Judging from real estate value ...

HGVC and other timeshare sellers say timeshare has real estate value. Particularly with HGVC, you have deed and become partial owner of a condo unit. On this piece of paper, timeshare is asset. But as you know, what is really happening is totally different. Here is the reality.

A well maintained Waikiki one bedroom condo with a ocean view (not ocean front) sells well beyond $450k and up to $550k. So I would say that real estate value of HHW HGVC timeshare interval for one bedroom platinum week should be around $9-10k. (Three years ago, the condo price was 20% lower.)

If buying timeshare from the developer, you pay 3-5 times more than the real value, and, in the current market, get only 60-80% or lower of the real value when you sell it. I think people buying timeshare resale now are really lucky.

Maverick1963 said:

HGVC and other timeshare sellers say timeshare has real estate value. Particularly with HGVC, you have deed and become partial owner of a condo unit. On this piece of paper, timeshare is asset. But as you know, what is really happening is totally different. Here is the reality.

A well maintained Waikiki one bedroom condo with a ocean view (not ocean front) sells well beyond $450k and up to $550k. So I would say that real estate value of HHW HGVC timeshare interval for one bedroom platinum week should be around $9-10k. (Three years ago, the condo price was 20% lower.)

If buying timeshare from the developer, you pay 3-5 times more than the real value, and, in the current market, get only 60-80% or lower of the real value when you sell it. I think people buying timeshare resale now are really lucky.

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Due to imbalances in the timeshare market, buying resale almost always makes the most economic sense especially with HGVC.

Jason245 said:

Due to imbalances in the timeshare market, buying resale almost always makes the most economic sense especially with HGVC.

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Almost always? Are you feeling OK?

JSparling said:

Almost always? Are you feeling OK?

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A fixed week 50 or 52 in a high end unit isn't usually available resale. In those cases, there is limited to no resale market.

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While there is value difference among seasons, it must be 30% more or less or at most 50%. I believe Waikiki hotel room rates fluctuate in such a range. I hope the above numbers will tell new buyers what it means to buy timeshare and what they are really buying.

Only about 15% of what developers sell their timeshares for is backed by real estate value. The rest is marketing and profit

In my opinion that's what an informed consumer needs to know. It still might make sense to buy at developer prices. If it does, by all means, buy. but. If not don't

Maverick1963 said:

While there is value difference among seasons, it must be 30% more or less or at most 50%. I believe Waikiki hotel room rates fluctuate in such a range. I hope the above numbers will tell new buyers what it means to buy timeshare and what they are really buying.

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In a ski resort timeshare, the difference between seasons can be 100%. Spring and fall weeks can be worthless while the winter weeks command >10K each.

I realize the OP is talking about Hawaii.

Real estate value? What real estate? You're only purchasing the right to occupy a specific size unit during a specified time frame. You don't own the land, the building, the furnishings, the amenities........nothing. You own nothing "real" let alone real estate. It's only an illusion created by the industry. There is no real appreciation in value. Even HGVC creates a false value by utilizing ROFR. Without the threat of HGVC taking the unit back at a low price to resale at their retail prices, resale values for HGVC would be next to nothing.

dougp26364 said:

Real estate value? What real estate? You're only purchasing the right to occupy a specific size unit during a specified time frame. You don't own the land, the building, the furnishings, the amenities........nothing. You own nothing "real" let alone real estate. It's only an illusion created by the industry. There is no real appreciation in value. Even HGVC creates a false value by utilizing ROFR. Without the threat of HGVC taking the unit back at a low price to resale at their retail prices, resale values for HGVC would be next to nothing.

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Of course its real. and i have a drawer full of deeds to prove it

even with worldmark where the club owns the deeds, by virtue of my membership I own a fraction of the real property

even in a rtu deal there is real property to back up your right to use.

The ops point I think is that there really is realestate behind these timeshare contracts and the value of that realestate should be reflected im the price we pay. Those that buy from the developers get screwed, and those that buyt on the secondary market get a pretty good deal.

Hawaii provides a pretty good example. (I know club Wyndham so Ill use Beachwalk at Waikiki as my example) you need about 15million points to reserve all 52 weeks, to buy that much from wyndham would be about $3,000,000 but to buy the same amount on the secondary would be less about $150,000>> I have no idea what the value of a condo is but Im guessing something in between those numbers.

and I dont care about appreciation, If the condo is worth $500000 Ill take the difference between what I spent and the 500K and invest it in something that does have a chance of appreciating

Maverick,

I don't think we can take a comparable property and divide it by 52 to get the approximate value of a single week in a timeshare. The MFs for a single week are much much higher on an annualized basis then the same week in a wholly-owned condo.

As an example, a 2BR OF condo (with a den which could be a 3rd BR) sold for $3.75M at the Kaanapali Alii in Maui, right next to my beloved Maui Ocean Club, which equates to weekly-equivalent of $72K to purchase that condo. The Kaanapali Alii has HOA fees of $1,500/month or $18K per year, plus whatever the property taxes are (not sure).

I just bought two 3BR week s(resale) for $45K each for Week 23 and Week 24, which are great weeks, IMO. But they carry a MF of $2,300 each (excluding property taxes), or $120K for a full year.

So, I don't think we can simply use the purchase price of a condo to try to justify a timeshare price, we have to consider the different monthly cost too. Make sense?

