Prospective buyer questions

[jjking42]

Technically speaking if you go the buying WKV rental route you have to consider capital cost , income taxes due on rental income, not to mention your time so I thinks its more than 6-7 years. For me it comes down to cost per year and what you think the value will be when you go to sell it.

Assuming that you don't want to rent, and you want to use your star options every year, and who knows what the value will be in 10 years so I assume zero and having to give it away.
SVV 10 years use cost 1500+(10*1181)= 13,310= 1,331 per use year 81K star options- resale value 0
WKV 10 years use cost (8750+(10*961)= 18,360= 1,836 per use year 81K star options- resale value 0
That is an extra 5050 over 10 years. If I believe that in 10 years I can sell WKV for 5050 more than SVV than it makes sense but assuming zero resale value makes SVV a safer bet.
This assumes that the MF will increase at the same rate but I bet Florida MF will increase at a higher rate than AZ.
That does not take into account rule #1 owe where you want to go and rule # 2 if you want to go to Orlando use getaways and extra vacations.

I rented my unused HGVC and Marriott Florida club weeks for years and don't ever want to go back to that hassle. My new rule is don't own more timeshares than I can use. I got down to one and am now back up to 4 but they are all points based and two of them are EOY.

 

[carpie99]

Technically speaking if you go the buying WKV rental route you have to consider capital cost , income taxes due on rental income, not to mention your time so I thinks its more than 6-7 years. For me it comes down to cost per year and what you think the value will be when you go to sell it.

Assuming that you don't want to rent, and you want to use your star options every year, and who knows what the value will be in 10 years so I assume zero and having to give it away.
SVV 10 years use cost 1500+(10*1181)= 13,310= 1,331 per use year 81K star options- resale value 0
WKV 10 years use cost (8750+(10*961)= 18,360= 1,836 per use year 81K star options- resale value 0
That is an extra 5050 over 10 years. If I believe that in 10 years I can sell WKV for 5050 more than SVV than it makes sense but assuming zero resale value makes SVV a safer bet.
This assumes that the MF will increase at the same rate but I bet Florida MF will increase at a higher rate than AZ.
That does not take into account rule #1 owe where you want to go and rule # 2 if you want to go to Orlando use getaways and extra vacations.

I rented my unused HGVC and Marriott Florida club weeks for years and don't ever want to go back to that hassle. My new rule is don't own more timeshares than I can use. I got down to one and am now back up to 4 but they are all points based and two of them are EOY.

Even worse ... that $7250 in extra purchase cost if invested over 10 years at 7% interest is $14,261 (S&P 500 is 9.8% annualized over last 90 years).

 

[needvaca]

I own both.
WKV- because I love it there and like to go every Spring Training when my schedule allows.
SVV Bella- because it was cheap and I use the Staroptions to go to other Vistana properties. Maui- here I come.

I have rented out WKV on occasion when we've been unable to go, but it takes a good amount of time and effort. and Time is Money!
I would never buy a WKV just to rent- not a good investment. Buy a S&P 500 Index fund instead- you'll make more money.

 

[JIMinNC]

Even worse ... that $7250 in extra purchase cost if invested over 10 years at 7% interest is $14,261 (S&P 500 is 9.8% annualized over last 90 years).

Be careful with the ROIs and using the S&P in this kind of analysis. Over any given 10 year period, the S&P can be significantly less than 7%-9%. I depends on when you start measuring and where that point was in the business cycle. For example, the S&P was around 1440 in mid-January 2000. In mid-January 2010 it was around 1100. That's a 10-year return of -2.7%. It wasn't until early 2013 that the market got back to 1440 and stayed there - a 13-year net return of 0%.

Another real-world example - when we bought our very first timeshare (a developer purchase in late 1998), the S&P was at about 1230. When we sold it 16 years later in 2014, the S&P was around 1980. That's a 16 year ROI of only about 3%.

Given that we are at a historical high point in the S&P right now, less impressive returns over the next decade are probably more likely than not.

 

[carpie99]

Be careful with the ROIs and using the S&P in this kind of analysis. Over any given 10 year period, the S&P can be significantly less than 7%-9%. I depends on when you start measuring and where that point was in the business cycle. For example, the S&P was around 1440 in mid-January 2000. In mid-January 2010 it was around 1100. That's a 10-year return of -2.7%. It wasn't until early 2013 that the market got back to 1440 and stayed there - a 13-year net return of 0%.

Another real-world example - when we bought our very first timeshare (a developer purchase in late 1998), the S&P was at about 1230. When we sold it 16 years later in 2014, the S&P was around 1980. That's a 16 year ROI of only about 3%.

Given that we are at a historical high point in the S&P right now, less impressive returns over the next decade are probably more likely than not.

That was why I gave the 90 year average of 9.8% and dropped it to 7%

 

[CPNY]

Any thoughts on a biannual unit? Is it better to have a biannual vs two annuals?

 

[JIMinNC]

That was why I gave the 90 year average of 9.8% and dropped it to 7%

Yeah, but my point was that over the last 20 years, even 7% is very aggressive. If you measure from that January 2000 peak at 1440, to today's 2975, that's only 3.9% over about 19 years. To get a annual S&P return of 7% or so, you have to go back to the 1994-1995 period as your starting point. So using 7% for only a 10 year horizon as you used in the example would be overly aggressive IMHO for the S&P given that we are near an all-time high right now. If we were nearer to a low point now, then maybe 7% would be more realistic number. For example, if you measure from the early-2003 low of 830 to the present, the return is about 8.3%. If you look at the big low in 2009 at around 680 to the present, the 10 year return is a whopping almost 16%. But given where we are right now in the business cycle, using anything over 3% to 4% for a 10-15 year ROI is too aggressive, IMHO. If you want to use 7%, you need to look at at least a 25-30 year time horizon, and unless someone is very young, I think that's too long to evaluate a timeshare purchase.

 

[controller1]

Yeah, but my point was that over the last 20 years, even 7% is very aggressive.

It is super aggressive. I'm a retired financial professional and as such IMO (and most reputable firms) people who use a cherry-picked number such as showing what the S&P annualized for the last 90 years is and extrapolating that to any ten-year average would have been terminated. When numbers are used in that manner, one can prove/disprove most anything.