Chapter 7
Use Your Timeshare

You’ve bought your time­share. Now use it! That seems a lit­tle ridicu­lous to say, but many peo­ple buy and appar­ent­ly for­get. Then at the last minute they can’t use their time­share because they haven’t planned for it.

Travel

If you bought to stay at a spe­cif­ic resort, plan well ahead to take your vaca­tion and use your annu­al time­share week. If you have a float­ing week, you will need to make a reser­va­tion ear­ly, or you may not get the week you want or need. Like­wise, if you have points and you wait until the last minute, mak­ing sat­is­fac­to­ry arrange­ments are like­ly to take much more of your time and may be impossible.

For most peo­ple life is not as sim­ple as mak­ing the arrange­ments with the resort for a cer­tain week. There are many oth­er arrange­ments you have to make, too, in order to take a vaca­tion dur­ing a cer­tain week of the year. Make such arrange­ments as ear­ly as you can to avoid last-minute com­pli­ca­tions. Chang­ing your time­share annu­al week at the last minute is often impos­si­ble; and if you don’t use it, you lose it.

In oth­er words, using your time­share annu­al week is some­thing you have to plan, because at some point it becomes fixed in time.

Exchange

If you bought your time­share to exchange it and go some­place new every year, deposit it (bank it) in your exchange ser­vice imme­di­ate­ly. That will give you max­i­mum exchange pow­er. Sub­se­quent­ly, bank your weeks as soon as you can each year.

For exchanges, you usu­al­ly need to plan far in advance to get what you want, par­tic­u­lar­ly if the desired resort is pop­u­lar. The fur­ther in advance you make a request, the greater your exchang­ing power.

Point System

I like the point sys­tem for both a time­share resort and for an exchange ser­vice because it gives you more flex­i­bil­i­ty in gam­ing the sys­tem. How can you use your time­share? Instead of tak­ing a full week you, you may be able to take a week­end at one time and sev­er­al days dur­ing the week anoth­er time, or maybe even two week­ends at dif­fer­ent times. The point sys­tem opens all sorts of possibilities.

Keep in mind that with the typ­i­cal time­share pur­chase you get one week or an equiv­a­lent num­ber of points. But all points are not equal. Week­ends are more valu­able and high sea­son stays are more valu­able; that is, they cost more points. The point sys­tem enables you to select a vari­ety of ways to use the points and a vari­ety of days and sea­sons to use your time­share week each year.

In addi­tion, the point sys­tem gives you more flex­i­bil­i­ty to game the sys­tem. For instance, in my time­share resort I can elect to choose one two-bed­room unit dur­ing high sea­son for a week or a one-bed­room unit for two weeks dur­ing high sea­son. I can even get a one-bed­room unit for three weeks dur­ing low sea­son. In many places low sea­son is just as good as a high sea­son except that not as many peo­ple are trav­el­ing at that time. If your sched­ule allows you to take vaca­tions dur­ing low sea­sons, the point sys­tem can be a real ben­e­fit to you.

Low-Season

Most fam­i­lies trav­el dur­ing the time that school is out from the mid­dle of June until the end of August. The oth­er pop­u­lar time is the week of Christ­mas. For many resorts the remain­der of the sea­sons are con­sid­ered low-sea­son and are in low demand. It real­ly depends on the local­i­ty. Some resorts have a strong win­ter sea­son because they are near or at ski resorts. Some time­shares have strong win­ter sea­sons because they’re locat­ed in warm weath­er, such as the far South or South­west. Nonethe­less, there are many places that are great fun in the fall, in the spring, and even in the win­ter, and have low demand dur­ing those times (low season).

This opens up fab­u­lous oppor­tu­ni­ties, par­tic­u­lar­ly for those who are able to trav­el in the low-sea­son. But you have to own a time­share to take advan­tage of such opportunities.

1. The points required to get a low-sea­son time­share week are low­er than get­ting time­share weeks dur­ing high season.
2. The exchange costs (points, exchange pow­er) for time­share weeks in low-sea­son are typ­i­cal­ly low­er than for time­share weeks in high season.
3. The exchange orga­ni­za­tions have a hard time get­ting rid of low-sea­son time­shares weeks. They become sur­plus inven­to­ry, in effect. As a con­se­quence, the exchange orga­ni­za­tions offer real bar­gains (deep dis­counts) to rent such low-sea­son time­share weeks for cash. (One caveat is that cer­tain loca­tions, such as Cal­i­for­nia, do not have a low sea­son any time dur­ing the year. But those are the excep­tion not the rule.)
4. At many resorts the local activ­i­ties and restau­rants do not cease oper­a­tion dur­ing low-sea­son. More­over, in many oth­er places, only a small frac­tion of the activ­i­ties and restau­rants are shut down dur­ing low-season.
5. Some of the recre­ation­al activ­i­ties and restau­rants offer bar­gain prices in the low-season.
6. In the low-sea­son there are typ­i­cal­ly no crowds and no wait­ing to engage in activ­i­ties and to eat at restau­rants. If you don’t like crowds, this aspect of the low-sea­son is a ter­rif­ic benefit.