Best,

Greg

Well, GregT, yes and no.

If you are comparing full time occupancy (12 months out of the year) yes. (although, you get weekly maid service, scheduled furniture replacement, complete utilities, no repair bills, and usually far fancier amenities than a condo).

Otoh, if you don't plan on staying at the location full time, then it becomes a different comparison. 2 months (8 weeks) at MOC (@$2500 a week) compares nicely to a 12 month ownership fee set at the condo you compare to.

And certainly compares nicely to a second home.

That's why I'm planning to snowbird in Hawaii. 4 weeks at Bay Club is currently around $6400 (for an A Penthouse) MF. A dollar and sense comparison. . .


Also, compare the two properties. $45K time 52 weeks is around $2.4 million. $3.75 - $2.4 = $1.35 million. Figure the fees at $30K for the condo (taxes and those extra amenities values), and $130,000 for maintenance fees for the MOC, causing the MOC to cost $100,000 a year more, with a 13.5 year breakeven. But how much could you make on investments on $1.35 million? (You'd need 7.5% break even on the condo fees.)

Not quite so obvious.

Ralph Sir Edward said:

Well, GregT, yes and no.

If you are comparing full time occupancy (12 months out of the year) yes. (although, you get weekly maid service, scheduled furniture replacement, complete utilities, no repair bills, and usually far fancier amenities than a condo).

Otoh, if you don't plan on staying at the location full time, then it becomes a different comparison. 2 months (8 weeks) at MOC (@$2500 a week) compares nicely to a 12 month ownership fee set at the condo you compare to.

And certainly compares nicely to a second home.

That's why I'm planning to snowbird in Hawaii. 4 weeks at Bay Club is currently around $6400 (for an A Penthouse) MF. A dollar and sense comparison. . .


Also, compare the two properties. $45K time 52 weeks is around $2.4 million. $3.75 - $2.4 = $1.35 million. Figure the fees at $30K for the condo (taxes and those extra amenities values), and $130,000 for maintenance fees for the MOC, causing the MOC to cost $100,000 a year more, with a 13.5 year breakeven. But how much could you make on investments on $1.35 million? (You'd need 7.5% break even on the condo fees.)

Not quite so obvious.

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These are excellent points, and I've made the same decision as you -- my "second home" will be a collection of timeshares, irrespective of the MF pro's and con's. And Bay Club is a great property, I'm glad you have a month there as a snow bird (from Texas??)

Best,

Greg

Ah- numbers and TS! Love it!

My 5 cents:
Yes, a time share is real! I OWN! In my case, per the deed, I own precisely 0.00846153846% of our beloved Lagoon Tower, 2 bedroom Plus, Platinum!
I wonder what that equates to: one tile on the lanai (not cracked)? The corner of a picture frame (undamaged)? One roll of toilet paper (unused)?

Of course it is an investment!
I bought it in 2013 for $21k. Now it can be had for around $10k. A 50% decline in real estate values only happened once in the US market, ever: the 2008 meltdown. God save you (and the Queen!) if one bought from the developer!
I see this as a normal occurrence in the TS business. I consider it foolish to compare it even closely to an "investment".
The initial purchase cost should be considered lost in its entirety if one wants to remain happy with a TS.
Investing in penny stocks could be far more profitable.

HGVC has it in their hands to massively influence the residual value.
They already took away what used to be a good deal for room rates during the open season. If they stop buying via ROFR, the "value" of a TS would trend toward zero. Case in point: how much "value" is in a 2500 point EOY TS bought resale these days? Exactly my point! They are given away!

Being able to reserve a week (paid for via what is refer to as the "MF") and have a jolly good time in paradise: priceless!

Aloha!

PS: I am also thinking about snow birding to Hawaii in retirement. But even a $500k condo or townhouse purchase in Honolulu would not make much sense if I would spent six months per year on location compared to a 6 month rental at $3000 per months. I would run out of life before I would break even (I will die between 86 and 91 years based on family "performance")

GregT said:

These are excellent points, and I've made the same decision as you -- my "second home" will be a collection of timeshares, irrespective of the MF pro's and con's. And Bay Club is a great property, I'm glad you have a month there as a snow bird (from Texas??)

Best,

Greg

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It gets chilly in North Texas. 35 F and windy is not my bag. I'm not happy until the thermometer get to 80 F.

(And I did look up the property taxes on the condo. Just under 20K a year, and insurance would range from 6K to 30K (figure 10K for convenience) . That's a lot of overhead.)

I have not seen the thread because I assumed it should not be interesting enough. And I am surprised to see the discussion going on.

I agree that timeshare interest and real estate cannot be compared directly. Seasonal value difference varies from resort to resort. Timeshare MF is much higher because it includes everything necessary to make your timeshare unit commercially attractive.

Because of the demand and supply and because of the economy with much uncertainty, timeshare resale value is much less than its real estate value. I brought out the point by using a Waikiki one bedroom condo and HHV timeshare. While timeshare resale value continued to decline in the past few or several years, Waikiki (or US) real estate including condo became more expensive.

Personally I have already passed the break-even point for my timeshare. So that's okay if I get nothing by selling it. Still I am "hoping" that resale timeshare value should be maintained at its real estate equivalent value at minimum. Then we should have a better world and a better future to live in.