Timeshare Questions

[b4freedom]

For Christmas, my father-in-law wants to give us his timeshare. We would get full ownership of it. It is “paid in full”, which means that there is no loan on it. However, I’m not thrilled with the idea of owning a timeshare. It’s a timeshare on an island, but I’m not sure which island. I think St. Thomas. I don’t know the details yet. I don’t know what the fees are, although he said it was around $80/month. We have two very young children so we’re not travelling on vacation anytime soon. My mother in law is thrilled with the idea of her ex-husband giving us a gift and offered to use it the first year and pay for the first year’s maintenance. My gut feeling is that he’s a bastard (nicest word I could think of for him) and that he can’t use it anymore (due to alcohol induced health problems) and is trying to dump a liability or annual expense onto us. In the long run when the kids are older it would be cool to exchange it for a Disney trip or something, but we’re a few years from that.

What kind of liabilities will we get for owning the timeshare? If we later decide we don’t want it and we want to depart with it how much of a headache will it be? Can we just tell the company that we don’t want it anymore and stop paying the maintenance fees? Will it affect our credit if we did something like that? How likely is it that the fees will go up? How much will it cost to exchange the locations to a different place? How do you think the current economic crisis will affect the ownership of timeshares?

[disneysteve]

I say a polite "no, thank you" is in order.

I agree with you that he is probably trying to get rid of a liability. I don't believe something qualifies as a present if it will cost the recipient money. Now if he wanted to give you free use of the timeshare for vacation this year, that would be a nice present, but saddling you with the monthly fee isn't a gift.

What you could do, however, if it wouldn't cause a problem in the family, is accept the gift and then turn around and sell it. Timeshares almost always (except for Disney) sell at a loss. In your case, since your cost basis would be zero, it wouldn't matter to you what you sold it for. If you could get $1,000 for it, it would be $1,000 you don't have now.

[Ima saver]

I also would say, no thank you. No one seems to want time shares anymore. I certainly would not accept it.

[b4freedom]

I wonder what it would sell for. In todays market I wonder if I'd even get $1000. But, if it costs me nothing and I could sell it for something then maybe it'll be worth it.

Timeshares are the stupidest "investment" one could ever make. Would you own one even if it cost you nothing up front?

[disneysteve]

Originally Posted by b4freedom

Timeshares are the stupidest "investment" one could ever make. Would you own one even if it cost you nothing up front?

Again, with the exception of Disney, timeshares are definitely not an investment because they depreciate in value.

No, I would never own one even if I got it for free. There is still the annual maintenance fee to be paid. There is still the lack of flexibility in travel dates. There is generally a fee to trade to a different locale than where you own your unit. Even though we do go back to the same vacation destination year after year (Disney World), owning a timeshare just makes no sense. We have actually rented a timeshare unit 3 times in the past 4 years, so we get all of the amenities without the expense. We've paid as little as $37/night to rent the unit. Why would we ever consider ownership?

ETA: There are various timeshare resale sites online. Google timeshare resales and you can get listings. If you know which resort this unit is in, you can look up what they are going for. Of course, that doesn't mean they are actually selling, but you can get an idea. You could list yours for well below the going rate and hopefully sell it that way.

[MonkeyMama]

I was under the impression they were mostly impossible to sell.

No, I wouldn't take it. My MIL has voiced the opinion that she wants to give us a timeshare (or 2). We told her no thanks. I am worried we will inherit it though. Blech.

[disneysteve]

Originally Posted by MonkeyMama

I was under the impression they were mostly impossible to sell.

I would modify that to say that they are impossible to sell for the price that most people try to get. If someone pays $10,000 for a timeshare, they generally try to sell it for $8,000 or $7,000 and are unsuccessful. However, if they would drop the price to $2,000 or $1,000, they'd probably find a buyer. They just don't want to admit that they made such a stupid purchase and take that loss.

I have a friend who owns multiple timeshares in the Orlando area. He and his wife go to Disney more often than us and he uses them regularly. He bought all of them on the resale market and I think the most he paid for any of them was $1,000. Most were less than that. In that price range, if you are sure you will use it, it can be worth the price. I just don't like being locked in like that. I'd rather make my own arrangements each year when we go.

[Daylily]

Can someone please explain timeshares to me? Why would I buy one?

I've been to several resorts in the Caribbean that also offered timeshares. I never went to a presentation. I have looked online and see for example, that a time share might cost $7000 and then there are monthly fees of $200. Okay, so I have to pay $200 x 12 = $2400 (in addition to the one time $7000) for one week stay? Our recent trip which included airfare to the same resort was less than $2400.

What am I missing here? Why would I pay $7000 plus the monthly fees for that? And what happens when you are done paying the $7000?

[Like2Plan]

Originally Posted by b4freedom

...and is trying to dump a liability or annual expense onto us. In the long run when the kids are older it would be cool to exchange it for a Disney trip or something, but we’re a few years from that.

What kind of liabilities will we get for owning the timeshare? If we later decide we don’t want it and we want to depart with it how much of a headache will it be? Can we just tell the company that we don’t want it anymore and stop paying the maintenance fees? Will it affect our credit if we did something like that? How likely is it that the fees will go up? How much will it cost to exchange the locations to a different place? How do you think the current economic crisis will affect the ownership of timeshares?

b4freedom,
In terms of liabilities you would be responsible for the annual dues. (BTW, dues almost always go up, but sometimes there is a maximum limit they can go up per year.) Sometimes, the taxes are paid separately from the dues, so that would be another thing to check out. If the dues (and/or taxes) are not up to date, then you would have to bring them up to date in order to use the timeshare or sell it. Additionally, you could be responsible for any assessments on the property--like if the property were damaged by a hurricane. Those would be good things to research before you agree. You FIL should have the contract which spells out all the rules.