In short, it’s a buyer’s mar­ket in the low-sea­son, and time­share bar­gains abound.

Annual Cost

Let’s take a hard look at main­te­nance fees. Main­te­nance fees are what you pay to main­tain and oper­ate your time­share resort. Nat­u­ral­ly, such fees are going to increase with infla­tion. Keep in mind, how­ev­er, that main­te­nance fees are a ben­e­fit not nec­es­sar­i­ly a lia­bil­i­ty. Your HOA (home own­ers asso­ci­a­tion) has some con­trol over what the fees will be. And your HOA is demo­c­ra­t­i­cal­ly con­trolled with you as one of the vot­ing members.

HOA  If your timeshare is not real estate, you don’t have an HOA.

A time­share is a liv­ing real estate project. It requires mon­ey to oper­ate it and pro­vide the req­ui­site ser­vices for time­share own­ers. A resort devel­op­er typ­i­cal­ly col­lects an annu­al main­te­nance fee to cov­er such oper­a­tions. If the time­share resort is run prop­er­ly, the fee will also include a reserve account for future rehabs and repairs of the time­share. This is an extra expense every year, but when it comes time to rehab the time­share, it will save you a sub­stan­tial extra assess­ment in that par­tic­u­lar year, or more like­ly for three or four years. Some­times the prop­er­ty tax­es are includ­ed in the main­te­nance fee, and some­times they’re not. It varies from resort to resort.

If you just look at the main­te­nance fees com­pared with what com­pa­ra­ble hotel or motel units would cost, time­shares are typ­i­cal­ly a bar­gain. In fact, in many mar­kets you can’t find com­pa­ra­ble units (e.g., units that have one bed­room or kitchen). Thus, from the main­te­nance fee point of view, time­shares are a great deal.

Two fac­tors affect this point of view. First, in times of eco­nom­ic down­turn one may be able to rent time­share weeks for less than what an own­er pays for main­te­nance fees. In times of eco­nom­ic pros­per­i­ty, how­ev­er, peo­ple pay a pre­mi­um for rent­ing a time­share week over and above what the time­share own­er pays at main­te­nance fees.

Sec­ond, just look­ing at the main­te­nance fees for each year does­n’t tell you what your true cost is in using the time­share unit. You have to pay for a time­share up front. And some­day you’ll prob­a­bly sell it. The dif­fer­ence between what you paid for it and what you sell it for amor­tized over the years you own it is a cost of using the time­share, a cost you have to add the annu­al main­te­nance fees.

You can do this cost analy­sis many dif­fer­ent ways. The most accu­rate way is sophis­ti­cat­ed and com­plex (dis­count­ed cash flow analy­sis) and well beyond the scope of this book. But what you can do is just take a straight­for­ward cost of buying/selling the time­share and divide by the num­ber of years you will use. This cal­cu­lates an annu­al cost to be added to your main­te­nance fee.

For instance, sup­pose you pur­chase a time­share dur­ing eco­nom­i­cal­ly depressed times. You pay $300 for it. In addi­tion you pay $500 in clos­ing costs. You antic­i­pate that you will be able to use this time­share for 10 years after which you will sell it. If you are to be con­ser­v­a­tive, cal­cu­late that you will sell it at the same price at which you bought it (with the buy­er pay­ing clos­ing costs). That means that you have only $800 to amor­tize over the 10 years.. That’s only $80 per year.

A best-case sce­nario would be one in which you sell it for $2,500 after 10 years dur­ing eco­nom­i­cal­ly boom­ing times. You would actu­al­ly make mon­ey on that deal, and your total prof­it would be $1,700. That means in effect that you will have reduced your annu­al main­te­nance cost over ten years by $170 per year.

Per­haps more pru­dent approach is to assume that you buy it dur­ing eco­nom­i­cal­ly good times for $2,500. When you sell it 10 years lat­er dur­ing eco­nom­i­cal­ly bad times you get only $300 for it. Your loss is $2,200 plus clos­ing costs for a total amount of $2,700. That means that your cost of own­er­ship over and above main­te­nance fees is $270 a year. Even pay­ing an addi­tion­al $270 a year for your time­share unit will like­ly make your cost of accom­mo­da­tions seem like a bargain.

