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Old 12-19-2013, 09:42 AM   #41
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Another factor with Timeshares was a turn-off for us (others here may have the exact opposite reaction). To wit, on vacation we have no desire to cook/eat "at home," make our bed, or worry about clean towels.
The one presentation we went to told us that we could get maid service and towels for yet another fee. For us, that alone was a deal-breaker.
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Old 12-19-2013, 09:45 AM   #42
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Originally Posted by Rustward View Post
My view of the timeshare industry (I believe they are trying to call it "fractional ownership" now -- wow) is that the timeshare is just an annuity for the management and maintenance companies.
I have a friend who sent me this link. This friend has been an astute real estate investor and has 3 properties in two resort areas he owns outright (except for whatever he owes the bank). Two of these properties are considered "wedding" properties that he rents for $25,000 per event (something like 20 bedrooms each).
He told me recently he has put some money into this "fractional investing" concept and swears he is making over 30% on his money. He provided me with a link and I have done some preliminary research. I'm left with a ton of questions but have not called this company as of yet.
It seems the way they are marketing this fractional investing concept is by telling you the difference between this and a time share. The nuts and bolts is that you get a deed of trust as tenants in common for your ownership (along with a commiserate part of the debt) and evidently you get part of the rents.

Has anyone else done anything like this? Thoughts?
Here is the link if it is allowed to post.
Travel World Vacations - Fractional Real Estate Investing
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Old 12-19-2013, 11:50 AM   #43
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Not sure it's as simple as walking away, especially if they still have a loan out on the purchase. At a minimum it will have an impact on their credit history/report. When someone walks away and stops paying the maintenance fees someone has to foot the bill, it's the other owners that get stuck paying through increased maintenance fees.
If there's a bank loan then obviously a credit hit would happen ... but most timeshares are not DEEDED ownership. So there is nothing to foreclose. More like breaking a lease. The chain just peddles the product to the next in line.

FWIW I've had little luck hitting a tenants credit for a lease violation.
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Old 12-19-2013, 12:03 PM   #44
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...
It seems the way they are marketing this fractional investing concept is by telling you the difference between this and a time share. The nuts and bolts is that you get a deed of trust as tenants in common for your ownership (along with a commiserate part of the debt) and evidently you get part of the rents.
...
The 1,500-sqft villa in Palm Springs that we once stayed in for an exchange was set-up as a fractional unit. There was a closet with 4 locked cabinets for the 4 shared owners to store their personal belongings. Apparently, partial owners return to the same unit, unlike regular timeshare owners who get whatever units available at the time.

Fractional ownership looks like timeshares on steroids for me. And I like to travel and stay in different locations instead of coming back to the same place all the time. I already have my 2nd home for that. So for now, my timeshare + exchange capability works out OK for me. Just book a week in Ruidoso NM via the exchange, a place I have meant to visit for some time.

Anyway, to the earlier poster who wants maid services, my experience is that all timeshares I have been in have towel exchange in mid-week. Some maids even offer room cleanup for the mid-week service, but we always decline. We do not make such a mess to require bathroom cleanup daily. And eating out every meal is something we do not want to do, even if someone else offers to pay for every meal.
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Old 12-19-2013, 12:19 PM   #45
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The 1,500-sqft villa in Palm Springs that we once stayed in for an exchange was set-up as a fractional unit. There was a closet with 4 locked cabinets for the 4 shared owners to store their personal belongings. Apparently, partial owners return to the same unit, unlike regular timeshare owners who get whatever units available at the time.

Fractional ownership looks like timeshares on steroids for me. And I like to travel and stay in different locations instead of coming back to the same place all the time. I already have my 2nd home for that. So for now, my timeshare + exchange capability works out OK for me. Just book a week in Ruidoso NM via the exchange, a place I have meant to visit for some time.

