Renting timeshares for income -- better to specialize, or diversify?

[Jason245]

It is even more common in real estate. That's why cities place performance bonds on developers. Land owners will set up an LLC, deposit the land as consideration, and develop it. When the development is completed, the money is made, LLC is desolved, and everyone goes on their merry way with no further liability. And basically, that is what Ron is doing, except, the land is still in the LLC.

That's also what the banks did with the bank loans they packaged together which lead to the bank failures, when they lied about their value.

I don't, however feel that Ron's demise would create such a ripple effect will it?

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Holding companies etc.. lots of inexpensive strategies to hide identity...look at the Panama papers. .

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[ronparise]

Bear with me, because I honestly don't know - can't the principal of an LLC be sued whether or not they have an LLC?

Anybody can sue anybody for anything and most of my timeshares are held personally not in the LLC

I'm still asking what risk is it that you think I should or could protect myself against?!you mentioned business liability insurance For what do you think I might be liable? Are you talking a slip and fall on the pool deck or perhaps a housekeeper steals my guests money he left on the dresser or a fender bender in the parking lot. Or maybe my guest dies while in the room I rented him. Bear with me Im just trying to understand your question

When I owned over 100 rental houses I only bought property insurance when the mortgage companies made me. Because the premiums were more than the value of any one house. that is I could suffer a total loss on one house a year and the loss was less than what insurance cost. Liability was another issue it seems as if plaster was always falling on my tenants heads. When I would go to court I would always question the severity of my tenants injuries especially when they usually visited the lawyers office before the doctor But what usually caused them to drop the case against me is when I showed them that I didn't own the building some LLC did and that the building was the only asset of the LLC I had a deed with me already signed and offered to sign the building over to the tenant to settle the case. That was the end of that they never took me up on the offer

 

[raygo123]

Bear with me, because I honestly don't know - can't the principal of an LLC be sued whether or not they have an LLC?

It depends on why the LLC was formed. If there is an intent to defraud, there is a smell test, as to why the LLC was set up, so in some cases the LLC can revert back to the owners being financially responsible.

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[Jason245]

It depends on why the LLC was formed. If there is an intent to defraud, there is a smell test, as to why the LLC was set up, so in some cases the LLC can revert back to the owners being financially responsible.

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Rental businesses in the timeshare world go under all the time. .as long as you act in good faith (don't donny thing criminal and don't just pull all the money out of bank account and run ) it isn't your fault it becomes insolvent after payroll and other expenses due to lower margins then anticipated. .

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[raygo123]

Rental businesses in the timeshare world go under all the time. .as long as you act in good faith (don't donny thing criminal and don't just pull all the money out of bank account and run ) it isn't your fault it becomes insolvent after payroll and other expenses due to lower margins then anticipated. .

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Agreed, I'm not a lawyer, but for as long as he has been in business, and given a perceived asset value of his business, I can see where fraud would be of little concern. One would have to presume it was set up properly.

I just hope that the OP understands that ANY, business has to be set up properly. Liability is something to take into consideration.

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[ronparise]

This thread has taken a funny turn. The assumption seems to be that a collapse of my little empire is the only logical end

I just want to make it clear that walking away from my timeshares is not part of the plan. I know it sounds like a lot of points but a little simple math shows otherwise.. 50,000,000 points at 100000 / reservation is only 500 reservations

Thats less than two a day, Easy, even for an old fart like me. and I bet a gal in a wheelchair could do it too

and as far as an exit strategy I got another offer today from someone that wants the whole thing..

 

[Jason245]

This thread has taken a funny turn. The assumption seems to be that a collapse of my little empire is the only logical end

I just want to make it clear that walking away from my timeshares is not part of the plan. I know it sounds like a lot of points but a little simple math shows otherwise.. 50,000,000 points at 100000 / reservation is only 500 reservations

Thats less than two a day, Easy, even for an old fart like me. and I bet a gal in a wheelchair could do it too

and as far as an exit strategy I got another offer today from someone that wants the whole thing..

