I saw it on TV. There’s a lady who lives on a cruise ship 52 weeks a year. She lives in the least expensive stateroom available. It’s full room and board. From reviewing the available rates, I figure it costs her about $45,000 a year. She’s just one person, not a couple, and it’s an uncommon lifestyle. But $45,000 a year is not outrageously expensive. And she goes around the world four times in the course of a year visiting exotic ports along the way.
If a person can live permanently, and apparently happily, in the small stateroom of a ship cruising around the oceans, living in a timeshare unit(s) year around should appeal to some people. So the question arises, what kind of strategy do you need to enable you to live in a timeshare year around at the lowest possible cost.
With the average weekly maintenance for a timeshare at about $850 per week, just the maintenance for a full year will cost you $44,200. That’s not the entire story, however, as you can work a timeshare point system to get two or three weeks occupancy for one week of ownership.
How does that work? Well, if you buy a timeshare week for a two-bedroom condo during high season, and the timeshare is part of a point system, you will typically be able to turn your ownership into a one-bedroom condo for two weeks during the high season (two for one = 2:1). Indeed, you may be able to turn your one week into a one-bedroom condo for three weeks during the low season (three for one = 3:1).
So the first part of your strategy should be to look at timeshare point systems. Let’s say that you can get an average of 2:1 with a proper and carefully mapped out strategy. Your maintenance cost is down to $425 a week or $22,100 per year. That’s $1,842 a month, less than the cost of an apartment plus utilities many places, and you get maid service to boot.
Location
You may want to line up your timeshares so that your transportation expense between your timeshare locations is not too much for your budget. That, of course, also depends on how many times per year you change locations.
Seasons
If you’re going to get 2:1 to keep your expenses down, you’re going to have to take full advantage of off-season timeshares as much as possible. The primary season is summer when families travel. But everything depends on the locale. Timeshares in very hot places are not hugely popular during the summer, because it’s simply too hot. Some timeshares have a popular summer season, but nonetheless they’re just not all that popular, and there always seems to be vacancy. In some popular summer spots, there are simply too many timeshares available locally creating an oversupply. Consequently, even at the busiest time of the year, there are opportunities for you to live in timeshares at a low cost (i.e., a low-cost in points).
The fall and spring are transitional seasons when fewer people travel. As a result, many timeshare resorts experience a low season in the spring and fall months. It may be possible for you to get to get 3:1 in a timeshare point system during these two seasons. Ironically, in many locations these two seasons are the best times of the year but not the most visited times. In addition, it’s easy to supplement your timeshare ownership during these two seasons with special deals from one of the timeshare exchange organizations.
Often the exchanges have excess timeshares during the spring and fall; and rather than see the timeshares stay vacant, they offer members a week’s occupancy at a much reduced price (e.g., $249/week). Unfortunately, this is something you can’t always count on, but when it’s available, you can take advantage.
The winter season is interesting. People in the North like to get away from the winter weather and visit timeshares in the South. People in the South who like winter sports such as skiing and snowmobiling like to go north in the winter. Some timeshares are most popular in winter. But many more places are less popular in winter than the spring or fall. That being so, you will be able to find deals through the point systems to satisfy your strategy more easily in winter than in summer.
Exchange Cost
The leading timeshare exchanges are going to charge you about $200 per week for an exchange. That’s an extra $10,400 a year, an expensive option. But there’s a way to get around such a cost.
The large timeshare resort developers (e.g., Wyndham) typically include dozens and dozens of timeshare resorts in their timeshare systems. They allow internal exchanges free or at a nominal cost. Indeed, one of the selling features of the point systems is that you can use your points to stay at any resort in the resort developer’s system at no additional cost. Consequently, your exchange cost is zero. The disadvantage is that you’re limited to a certain collection of resorts (e.g., 30 to 230 depending on the resort system).
Timing
You’ll be more successful on setting up your yearly schedule by reserving your timeshares far in advance. If you’re trading internally within one timeshare organization, you will typically need to set things up at least eight or nine months in advance. Earlier is better.
Storage
It may be hard for you to live in a one- or two-bedroom condominium where you have to move your sundry belongings several times a year or perhaps more often. How are you going to transport your belongings between timeshare locations? (At least you don’t have to worry about furniture.) You may need a local storage unit at each timeshare resort to accommodate your excess possessions. So you may want to figure the cost of storage into your cost analysis.
I use a storage unit in the town where my summer home timeshare is located. It costs $20/month ($240/year).
Balance
It is unlikely that you will be able to stay in the same timeshare for 52 weeks as inexpensively as indicated in this chapter. It’s not impossible, but each timeshare has its high seasons which cost more (in points). For almost all timeshares, staying in one place is more expensive than moving with the seasons. Rather than staying in one timeshare for the entire year, you can do half the year in one place and the other half in another place. Or you can stay in a different place each season.