Anyway, to the earlier poster who wants maid services, my experience is that all timeshares I have been in have towel exchange in mid-week. Some maids even offer room cleanup for the mid-week service, but we always decline. We do not make such a mess to require bathroom cleanup daily. And eating out every meal is something we do not want to do, even if someone else offers to pay for every meal.
I agree on the "timeshare on steroids" analogy. Evidently they have also qualified these fractional ownership tenants in common units for a 1031 exchange. I still have question about the taxation and debt piece as well as selling it in the future. There also seems to be certain points in time when you can get your investment out or so he says. Wonder if it is possible that my friend is really getting 30% return or if will also be getting a bill for the maintenance and expenses or really will be able to get his investment out "on demand". Don't have answers for those pieces yet.
Seems to me a big risk here is that the Leasor (the entity who has bought/mortgaged the resort property) and sold the units as fractional ownership units has control over the accounting, meaning at some point perhaps there is no positive cash flow to distribute especially if the resort property requires large capital infusions to keep it up.
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Old 12-19-2013, 12:50 PM   #46
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. Wonder if it is possible that my friend is really getting 30% return or if will also be getting a bill for the maintenance and expenses or really will be able to get his investment out "on demand". Don't have answers for those pieces yet.
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I think you know the answer.
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Old 12-19-2013, 12:58 PM   #47
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I think you know the answer.
MRG
Agree MRG. Suspicious to say the least. I'm afraid in his effort to avoid the stock market he may have gotten himself into something that may bite him in the behind. That said, he is a big boy with current real estate worth at least 10 millions so not to worried about him.
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Old 12-19-2013, 11:28 PM   #48
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May need to get fairly creative in disposing of a troublesome, undesired timeshare. Maybe find a homeless addict and gift it, maybe someone in prison for a long term, last might be someone who has a short time to live. It sounds pretty grim but some of these timeshares stick like road tar.
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Old 12-19-2013, 11:40 PM   #49
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The recipients would need transportation to get to these timeshares, which are in touristy locations and not always in city centers.
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Old 12-20-2013, 10:24 AM   #50
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A number of years ago, my DW had to transfer ownership of her parent's TS into her name to prevent her elderly father from paying scammers up front to sell the TS. We didn't want the TS, and tried to get rid of it, but there was no market. Couldn't give away. Couldn't give it back to TS company. Since that time the maintenance fees have more than doubled.

Reminds me of an old chestnut for remembering the 3 Laws of Thermodynamics - "You can't win. You can't break even. You can't even get out of the game."

Inheritance of TS properties is becoming a major problem. It is not uncommon for beneficiaries to estates that have a TS property to disclaim the TS because of the fees. The TS remains with the estate which has to continue to pay the fees until the property is disposed of. Until this happens the estate remains open with cash assets tied up to pay the fees. Some aggressive TS companies have sued estates that stop paying the fees.
One clever individual I talked to had placed his TS into a trust. The only asset in the trust is the TS. Each year he provides the trust with enough income to pay the fees. Upon his death, if the beneficiaries of the trust disclaim because they do not want the TS, then the trust will cease paying the fees. At that point, the only option for the TS company is to foreclose on the property in the trust. Meanwhile the rest of his estate will be unaffected and none of his beneficiaries are saddled with a TS that they might not want.
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Old 12-20-2013, 10:31 AM   #51
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One clever individual I talked to had placed his TS into a trust. The only asset in the trust is the TS. Each year he provides the trust with enough income to pay the fees. Upon his death, if the beneficiaries of the trust disclaim because they do not want the TS, then the trust will cease paying the fees. At that point, the only option for the TS company is to foreclose on the property in the trust. Meanwhile the rest of his estate will be unaffected and none of his beneficiaries are saddled with a TS that they might not want.
I wonder if it's possible to name the TS Company as the sole beneficiary of the Trust?
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Old 12-20-2013, 11:23 AM   #52
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I wonder if it's possible to name the TS Company as the sole beneficiary of the Trust?
Or make them the contingent. If the primary disclaims, it goes to them.
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Old 12-20-2013, 11:34 AM   #53
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Great thread to read... nothing intelligent to add, but triggered one of the fondest, funniest moments in my life...

Back in the 70's, received an invite (w/ free gift offer)to a new lake property sale... a development with homes to be built on the shore... timeshare homes. Big meeting room 40 people sitting at tables... waiting, waiting, waiting... half hour, and a few people got up to go...