Not true.. I never even suggested that.

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[ronparise]

Not true.. I never even suggested that.

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It just seems to me that several comments that came after Denises insurance question were speculating on the reason for setting up an LLC.

the word fraud was used by one poster and you said "Rental businesses in the timeshare world go under all the time. .as long as you act in good faith (don't donny thing criminal and don't just pull all the money out of bank account and run ) it isn't your fault it becomes insolvent after payroll and other expenses due to lower margins then anticipated." .

another poster talked about Wyndhams suit brought against a PCC

i realize that none of posts said i was associated with a PCC or set up my little operation to defraud. My problem is the mention of these bad guys in the same post with me might lead the casual reader to assume that Ron's a bad guy that just hasnt been caught.... yet

Im trying to head off an assumption like that

 

[Saintsfanfl]

Sorry about that Ron. I got caught up in the possibility of being sued for just about anything and the fact that having insurance does not necessarily help. That is my fault and I apologize.

 

[Jason245]

It just seems to me that several comments that came after Denises insurance question were speculating on the reason for setting up an LLC.

the word fraud was used by one poster and you said "Rental businesses in the timeshare world go under all the time. .as long as you act in good faith (don't donny thing criminal and don't just pull all the money out of bank account and run ) it isn't your fault it becomes insolvent after payroll and other expenses due to lower margins then anticipated." .

another poster talked about Wyndhams suit brought against a PCC

i realize that none of posts said i was associated with a PCC or set up my little operation to defraud. My problem is the mention of these bad guys in the same post with me might lead the casual reader to assume that Ron's a bad guy that just hasnt been caught.... yet

Im trying to head off an assumption like that

Ron is a good guy.

everything I have said is under the premise of my original (unethical, but possibly legal) was to make large sums of money buy buying millions of whyndam points, sheltering them in a LLC, pooling, renting it all in year one (points manager), paying salary to a CEO, and then the ship going down. )

 

[raygo123]

One thing I have learned, if nothing else is that the OP asked the wrong question first. Maybe it is more important as to how you set up your business than it is as to how you run it. As the old saying goes, there's more than one way to skin a cat.



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[ronparise]

FYI

The op and I are trying to find a time and place where we can meet to discuss her situation

Given what she already owns its going to be possible for her to build a nice little rental business with out the outlay of any money except maintenance fees. And I think it will be possible for her to keep that to a minimum.

 

[rapmarks]

FYI

The op and I are trying to find a time and place where we can meet to discuss her situation

Given what she already owns its going to be possible for her to build a nice little rental business with out the outlay of any money except maintenance fees. And I think it will be possible for her to keep that to a minimum.

I am glad to hear this, and the topic is back to OP.

 

[JudyS]

Hello, I'm back! I had a medical procedure on Wednesday. I didn't post much for a couple days because I was tired, and was also answering a lot of PMs with advice. The medical procedure went very well. So, I am less stressed and panicky than I was a few days ago.

MSchleicher, thank you for your suggestions, and I will PM you.

I don't want to get this thread off track again, but I also don't want to discourage anyone from considering all their possibilities for health insurance. The ACA Marketplace would be a good option for some people. Medicaid would also be an option for some people, depending on income, assets, age, and state of residency. (20 states don't offer Medicaid to people aged 18-64, no matter how poor they are, unless they have young children or can prove they are disabled.)

My situation is complicated because I need a lot of expensive medications and care that many insurers won't cover. My current insurer gives me about the best coverage I can expect to find. A different insurer would likely cover less, but there's no way to know until I'm a customer. By the time my applications for "step-up care" or "prior authorization" were denied, my COBRA eligibility would probably have lapsed. And as Saintsfanfl noted, it is not currently the Open Enrollment period for the ACA Marketplace.

Also, my DH and I have already paid thousands towards our deductibles and copays. If we switch to a different insurance plan, we have to pay the deductibles and copays again.