Some timeshares trade better than others. I don't know anything about St. Thomas or the properties there, but there is a group on the web called Time Share Users group (TUG) Link to TUG2 which has a lot of information on all timeshares. There is some information you can look at without paying the $15.00 annual membership fee. TUG has ratings on properties, too (although I think that is in the membership section). I can tell you that there are some timeshare properties that in general are good traders. Like Marriott in general. Marriott has some awesome properties and if you are a Marriott owner, you get priority over other non-Marriott owners when you trade through Interval International. There are generally fees associated with trades, that should be spelled out in the contract.

In terms of your cost basis, if the property were given to you as a gift, the basis goes back to what your FIL orginally paid for it. So, chances are you would most likely sell it at a loss because timeshares generally go down in value from the original purchase price. (You would want to get that data in case you sell it in the future). Your FIL would have to pay gift taxes on it if it is titled in his name alone and if the current value is over 12K and he titled it in your wife's name alone or over 24K if he titled it to you and your DW together (But, the gift tax bit would not impact your taxes).

[Like2Plan]

Back to the question--is this a good deal? It could be a very good deal, but the above questions would have to be answered. Then, it gets to the mechanics. Like does he have a fixed week or points? If it is a fixed week, could you go during that time? I will say that there is a learning curve figuring out how each timeshare system works.

You need to think about your vacationing patterns. At one time I was looking at Marriott. At the time I was looking at their program, it didn't fit the way we vacationed. (We generally take long weekends vs a whole week). (I think their program may have changed since, but we lost interest. )

If you are not able to take a vacation in one year, would they allow you to trade or bank your week?

Then, there is the cost--which you should plan for an annual increase. (You could use the rate of inflation as a guide, realizing it could be actually be higher. ) How much do you spend on accomodations now? Would this be more than you normally spend? What type of accomodations do you need? Are you perfectly happy with a regular hotel room at the best price you can get? Do you normally get two rooms in order for the kids to be in their own room and to spread out a little?

We own a Disney Timeshare. It took us 10 years to decide to buy it. One of the reasons we waited was when our DS was little, a regular hotel room was just fine. But, as he got older we wanted a little more space. We loved staying at the Beach Club, so when Beach Club Villas were offered we bought! I won't say it saved us any money, but it did get us nicer accomodations for the money.

[tripods68]

I agree. Selling it would be best.

[disneysteve]

Originally Posted by Daylily

Can someone please explain timeshares to me? Why would I buy one?

What am I missing here?

I don't think you are missing anything. With very few exceptions (and even that is debatable) timeshares do NOT save you any money. As Like2Plan mentioned, what they might allow you to do is get nicer accommodations for the same amount of money that you would otherwise spend.

The sales angle is that you are locking in today's vacation prices. That package you bought on your own can get more expensive each year. What they don't emphasize is that your annual maintenance fee for the timeshare can get more expensive each year also. In my experience, you can virtually always find a cheaper way to get similar accommodations on your own compared to owning the timeshare, and you maintain your flexibility for dates and locations for your trip.

With all due respect to L2P's decision to buy DVC, I've looked into it a few times and the numbers never add up. We are able to stay in the area for far less than it would cost to own DVC. To be fair, I am not comparing equal facilities, but for what we like and need, DVC is way too expensive. I have lots of friends who own DVC and they all love it, but they'll all admit that it doesn't save any money.

[Like2Plan]

Originally Posted by disneysteve

With all due respect to L2P's decision to buy DVC, I've looked into it a few times and the numbers never add up. We are able to stay in the area for far less than it would cost to own DVC. To be fair, I am not comparing equal facilities, but for what we like and need, DVC is way too expensive. I have lots of friends who own DVC and they all love it, but they'll all admit that it doesn't save any money.

I don't think the numbers ever come out in DVC's favor if
1. You don't visit WDW at least once every 3 years or
2. If you are just as happy to stay off property or
3. You enjoy staying on property at the values (and maybe even the moderates)

This comes down to analysing vacationing habits and preferences. You
know what you like.

[jeffrey]

I have a very negative view of timeshares because I hear the horror stories on a weekly basis from one of the other sites I run. I would stay away from it at all costs. Here are a few things to consider:

It won't be easy to sell - with the economy the way it is, who has the money to go on a yearly overseas trip? The few that do can choose from any timeshare they want because people are so desperate to get rid of them. Many these days are willing to give them away for free to get out of the fees - sounds like what your father in law is doing.

There are huge risks - when a hurricane hits, guess who is responsible for rebuilding the timeshare damage. Yep - it's you. Now the timeshares should hold insurance for this, but many in Cancun found out that timeshares don't always do this after the hurricane damage a few years ago.

It is much cheaper to rent a timeshare today than to own one. Even during when the economy was good, as DisneySteve pointed out, you can find comparable places to stay for less.

Don't invest in things you don't know. It's the fundamental rule. If you are thinking of taking the timeshare to sell it quickly and haven't done your complete homework and know everything there is to about that resort and what timeshares are selling for on the secondary market for it, you may find yourself stuck with a never ending drain of money.

[KevinCarr]

once a person buys them it's impossible to sell for anywhere close to the price it was purchased. They are really awful things to own. If you own one I highly recommend getting out of it. Talk to some friends and see if they want to just have yours.

[Salmon Runner]

Your father in law is a sneaky one