Timeshares
This may not sound like a real estate or home maintenance issue, but I thought my experience was worth sharing. Recently, my wife and I purchased a vacation package offered by our bank. And after various delays we finally managed to take the kids to Puerto Vallarta for a four-night stay at one of the beachfront resorts.
Shortly after arrival, we were greeted by a hotel "employee", who offered a free breakfast buffet and hotel orientation tour. Yeah, yeah... free breakfast and a tour? After a few questions, we thought why not. We have been through it and we were curious about all the small villas on the property, how they were configured, how much they rent for, special facilities, etc.
After the promised 90 minutes extended to more than 150 minutes, we were at our limit with the vacation club/timeshare promotion and were not interested after being confused by the numbers during the presentation. I found the presentation to be very aggressive and to say the least, after correcting the math of the presenter several times, confusing. Remember, timeshares are not a real estate investment but a membership to access vacation programs, even though it appears you are sharing a specific accommodation.
Anyways, the final number was $14,900 for a junior suite that sleeps four and has a small kitchenette. Apparently promising use of it once a year for 25 years although it was not clear it was for every year and the maintenance fees were $250 USD per year. Now using simple net present value calculations and assuming my money can normally earn about 2% over inflation, I actually would be paying approximately $1,300 USD per week over the next 25 years. Considering the advertised rate for the same unit was $250 USD per night (or $1,750 USD per week) without promotion or discount. I am sure the hotel would provide a discount if I was looking for a one week rate.
I was not impressed with the effective discounted rate, the upfront payment and the lack of control of the maintenance fees, which likely would increase. Also it is a commitment for 25 years of vacations, which is longer than my economic commitment with my own house and my children's education. However, what is interesting the secondary market for timeshares. There are various websites that promote timeshares for sale and typically are available for much less than the promotional "new" price available from the developers. This is partially due to the high cost of promotion; in some cases as high as 50% of the cost is marketing. This secondary market for timeshares is essentially one person selling their timeshare to another person, if the timeshare contract permits the sale.
Now there are some benefits to timeshares which include access to the RCI (Resorts & Condominium International) network, which will allow you access to places around the world at discounted rates however, you will need to be flexible on dates available. Also if you enter a system with points, you are at the mercy of the value of those same points. There of course is a cost to enter the network and annual fees, deposits to put on a vacation unit, etc.
Remember, read your contract thoroughly and assure everything discussed is in the contract. Also PROFECO (the Mexican government consumer protection agency) is available to help you if you feel you have not been fairly treated. By Mexican law you do have a five-day cooling off period after signing should you want to cancel the contract with a full refund of deposit.
On the novel side of timeshares, I have learned of people that have economized their vacations by planning their vacation around the bonuses they receive for the timeshare presentations. In some cases, timeshare promoters will give cash to draw in clients for their presentations. One case I read about was a person who programmed timeshare presentations for the morning and afternoon to receive the cash bonus that in total effectively paid for the vacation with the money received. Sounds too much like work during a vacation and isn't a vacation to help get away from a work schedule. Hence the question; what is the value of your time during a vacation. I know the time sitting at the table with the presenter when my daughter was pleading to go to the swimming pool, was very valuable time for me.