Believe me, I have been struggling with medical coverage for years. If there were an easy solution, I would have found it by now.

As for the suggestion to get a reverse mortgage, the minimum age for one is 62, and both my DH and I are still in our 50s.

The was also a suggestion for me or my DH to declare a "strategic bankruptcy." I don't judge other people who declare bankruptcy. (Except maybe certain famous, rich people who have done it.) However, I would be truly ashamed to declare bankruptcy. I see it as an absolute last resort. The idea of just giving up and planning to go bankrupt doesn't appeal to me at all. I would much rather try to start a business that has a chance of bankruptcy than just plan to go bankrupt.

And, the timeshare business I am planning is not all that risky. I might not make much money, but I probably won't lose much, either.

 

[DeniseM]

The was also a suggestion for me or my DH to declare a "strategic bankruptcy." I don't judge other people who declare bankruptcy. (Except maybe certain famous, rich people who have done it.) However, I would be truly ashamed to declare bankruptcy. I see it as an absolute last resort. The idea of just giving up and planning to go bankrupt doesn't appeal to me at all.

I admire your stance on this! Best of luck with your new endeavor!

 

[JudyS]

FYI

The op and I are trying to find a time and place where we can meet to discuss her situation

Given what she already owns its going to be possible for her to build a nice little rental business with out the outlay of any money except maintenance fees. And I think it will be possible for her to keep that to a minimum.

Yes, Ron has graciously PM'ed me with a very good idea, and we plan to discuss it further.

For those who think Ron is running a "Ponzi scheme, " I think you are missing an important point. Ron has said that he spends a lot of time looking for good deals on timeshares. Timeshares are a very inefficient market. There are deals out there to be had, although they take a lot of searching and patience. Someone who is trying to rent timeshares as a business can afford to spend hundreds of hours a year searching eBay and other sites for deals. Someone who wants a couple of weeks worth of Wyndham points for personal use is probably just better off buying them at the going rate -- possibly from Ron.

So, Ron (and other people who rent as a business) are able to buy low and sell high (or more accurately, buy below market prices and sell at market prices.)

Several other posters who rent timeshares have said they spend a lot of time looking for underpriced timeshares to buy. That is a big part of my strategy, too.

I'm not certain why people keep telling me, over and over again, that timeshares cost money to buy. I have a good idea of what timeshares cost. I've been a poster on TUG for a decade, and I had hoped by now people would realize that I am not an idiot. The business model I am using now is working and my timeshares rent for more than the MFs. It will just take some time to turn a profit, since I do have start-up costs to cover. But yes, I am keeping the start-up costs low.

 

[JudyS]

I admire your stance on this! Best of luck with your new endeavor!

Thanks, Denise!

 

[Roger830]

For those who think Ron is running a "Ponzi scheme, " I think you are missing an important point. Ron has said that he spends a lot of time looking for good deals on timeshares. Timeshares are a very inefficient market. There are deals out there to be had, although they take a lot of searching and patience. Someone who is trying to rent timeshares as a business can afford to spend hundreds of hours a year searching eBay and other sites for deals. Someone who wants a couple of weeks worth of Wyndham points for personal use is probably just better off buying them at the going rate -- possibly from
.

Apparently you didn't comprehend the "one person ponzi scheme" aspect of his strategy that I was referring to. It had nothing to do with buying and selling of timeshares.

It was in reference to his scheme of aquiring contracts, then turning three years of points over to a points manager. He receives revenue up front, then pays the mf in later years. The mf could increase in the future higher than what he received. Even without increases, he barely breaks even and each year has to aquire more contracts for needed revenue.

I'm not at all hostil towards Ron. I've benefited from his information. I'm just pointing out the pitfall in the strategy.

 

[T-Dot-Traveller]

RE Ron's - "Layaway sale" timeshare divestitures via TUG "bargain bin" give away TS

Apparently you didn't comprehend the "one person ponzi scheme" aspect of his strategy that I was referring to. It had nothing to do with buying and selling of timeshares.