Where you go will depend upon your personal preferences. If you’re on the lowest possible budget, you’ll have to make serious compromises. If you’re on a more generous budget, you’ll have to make fewer compromises. Regardless, the idea of living in timeshares 52 weeks out of the year is an idea well suited to moving around to different places.
A lot of people have a summer and winter home. If you can’t afford a summer and winter home, having summer and winter timeshares may be a viable alternative.
The idea of a 52-week timeshares is conducive to moving between fixed locations each year as if you had a summer and winter home; but it doesn’t have to be that way. For instance, you might have a place where you want to stay three months of the year because friends and relatives are nearby. For the remainder of each year you might want to try new places.
Keep in mind, timeshare developers tend to favor resort locations. But many resort locations are only resort locations for one or two seasons of the year. At other times of the year they’re simply places that don’t draw crowds in low season. Does that matter to you? Perhaps not. For instance, if you’ve always wanted to visit various states, the fact that you visit Indiana during the spring rains for two months is not necessarily a drawback to your ambitions to see the whole country. The point is that the 52-week timeshare idea provides you with plenty of flexibility for a fixed schedule of migration each year to different places.
Bind
You get into a bind when there are several weeks during the year that you just cannot seem to get a timeshare week. You will have to live somewhere else. One alternative is a motel room. Another alternative is a motel suite which is likely to cost twice as much as a normal motel room and is not even available in many locales. Another alternative is renting a condo or house locally. This is expensive by the week but less expensive by the month. Then too, the time you cannot arrange to be in a timeshare might be a good time to visit relatives or friends. So long as you’re planning far ahead, scheduling all the weeks of your year shouldn’t pose a huge problem for you.
Another bind is when you can’t use all the timeshares in one year that you own. There could be many reasons for this, as each year brings its triumphs and tragedies in life. You have at least two solutions. Give away timeshare weeks for that year to friends and relatives or rent the timeshare weeks.
I can tell you from experience that giving away timeshare weeks doesn’t work well. Friends and family are enthusiastic about using your timeshares until it’s time to go. Then, more often than not, they can’t go. It’s no loss to them. They didn’t pay for the week anyway. So my advice is to rent the timeshares to recover some or all of your cost. Read Chapter 4 on renting your timeshare.
Rehab
Timeshares have to be rehabbed from time to time. Well-managed timeshare HOAs keep a reserve fund which builds up over a long period. When the units need to be rehabbed, the money is there. Many timeshare HOAs, however, do not have adequate foresight to plan accordingly. Therefore, during periods of rehabbing, your monthly maintenance may go up a substantial amount. Plan on 5% of the condos being rehabbed each year with a supplemental maintenance fee imposed to cover the rehab. If you own 26 timeshares (e.g., 2:1), plan an extra $300 for maintenance on 1.3 timeshares. That’s an extra $390 per year.
Maintenance Cost Analysis 1:1
Annual maintenance = $800 x 52 timeshares = $41,600 + $2,400 rehab = $44,000
This assumes that you use all your timeshare weeks in high season in a two-bedroom condo.
Maintenance Cost Analysis 2:1
Annual maintenance = $800 x 26 timeshares = $20,800 + $1,200 rehab = $24,960
This assumes you will use your timeshare weeks some in high season, some in low season, and all in one-bedroom condos.
Maintenance Cost Analysis 3:1
Annual maintenance = $800 x 18 timeshares = $14,400 + $900 rehab = $15,300
This assumes you will use all your timeshares in low season and in one-bedroom condos. You will need to do a great job of scheduling to achieve this ratio, and you will be staying in less popular places during the summer.
Anyone?
Do I know anybody who follows this idea. No, I don’t. But I’ve heard about people who do. I do know a retired couple who own 12 timeshare weeks and in a typical year expands their use to about 18 weeks. I have four timeshare weeks myself and spend six to eight weeks each summer at the same timeshare resort. As soon as my son gets out of community college, I will buy additional timeshares enabling me to spend several more weeks at the same timeshare resort.
Your Initial Cost
What’s it going to cost you to be a timeshare dweller for 52 weeks each year? That’s really up to you and how aggressive you want to be. Read Chapter 13 on buying a timeshare. It’s conceivable that you can buy the requisite number of timeshares to implement your strategy at a low initial investment. Timeshares are difficult to sell. On the resale market you may be able to purchase timeshares for a nominal price.
You definitely don’t want to incur any debt in doing so. Interest rates on timeshare purchases tend to be very high and will add considerable monthly cost to such a living arrangement. You will want to buy the timeshares for cash.
