Timeshare Sales Math

[txlandlord]

We live 1 1/2 from Galveston, TX. We toured a timeshare development on the beach. We did not surrender and buy, but did receive a 4 day Cruise.

Has anyone ever done the math on a typical timeshare development sale?

Our Church has a shared 3 bedroom vacation condo on Seawall Boulevard in Galveston. It is currently valued at $185,000.00 sales price. There are some new homes (lots recently) by developers. 3000 - 4500 SF in a beach front development can be bought for $650,000.00 - $1,000,000.00.

The timeshare developers in the area sell 2 bedroom apartment type timeshares in the new development for an average of $20,000.00. They sell 52 weeks per unit.

Construction cost for these type of structures are at approximately $80.00 per SF, to include paving and landscaping, with site development and additional infrastructure added to this cost. I have fresh experience with apartment build cost. I do not have figures on land cost, but they are curently very cheap as compared to beach areas in other parts of the country.

52 weeks x $20,000.00 = $1,040,000.00 sales collections per unit.

Aftter purchase, they charge $700.00 per year, per owner / unit as a "maintenance fee". They will have at least 300 units when the project is complete.

52 Owners per unit x $700.00 per year = $36,400.00 per unit x 300 units = $10,920,000.00 per year maintenance collections.

These figures do not account for many of the units, which are "Presidential" with retail sales price at $40,000.00, and higher maintenance fees.

Off the intended subject: The developers will get what they can, and who can blame them. Many people surrender to the high presure sales and "special deals" for signing TODAY (and today only). When I returned home, I discovered the resale market for timeshares is crazy. The offseason weeks at many resorts can be bought for $1.00 - $500.00 and up. We discovered resales in week 27 (peek season / July 4th) at a large fresh water lake in a very desirable location in the beautiful Texas hill country for $5,000.

[GaryJR]

Re: Timeshare Sales Math

I have this discussion with my partner all the time. He owns two, one in Mexico and one in Florida.

You can't convince me to even consider one.
If I want to go on vacation, I pick up the phone, make a reservation and done. No restrictions, no yearly fee, no wasting time trying to switch it out for something else and the biggest one IMO, I still have my 30K or whatever it cost sitting in my pocket!

[Toolwhore]

Re: Timeshare Sales Math

For the very reasons Gary just gave, I have never understood why anyone would buy into a time share. What could possibly be the attraction?

[Overbuilders]

Re: Timeshare Sales Math

Ditto. You pay far more into it than you will ever receive and you can never sell it for a profit. There are companies that do nothing but buy time share properties from desperate owners at a greatly reduced price and sell them for a markup.

http://troubleshooter.com/ConsumerIn...m?ColumnID=355

http://mortgagesloans.suite101.com/a...uy_a_timeshare

http://cageyconsumer.com/timeshare.html

[greentree]

Re: Timeshare Sales Math

I dont think its really looked at as an investment to the consumer, the realistic ones anyway. Its more of a convenience, your vacation week is set in stone and mandated because you've committed to it, and you can trade, I think, to virtually anywhere. That being said I would never get one either because it is such a poor investment, sounds like making the money is in creating them.

Travis

[txlandlord]

Re: Timeshare Sales Math

My post was in pointing out the return the timeshare developers reap from sales as opposed to typical home sales and development, and not in discussing the pros and cons of timeshare ownership.

$1,000.000.00 for a two bedroom apartment, and an additional $35,000.00 a year for the unit in maintenance fees. The maintenance fees can increase.

I did not mention that the timeshare company has in house financing, are tied to and profit from resales, charge fees for manupulation of the owners weeks in connection with other timeshare locations and are always pressing owners to upgrade.

It is no wonder that they have money to buy large tracts of land in desirable vacation areas.

[Giovanni]

Re: Timeshare Sales Math

Timeshares are very profitable for the developers, if they have their management and operations systems in place. That's why all the hi-end hotel chains have timeshare divisions.

