Sure, listening to the sales pitch might be worth a free night’s stay, but if a purchase is being seriously considered, the offer should be thoroughly examined first.
One Couple’s Timeshare Experience
A young couple planned on vacationing primarily in Dallas, so they considered an Dallas timeshare purchase with the option to trade for a stay at an affiliate property on occasion. They listened to a timeshare presentation and then did some homework with the help of real estate companies in Dallas.
Their negotiations resulted in a timeshare offer for an 1191 sq ft, one bedroom suite with a jetted tub and full kitchen, for $10,000. The timeshare amenities included basketball and tennis courts, 2 pools, fitness center, internet, and desert trail activities.
Their total annual costs for the first 10 years (duration of financing) were estimated to be approximately $2095, not counting the occasional $150 fee to trade destination properties. This included the loan payments ($1672), Annual HOA fees ($373), and annual Exchange fee ($50).They decided to compare this offer to staying at a resort, renting a timeshare, and buying someone else’s timeshare interest.
Timeshare vs. Resort Stay
The couple got information regarding The CopperWynd Resort and Club, a AAA four diamond resort, located on a mountain ridge overlooking Scottsdale, Arizona with scenic views of the Arizona Sonoran Desert. The resort offers tennis, spa services, restaurant and a fitness center on site, with highly accredited golf courses nearby.
They researched a one week stay in April, for an oversized guestroom (525 sq ft) which included a king-sized bed, Italian linens, gas fireplace, internet, private terrace with 360 degree views of the Arizona Mountains and Sonoran desert plus $100 toward daily spa services. The cost for the week’s stay totaled $1872, which included nightly fees, room tax of 12.87% and resort fees.
They liked the resort’s location, views, and daily spa amenities offered in the resort’s package. The timeshare advantages (larger room, additional suite, and kitchen) weren’t really important to them, since they wouldn’t be in the room much and didn’t cook on vacations anyway!
Staying at the resort instead of buying the timeshare offered a savings to the couple during the first 10 years (during term of loan) of approximtely $823 (deducting the $600 for the spa treatments). A total 10-year savings of $8,233.
However, once the loan was satisfied, the couple’s timeshare costs would be reduced to $423, so the reverse would be true. At that point, the timeshare would be a better deal by approximately $849 over the resort stay. Therefore, the timeshare breakeven point (assuming similar resort offers would be available) would be approximately 19.7 years.
Renting or Buying a Timeshare Resale
The couple found a website with timeshare units renting for $900 in the same timeshare property they considered buying. They also found a resale in the same timeshare property at a real bargain: The Penthouse Suite with adjacent Junior Suite selling together for $8000!
This couple didn’t accept the timeshare offer because the breakeven timeframe (compared to the resort stay only) was longer than they had hoped for. Also, they didn’t want to commit to an annual vacation expense, preferring to plan the timing and length of their annual vacation according to their schedules and budget. And since it was obvious there were good deals on timeshare rentals and resales, they elected to further research.
The Timeshare Strictly as an Investment
However, another couple who has cash to pay for the timeshare, might look at this from a different angle. They might consider this purchase strictly an investment, like money in the bank. If they can rent the timeshare for $900 a year and their costs are $423, they net $477 annually. This would be a 4.77% return on their $10,000 investment, not bad in today’s market! However, purchasing the resale for the two units at $8000 would mean an even bigger return!
This illustrates the need to do the research and math when considering an investment such as a timeshare. If the math works, and it makes sense for the buyer, that’s one thing. But Never be intimidated into signing a contract, or act in response to emotions. And, if possible, look at the offer closely away from the ambiance of the resort lifestyle!