Keep in mind also that there’s a transaction cost in acquiring a timeshare. Figure at least $500 per timeshare week for closing costs. Accordingly, to purchase 26 timeshares will cost you $13,000 just in transaction fees. However, you can often find timeshares offered for sale for which the seller will pay the closing costs (transaction fees).
In a point system that allows you to use your points for any other timeshare location (at the resorts managed by the timeshare resort developer), the actual location of your timeshare obviously means little. It’s the points that matter. Your strategy in buying a timeshare should be to find one at the lowest purchase price, lowest transaction cost, and the least expensive annual maintenance. This chapter and this book provide you with plenty of ideas to develop a strategy for acquiring and using timeshares at a cost that fits your budget.
Purchase scenarios:
- Average purchase price $100 + $500 transaction cost = $600
52 timeshares x $600 = $31,200
26 timeshares x $600 = $15,600
18 timeshares x $600 = $10,800
- Average purchase price $1,000 + $500 transaction cost = $1,500
52 timeshares x $1,500 = $78,000
26 timeshares x $1,500 = $39,000
18 timeshares x $1,500 = $27,000
- Average purchase price $5,000 + $500 transaction cost = $5,500
52 timeshares x $5,500 = $286,000
26 timeshares x $5,500 = $143,000
18 timeshares x $5,500 = $99,000
- Average purchase price $15,000 + $500 transaction cost = $15,500
52 timeshares x $15,500 = $806,000
26 timeshares x $15,500 = $403,000
18 timeshares x $15,500 = $279,000
Can you purchase timeshares for $0 and have the seller pay the closing costs? Sure. You will need to carry on an aggressive search campaign, but a lot of owners are desperate to get rid of their timeshares.
Can you purchase timeshares for less than $1,000? Sure, if you look in the resale market enough over a long enough span of time. And you can purchase low-season timeshares usually at a much lower price than high-season timeshares.
Can you purchase timeshares for more than $15,000? Sure. Such a price is at the low end of the range ($15,000 to $35,000) that most resort developers sell timeshares. But timeshares bought from the resort developer may come with more benefits than timeshares bought in the resale market. Whether such benefits are worth the price is something you will need to consider carefully.
The Elephant in the Room
The huge drawback to this whole idea is: what happens after you’re gone? Your heirs are going to end up with 26 (or whatever number) timeshares that they can’t sell easily within a reasonable amount of time. In the meanwhile, the annual maintenance payments are due. Such maintenance payments are a claim against your estate. If you’re not leaving any assets to anyone, or have no assets to leave, then this is not a problem. It’s probably not a problem anyway, as a timeshare HOA or resort developer will not likely make a claim against your estate.
The timeshares will eventually revert to the timeshare HOA or resort developer (e.g., via foreclosure). The HOA or resort developer will either sell the timeshares or rent them.
The responsible thing to do is to leave (via a will) such timeshares to the HOA or resort developer. That will save them the legal expenses of lien foreclosure. If you do have assets, however, that may not work. Recipients do not have to accept such timeshares and may not do so if there are enough assets in your estate to cover the ongoing maintenance fees.
For a timeshare resort where the resort developer still has an active timeshare sales program, you may be able to get such a resort developer to buy back (for a nominal price) some of your timeshares or take them back free. The resort developer may need additional inventory to sell. You may even be able to get them to accept the timeshares via your will by prearrangement.
Another way of dealing with so many timeshares might be to deed the timeshares to friends and relatives when you can no longer use them, or do the same via your will. Read Chapter 5.
Finally, what if you get to the point where you can’t live with the timeshare lifestyle any longer? (For instance, you might have to go into assisted living.) You will need to sell your timeshares. Timeshares are difficult to sell in the resale market. It’s takes a long time, and the sale prices can be low or even $0. A sale price can be even less than $0, if you as the seller have to pay the closing costs.
Hybrid
In Chapter 9 the idea of a timeshare second home was proposed. That makes a lot of sense. Typically that requires four or more timeshare weeks. But there’s no reason a hybrid between the second home idea and the 52-week idea will not work. In fact, one could have several timeshare second homes (e.g., one for each season).
Headache
If you own a large number of timeshares, it’s likely to be an ongoing headache to make reservations. You have to decide whether it’s worth the trouble for the benefits you will get. You will also want to check the guidelines for your resorts. There may be a limit to the consecutive timeshare weeks you can use.
Conclusion
Does the 52-week timeshare make sense? I’ll leave it for you to decide. The one thing this idea will do is stretch your imagination. If the 52-week idea doesn’t suit you, how about the 40-week timeshare or the 20-week timeshare?