Suddenly... from the four corners of the room 20 salesmen come bursting out, to the blare of music... each salesman grabbing a couple, and saying... loudly... "Come one with me.... We're gonna have FUN!....
Hustled into his car for a whirlwind half hour tour of the lake sites, and a quick trip into one of the three model homes... (nothing else built yet).
Back to the main building for a very intense sales presentation by your (private) sales person... Ours was really great... He actually cried and talked about his wife and children and how this was his last chance to be successful...
With the final "No... sorry" we were ushered into the main office... White haired gentleman in a Palm Beach suit and wearing a huge Rolex... Pressure... like no one should ever have to go through... all but Hell and Damnation... then finally... turned over to the guy whose job it as to user us out.
Back door... leading to the parking lot where our car was parked close by, down about 5 steps...
The salesman is waving goodbye... red face and obviously mad... we're in the car and backing out when DW... stops.... Opens the window and says to the guy.... HEY!!! What about our free gift?
Smoke pours out his ears... face even redder... and he goes back into the building, and comes out with this 35MM camera in a box... and...
Honest to goodness... from15 feet away, throws the camera into our car through the open window... missing DW by inches and going into the back seat... turns on his heel and back in to the office.
We laughed for hours... and to this day, the mere mention of the event brings us to tears...
Sorry for the interruption, but thanks for the memories!
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Old 12-20-2013, 11:48 AM   #54
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How about selling TS for a $1 to someone who is just about to file bankruptcy? Let the person go delinquent on payment. Serves those TS pushers right!
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Old 12-20-2013, 12:28 PM   #55
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As said in earlier posts, I still keep my Mexican timeshare because I am getting something worthwhile out of it. When I get tired of it, I think I can just stop making yearly fee payments.

I don't think they will come pursue me here in the States, or how the law would apply. Can they have me arrested if I set foot in their country again?
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Old 12-20-2013, 12:31 PM   #56
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As said in earlier posts, I still keep my Mexican timeshare because I am getting something worthwhile out of it. When I get tired of it, I think I can just stop making yearly fee payments.

I don't think they will come pursue me here in the States, or how the law would apply. Can they have me arrested if I set foot in their country again?
Maybe they will "send" someone?
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Old 12-20-2013, 01:12 PM   #57
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How about selling TS for a $1 to someone who is just about to file bankruptcy? Let the person go delinquent on payment. Serves those TS pushers right!
I wonder if they have to approve the transfer. If not, it would seem pretty easy to get rid of, just give a homeless guy $50 in cash to take it.
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Old 12-20-2013, 01:23 PM   #58
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We stayed in a friend's TS years ago almost every summer. Paid them the annual fees. They wound up giving it to us. The fees have gone up from about $80 to about $130 a quarter for an efficiency in Vail over the 4th of July weekend. There is a lot to do in Vail in the summer and DW and I liked to hike in the area. Now days I usually give it to friends or family to return a favor. I have contemplated giving it back to the TS company, but the kids are getting old enough that they want to use it. It will cost a year's maintenance to give it back. The annual fees aren't so high that it makes me uncomfortable, so it just sort of rolls along. I think eventually I will get hit with a large maintenance bill. Got one several years ago when they had to put in a new fire sprinkler system and convert the fire places to gas. We have a specific unit in the lodge.
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Old 01-04-2014, 07:02 PM   #59
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I just made reservations to see TS in Orlando. Hilton called and we stay 3 nights, 3 days for $147. We get 10K points towards our Holiday Gardens card and a $200 cert, for any Hilton owned motel/hotel.

I told her we were too old to invest into something like this, but she still wanted us to go. Since we go to Fl. every Feb., I told her it had to be the first or last 4 days in Feb. We'll get there Sat., listen to sales pitch on Mon. morning and leave Tue. morning. On the way to the west coast we'll use the certificate to stay somewhere.

This is a good way for us to see if we would like Orlando or not. We are going to a different place every Feb. for a month until we find a place we both like. Once we find an area we agree with, we'll then have to find a place we can rent every yr.

But I can't complain about $147 stay, plus there isn't ant way my husband could be talked into it...
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Old 01-04-2014, 08:34 PM   #60
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If there's a bank loan then obviously a credit hit would happen ... but most timeshares are not DEEDED ownership. So there is nothing to foreclose. More like breaking a lease. The chain just peddles the product to the next in line.

FWIW I've had little luck hitting a tenants credit for a lease violation.
Actually, my understanding is the opposite...that most timeshares are deeded. There are RTU (right-to-use) here and there like Disney, and they're very common in MX for instance.

US-based timeshares can get very aggressive in pursuing for maintenance fees, and it can hit your credit rating if you care about that. I've never found any solid advice re. MX RTU and what happens there if you just skip out, but some people believe if the resort has a stateside presence it's more likely they'll try to collect.
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