Time Share Anyone ?
No I'm not trying to sell one. I was wondering what the creative folks on this site thought of the concept. More specifically vaction ownership where an ower owns time at a particular place but points acquired throught the program can be used anywhere. Points carry over year to year and expire within six years after they are acquired. I have always heard that time-shares are a bad deal but the numbers I've seen here seem to be reasonable.
Thanks for the details. I understand the concept of time-shares. My question lies in the possible cash flow in "owning" one, subsequently renting it out, and the success rate therein.
Simplified Example:
After 20K down yearly dues are 1250 for certain amount of points which translates to a week in a duplex type unit.
Rent out one unit for the week for the price of yearly dues the rest is gravy.
Renting both units above produces a cap rate of 6%, not so great, but 6% ROI with the ability to have week's stay at various locations seems tempting. Of course for 20K I could cash flow several rentals that would pay for the yearly vacation.
Well since no-one but Thealmon seems to want to respond to this I think I'll stick in my $.02 My guess is that your wife is more likely to be accurate (though I do not have extensive experience in such matters).
If you buy a Time Share at retail (i.e. from the developers pitch) it seems very unlikely that it could be very profitable.
Certain principles of Real estate investing do not seem to be present in Time Shares.
1) Find a bargain. If you buy from the developer you are paying retail. If If you buy the shares of some persons who no longer wish to participate in the program you might be able to purchase at less than retai-- but my guess is that such folks are hard to find and that the developer wants to make it difficult for them to sell in an open market (and therefore has constructed the agreements to reflect that) .
2) Manage your expenses. Clearly you are not in control of the operations of a Time Share. The developer/operator takes those responsibilities and they charge a fee for it (as well they should). But since any one shareholder owns such a minor part of the whole the operator is effectively an independent entity who is going to manage the property in their own best interest. In other words-- no profits from operations to you.
3) Build equity. Again, difficult to do with a Time Share. No matter how long you own the unit it is never "yours" if you fail to pay your dues one year it it lost.
None of this is to say that these things couldn't possibly work just that it seems unlikely to me
.