Compared to renting a hotel room time shares don't add up, but compared to buying, financing and most importantly maintaining a vacation home year-round to be used two weeks a year, it's a lay down. For the cost of a Toyota you can have a high-end condo with all the amenities in a great vacation spot all fixed up and ready for you every year. Think young family with two corporate jobs and 'only' two weeks of vacation a year. Think Hawaii, daycare or daycamp for the kids, nice beach (and bar), restaurants, shops, activities, the whole resort deal.

Not my ideal vacation but you can see the attraction. And the market opportunity.

[Toolwhore]

Re: Timeshare Sales Math

For the price of a timeshare, you could take a lot of 2 week vacations at a number of high end resorts, and get waited on, hand and foot, for many years. Too many rules and restrictions for me. To each his own, I guess.

[Overbuilders]

Re: Timeshare Sales Math

Tom? Up and early to work?

I agree with your assessment. I think most of the respondents to this thread approached it as a potential buyer of a timeshare vs Tex's intended development opportunity.

[txlandlord]

Re: Timeshare Sales Math

If one could purchase a time share on the resell market, the long term numbers versus a hotel room may work. As stated, I found one in Canon Lake in the Texas Hill Country in week 27 / July 4th, on the resell market. The clout with this holding is very strong and easy to exchange for other weeks in resorts all over the world.

The price is approximately 20% of developer retail, or $5,000.00. The maintenance fee is $650.00 per year. It is suppose to come with Bonus time and Bank Time, which is free time at this or other resorts. Two friends of mine own timeshares at the resort in week 29. One has never exchanged his week, as the lake is large for water sports with his boat, and the surrounding area is beautiful...think tubing down the very clear and easy flowing Guadalupe River.

He recently took family trips to Colorado and Orlando FLA. He has 6 days of bonus time each year and some bank time. I am not sure how to explain bank time, but it adds additional free days. Both of his resort stays in FLA and Colorado were free. He paid full retal in 2000 and is a whole hearted advocate without regret.

As previously mentioned, I found timeshares on the resell market for $500.00.

I also checked timeshare rentals (owners who rent their timeshare). The 27th week at Canyon Lake rents for $1,200.00 and up, or almost double their yearly maintenance fee.

I think timeshares in the developers market are a bad choice, but can be justified when purchased at a considerable discount on the resell market. As similar to advise they give you on TV for prescription meds: Do the math and consult your financial advisor. It is not for everyone, and can certainly produce adverse side effects.

Again, my point was the goldmine for developers at first glance.

[txlandlord]

Re: Timeshare Sales Math

Tom? Up and early to work?

Early?

It is 7:15 here in TX, but I have already calculated the trim materials for a custom home project, feed the chickens, hogs, horses, milked the cow, read and posted to JLC. : - )

It is time for lunch.

[Giovanni]

Re: Timeshare Sales Math

Don't forget walking barefoot five miles uphill through the snow to get to school LOL!

Overbuilders is right, it seems most looked at the situation as a consumer and not as a possible business opportunity. I think this is a really good test of where one is mentally like a psych test: What was your initial reaction to tx's original post? Was it as a consumer or a business owner?

Was it somebody is making a lot of money on this, is there a way I can give customers a better value and make a good profit? Or was it I would never spend that much money on any vacation?

Look for opportunities to add value and make a profit doing it.

[Overbuilders]

Re: Timeshare Sales Math

Look for opportunities to add value and make a profit doing it.

In other words...upsell!

[Toolwhore]

Re: Timeshare Sales Math

Tom? Up and early to work?

Everyday my friend. Up at 3:30 AM, unloading and then reloading trucks with different tools & materials, sending 6 morons in 4 different directions, then trying to hit the road ( gotta love that So. Cal traffic ) by 5:00 or your screwed.

txlandlord,

Even with the 2 hr. time difference, that's all you've done by 7:15? YOUR FIRED! :)

[kreg McMahon]

Re: Timeshare Sales Math

For the price of a timeshare, you could take a lot of 2 week vacations at a number of high end resorts, and get waited on, hand and foot, for many years. Too many rules and restrictions for me. To each his own, I guess.

I agree with you they are not worth it. go to top of the line hotels and live it up with the money you would invest..it would be better to have wives on time shares... you get a new one each week as you pass them around to the other 51 owners!!!!!