things that you love- my Panama City Beach unit) and really vacation.   That is good for you..

The thing is, you could buy a good car, install a home pool, buy several plane tickets and a lot of hotel reservations, repair the roof, or put one of your kids or grandkids through a year of college for what you will spend for a time-share.  You personally have got to decide what it is worth to you.

THINGS TO CONSIDER:
  1. You can buy a time share at close to half price or less on line, from real estate agents in every resort town who specialize in getting rid of time shares for people who have begun to hate the maintenance fees.  The biggest time share re-seller is Century 21, and to be honest, without any clear information, I would have reservations because they are owned by CENDANT, the company that owns RCI, and I have come to be terminally irritated by CENDANT.  If you deal with a “discount” time share seller, invest in the extra couple of hundred dollars to hire a local lawyer to check out the contract and terms for you.  Don’t ever trust the other guys lawyer.  Remember the lawyer joke above.

  2. You can get some really good stuff out of the developers by taking advantage of their freebies and discounts, but beware that even the most honest time share salesmen are terrific salesmen or they wouldn’t be on the floor a week, and you will require real chutzpa and willpower to avoid being sold a unit..

  3. You can take advantage of time share from other sources.  Sky auction.com often sells weeks (just the one week, not permanent) all over the world, sometimes for less than you would pay for a one year maintenance fee.  My brother (who also owns one “points” unit) went to Portugal, Spain, and , I think France one summer and bought all of his living space (rooms etc.) from individuals on Sky auction.  You do have to check hotel prices in the area and do your homework, but it (and two or three other sources, including Ebay) can save you real money.

4.  You are going to be told that you can buy these things and resell them for more than you paid.  Other real estate appreciates in value.  Time shares NEVER do, and anyone who tells you they do is trying to sell you a bill of goods.  You will also be told that you can rent out your time share.  You probably can, if you own a fixed, good week, but you aren’t like to make any money.  If you rent it through your “company” their commission will be forty percent or more.  (I rented one once, when I couldn’t go, and even though it was beach side on Memorial Day weekend, I didn’t make enough to pay the maintenance fees).  If you rent it yourself you will place newspaper adds or put it on Ebay or Skyauction, and I have already tried to make the point that most such sales go pretty cheap (much better for the buyer than seller) and RCI will often come after you for a 49.00 “gift certificate” for disposing of  your own property.

Well, there you are.  Now you know more than you ever wanted to know about time shares, but whether you own one now, or have never heard of time share, you will be exposed (no matter where you live, they have time share property in every western European country, in Turkey, in may North African countries, all through both North, South and Central America, Hong Kong, Thailand, and, I suspect,  most of the other Pacific Rim countries.  What was the old TV commercial?  THEY’RE EVERYWHERE, THEY’RE EVERYWHERE.
You have to be an old coot to even imagine that a lot of people want to know these things.

3 Comments:

At 5:09 AM, Blogger Ed Abbey said...

I have never been interested in time shares but then I am a little over one score and ten years old and probably not ready to fully utilize one yet. I learned a lot that I didn't know from your post.

 
At 1:08 PM, Blogger Patrick Joubert Conlon said...

I've never even considered a time-share but was curious about the ins and outs. Now I know.

 
At 6:52 AM, Blogger Steve Bremner said...

I have never been tempted to buy a timeshare. Thanks for outlining the pros and cons. The economics never made sense to me. Besides I prefer to travel to unknown regions, rarely repeating locations. Part of the pleasure of travel is spontanaiety.

 

Post a Comment

Links to this post:

Create a Link

<< Home