It was in reference to his scheme of aquiring contracts, then turning three years of points over to a points manager. He receives revenue up front, then pays the mf in later years. The mf could increase in the future higher than what he received. Even without increases, he barely breaks even and each year has to aquire more contracts for needed revenue.

I'm not at all hostil towards Ron. I've benefited from his information. I'm just pointing out the pitfall in the strategy.

******
bought at the right price and stripped of points for 3 yrs use can yield Ron a (better) profit if he can give them away easily .
The Wyndham SF Canterbury contract is a good example - the new owner gets it for free and has to pay MF monthly - so the zero dollar purchase becomes a "layaway plan timeshare " and is perfect for the 63 year old who will be retired with lots of travel weeks when the Wyndham contract refills with useable points
The secret sauce is an undervalue purchase price on a contract that is desirable.
To me this explains Ron's regular info on price per point and details on when it dropped below a penny a point on ebay .
The hardest work -in this strategy is finding a contract that won't "bite you " latter on,

******
I would like to thank all who shared information in this thread
and especially all the various owner/renters
I do not think I wish to jump in your swimming pool , but your sharing has given me reasons why I might like to rent YOUR swimming pool from you - one day ( TS week ).

Probably need to retire first or find a universe with a 60 week year .

.

 

[ronparise]

Apparently you didn't comprehend the "one person ponzi scheme" aspect of his strategy that I was referring to. It had nothing to do with buying and selling of timeshares.

It was in reference to his scheme of aquiring contracts, then turning three years of points over to a points manager. He receives revenue up front, then pays the mf in later years. The mf could increase in the future higher than what he received. Even without increases, he barely breaks even and each year has to aquire more contracts for needed revenue.

I'm not at all hostil towards Ron. I've benefited from his information. I'm just pointing out the pitfall in the strategy.

You are quite right I make very very little on a whole lot of points so little in fact that I call it break even. And that side of what I do gets bigger every year. The numbers are big enough that I'm not worried about above average fee increases because I have enough that I own the average. And I'm not worried about the size because bigger doesn't mean more time or work on my part. The danger is that average fees go up faster than average rents, the points managers will I believe pay me more if their rents go up at least at this point they need me as much as I need them. I mean without the inventory they have nothing to rent

But I recognize the danger so I sell on a regular basis so that the "dead weight" doesn't get too heavy


Coincidence? Luck? Or as Judy suggested, "Buy Low and Sell High" is at the core of what I do. this week I signed contracts to sell 4 million points and I was paid $1000 for a 30 minute consultation and I was contacted by a realtor to assist him with a client that wants to make a "substantial" investment to build a vacation rental business based on timeshares. (I'm asking for a piece of the commission or a consulting fee)

And I also made 10 more reservations for next years Mardi Gras

Rest assured I am not a one trick pony

 

[silentg]

I'd like opinions on this. Suppose one wants to rent out timeshares to generate income, and plans to acquire a lot of timeshares in order to do this. Do you think it's better to concentrate one's ownerships in one system (specializing) or spread them out over several systems (diversifying)?

Here's what I see as the benefits of specializing:
It's much easier to master one system than several. (Mastering the system would include knowing how to acquire weeks cheaply, knowing all the tricks to booking, knowing which weeks rent well, and perhaps other things.)
Some systems provide for economies of scale -- for example, being Wyndham Platinum VP gives big discounts on last-minute bookings.

The benefit of diversifying, of course, is less risk. You don't have to worry that the one system you own will have massive MF fees, change the rules in ways that make renting much less profitable, etc.

Thoughts?