You can see that pay­ing $15,000 to $35,000 for a time­share increas­es the cost of using the units quite a bit. Keep in mind, how­ev­er, that such an analy­sis only true if you keep the time­share for just 10 years. If you keep the time­share indef­i­nite­ly and even pass it on to your heirs, the ini­tial cost is amor­tized over a longer period.

The Annual Cost Revisited

What­ev­er the cost of the time­share itself, it’s a one-time cost. Once you’ve paid it, you don’t have to wor­ry about addi­tion­al funding.

It’s easy to tell what your ben­e­fit is. A time­shares is typ­i­cal­ly one week each year. So if you divide sev­en into the annu­al main­te­nance fee, you get a dai­ly rate for such time­share. For instance, let’s say that the annu­al main­te­nance is $700. That means your dai­ly rate for the time­share unit is $100. Nor­mal­ly, you get a two-bed­room suite with a full kitchen. You can check the local rates for a com­pa­ra­ble unit to find out what kind of a bar­gain you’re get­ting. Often such units, if avail­able, rent any­where from $200 to $600 a day. So a time­shares can offer you a bar­gain vacation.

Once you own a time­share, you are oblig­at­ed to pay the main­te­nance fee every year whether you use the time­share week or not. You may be able to rent your time­share week to a third-par­ty. Or per­haps your resort will rent it for you (no guar­an­tee); if so, your resort will charge you 25% to 50% to do so. But the main­te­nance fee goes on for­ev­er, and regard­less of what you do with your time­share week, you keep on pay­ing the main­te­nance fee.

Con­se­quent­ly, the main thing to keep in mind about your time­share week each year is, just use it. Use it one way or anoth­er. But don’t for­get it or ignore it.

The Secrets for Making the Best Use of Your Timeshare

The ideas for mak­ing the best use of your time­share are cov­ered most­ly in Chap­ter 6 in addi­tion to the ones cov­ered in this chapter.

1. Plan ahead to get the annu­al time­share week when you want, where you want.
2. Plan your per­son­al and fam­i­ly affairs ahead, too, in order to take a vacation.
3. Learn the rules of your time­share resort sys­tem well enough so that you can game the sys­tem if possible.
4. Learn the rules of your exchange group well enough so that you can game the sys­tem if possible.
5. Keep up on the changes in the rules so you can con­tin­ue to game the system.
6. Spend time each year fig­ur­ing out how to get the most out of your timeshare(s). That may be as lit­tle as a few min­utes or quite a bit more time depend­ing on what you’re try­ing to accomplish.

Your goal should be to get the resort ben­e­fits at a low­er price than it would cost you to be a guest at a com­pa­ra­ble resort in a com­pa­ra­ble unit. In fact, you should be able to accom­plish this goal easily.

Biggest Problem

If you’re like most time­share own­ers, the biggest prob­lem you have in own­ing a time­share is using it each year.

Keep in mind that the time­share does not cost you any­thing more than liv­ing at home. You’re going to pay for the week whether you use it or not. You can live in the time­share using the kitchen and the wash­er and dry­er just as if you were at home. That might not be ide­al (folks love to go out to din­ner on vaca­tion), but it’s a real­is­tic way to look at a time­share vaca­tion if you’re on a very tight budget.

At worst a time­share vaca­tion is going to cost you extra mon­ey over and above the time­share main­te­nance fees. Greens fees, ski lift tick­ets, bike rentals, boat rentals, trans­porta­tion, amuse­ment park rides, restau­rant din­ners, recre­ation expens­es, and the like can run up your vaca­tion costs. But at least you have con­trol over those costs. In the worst of times, you can still enjoy your time­share vaca­tion and min­i­mize your addi­tion­al cost. There are always plen­ty of activ­i­ties that do not cost money.

So the mes­sage here is that even in years where you can­not afford to go on vaca­tion, use your time­share to go on vaca­tion any­way. You pay for it whether you use or not, and all those extra costs are under your control.

Management

What do I mean by man­ag­ing your time­share? Man­ag­ing your time­share is sim­ply doing some­thing with it each year. It takes time and effort. You can rent it to some­body. You may be able to defer your week until the next year. You can use it on a bud­get. You can use it as nor­mal with mon­ey spent on extras (activ­i­ties). All you have to do is set aside some time to man­age it.