I would never do this, unless I knew the person. Plan to rent only to cover maintenence fee. I'm exchanging a week with another tug member so that is an even swap. I use my weeks myself otherwise, in fact am on a timeshare vacation now. If I made this a business would not be as fun, for me anyway. JMHO
Silentg

 

[ronparise]

I would never do this, unless I knew the person. Plan to rent only to cover maintenence fee. I'm exchanging a week with another tug member so that is an even swap. I use my weeks myself otherwise, in fact am on a timeshare vacation now. If I made this a business would not be as fun, for me anyway. JMHO
Silentg

Never do which?
specialize or diversify

We understand that no one with a stable income would d such a thing but some of us find ourselves in difficult circumstances and are in need of an income

The question before us isn't would you do this. The question is: given that the op is going to do this. Would it be better for her to specialize or diversify

 

[Roger830]

You are quite right I make very very little on a whole lot of points so little in fact that I call it break even. And that side of what I do gets bigger every year. The numbers are big enough that I'm not worried about above average fee increases because I have enough that I own the average. And I'm not worried about the size because bigger doesn't mean more time or work on my part. The danger is that average fees go up faster than average rents, the points managers will I believe pay me more if their rents go up at least at this point they need me as much as I need them. I mean without the inventory they have nothing to rent

But I recognize the danger so I sell on a regular basis so that the "dead weight" doesn't get too heavy


Coincidence? Luck? Or as Judy suggested, "Buy Low and Sell High" is at the core of what I do. this week I signed contracts to sell 4 million points and I was paid $1000 for a 30 minute consultation and I was contacted by a realtor to assist him with a client that wants to make a "substantial" investment to build a vacation rental business based on timeshares. (I'm asking for a piece of the commission or a consulting fee)

And I also made 10 more reservations for next years Mardi Gras

Rest assured I am not a one trick pony

My comments were never meant to be about you, only one particular strategy when you mentioned that the upfront fees were profit. We agree that it's cash flow. I also agree with an earlier comment you make that it's not a ponzi scheme in the way Mr. Ponzi played, it just has similar characteristics requiring more and more assets. If you have a means to dispose of assets no longer needed, then all is well.

You have opened up niches in the timeshare sphere that fit your attributes and bring you success. One of those is salesmanship. I know that I wouldn't be as successful and wouldn't attempt it.

 

[am1]

There is a lot of risk taking on more timeshares. Buying, owning, selling or renting can easily throw the cash flow off if conditions change.

The upside of the business is great. The downside is having to walk away with nothing. The resorts are not going to come after an llc that has been operating as an ownership.

Renting timeshares is not easy. For me it is very time consuming. Maybe I have been doing it wrong.

 

[ronparise]

My comments were never meant to be about you, only one particular strategy when you mentioned that the upfront fees were profit. We agree that it's cash flow. I also agree with an earlier comment you make that it's not a ponzi scheme in the way Mr. Ponzi played, it just has similar characteristics requiring more and more assets. If you have a means to dispose of assets no longer needed, then all is well.

You have opened up niches in the timeshare sphere that fit your attributes and bring you success. One of those is salesmanship. I know that I wouldn't be as successful and wouldn't attempt it.

Thanks.. I am pretty sure Im not doing anything wrong and I think I have my head wrapped around the risk and have that risk under control. My concern as I said in another post is that when words like Ponzi and pyramid and scheme and the like are used when describing what I do, some readers may jump to wrong conclusions.. and as Richard Nixon said "I am not a crook"

Some one else in another thread some time ago talking about the advisability of doing timeshare rentals suggested that I was the "perfect storm" of experience and personality to pull it off. Ive been a stock broker, and made at least some money trading options and futures, I have owned inner city rental property where I collected my rent at the door. negotiating with the corner drug dealer my share of our common customer's welfare check. I even sold advertising for a while. Im a licensed real estate agent in a vacation/second home market. With one 15 year break as a government employee, (the enforcement division of a regulatory agency) ) Ive been selling since I sold my home delivery service of the Washington Post in the late 1950.s

So 60 years of experience (several foreclosures and 2 bankruptcies), brought me to where I am today, I dont know whether thats it. But I do know this rental stuff seems easy and fun to me. I dont recommend it to anyone, but I stand ready to help if thats what someone wants to do.