MAKING MONEY ON TIMESHARES

How to out-scam the scammers

There are huge sums of money to be made in timeshares and point systems of the same ilk.  Unfortunately, most of it seems to be made by the timeshare companies.   Their profits can be staggering. 

A condominium unit that sells for $200,000 outright might return $700,000 to the timeshare company if all the weeks are sold individually at top dollar. A great deal for them, generally, a very poor deal for you. 

Surely, you’ve received scads of timeshare offers in your mailbox, on the Internet, or at resort areas you have visited.  They entice you with free dinners, free entertainment, free hotels and free moneeeeey just for visiting their property for one or two hours. They’ll dine you and maybe even wine you on a pleasant little tour as they try to coax you into seeing the value of their version of the timeshare concept.

Your ‘wasted dollars’ are their chief selling point.  They like to sum up the cost of your past hotel bills for the last cagillion years and make you weep like a baby over all those by-gone dollars. Their fuzzy math initially seems irrefutable.

The conversation might go something like this. “Good day Mr. And Mrs. Smuck. I’m not here to waste your time, so let’s get down to business.  How many weeks a year do you vacation?  Three weeks…...  OK.  Now, how much do you spend on average for a hotel room. $150…...  OK.  Now, do you intend on continuing to vacation in the future. Yes…... OK.  (Silence….followed by fingers flying across a calculator…. followed by a very worried look)

Holy C—p, Mr. and Mrs. Smuck do you realize that you have just twitted away over $31,000 over the last 10 years?  How in the world are your kids every going to be able to go to college with parents that spend like brain dead billy goats? Furthermore, when we add on our projected hyper-inflation percentage over the next millennium we anticipate that you will spend enough in the years remaining before you see the Big Man to finance the national debt of Abukistan.  Mr. And Mrs. Smuck, we have a very serious problem here.

Fortunately, I, Billy Bob, your best friend, have a wickedly good solution to your dilemma.  We’re going to end your loosing streak right here and now.  We’re going to sell you endless ‘free’ vacations for not only the rest of your life, but the rest of your heir’s lives and their heir’s, heir’s lives.  This is just to good to pass up.  And if you act fast, I think I can talk my manager into letting me give you our super special, 5^th anniversary, end of the fiscal year, 500^th customer, close-out special price of only $18,900 per week for vacations forever and ever and ever each and every year.  Is that a good deal or what?”

Or what is more like it.  If you haven’t succumbed to the pitch you might ask a few questions like;

“Are there any additional costs associated with my ownership of this unit?”

 “Can I trade the rental of my unit for another at another project and at what cost ?”

“What happens to my interest in the property if the project doesn’t sell out or the developer goes out of business?

And their response might be something like this.   “Of course there are additional costs with any form of real estate.  You want paint on your unit from time to time, the lawn mowed, termites terminated and the dirt from the other 51 weeks worth of occupants vacuumed from your unit before you use it don’t you? $100 per day seemed like a fair number to us.  Now, as far as trading your unit, we’d be happy to set you up with Vacations Club of the Whole Big Universe, which will be happy to honor your request for a trade for only about $20 per day.  You can go to any participating resort in our solar system in the same category subject to a-v-a-i-l-a-b-i-l-i-t-y.

Oh…. and don’t worry about us selling out the project or the builder going bankrupt.  That’s just not going to be a problem.  The units in this project are selling so fast that I don’t even have time to go to the bathroom.  I wet my pants three times last week alone.  And….. the developer.  He is so rich; I think he has more money than God.  Trust me, (wink, wink) I’ve been in this business for years and years.  It just doesn’t get any better than this.”

Do The Math

“Trust me”, don’t trust him or anyone else without carefully running the numbers and verifying the authenticity of the information supplied to you.  Always assume the worst.

The numbers usually paint a very poor investment picture.  Let’s add up our tongue-in- cheek example and see how much our FREE nights actually cost. 

First there is the cost of your investment, either directly through an outright cash purchase or indirectly through developer financing.  For simplicity sake I’ll take what is usually the least expensive option and just calculate the cost of the money invested if you were to buy the timeshare for cash.  After all if you pull $18,900 out of your savings account, you’ll lose the income it would have provided.  It’s not too difficult to earn say 6% interest without doing a darn thing.  Therefore, the cost of your money is $18,900 times 6% or $1,134 per year divided by the 7 days equals $162 per day.  That’s the cost of your money invested.  Your cost might actually be 10% or more if you choose to have the developer finance your purchase.

Next we add the cost of the maintenance fee of $100 per day and the cost of exchanging your unit of $20 per day.  Our total is then as follows:

Cost of Investment               $162

Maintenance Fee                  $100

Exchange Fee                     $  20

 Total Cost Per Day              $282

This is how much your infinitely FREE timeshare costs you.  Now you’ve got to ask yourself, is this really a good buy if I’m essentially paying $282 per FREE night, with my maintenance and exchange fees scheduled to go up with inflation or at somebody’s whim?  Of course not! 

Hotel nights are a very perishable commodity. When a  night has past, the revenue is lost. 

The industry recognizes this and accordingly readily drops the price for savvy travelers.  Rooms are heavily discounted through numerous clubs and Internet websites. If you are flexible and persistent enough, you can accommodate you, your family and your friends for a fraction of the ‘rack rate’ initially offered by a hotel.

Salesmen Always Tell The Truth, Right?

To illustrate the lack of value with most timeshare offers, let me describe an incident that occurred during a timeshare presentation in Florida. During the timeshare sales presentation, before we reached the point of crunching the numbers and the beat-um-up closing, our guide took us for a tour of the property.  As we were coming down the crowded elevator, sardine next to sardine, I struck up a conversation with one of the occupants of the project.  I asked her how she liked the project.  She indicated that she and her family had just arrived and were merely renting their unit.  I asked how much she was renting the unit for.  Much to the consternation of our salesman, she happily bragged that her entire family got a large two-bedroom unit for only $55 per night for the duration of their vacation from a condominium discounter.  Our salesman had previously suggested the luxury units were worth hundreds per night. 

I think our salesman mouthed out the words “oh s—t” before quietly regaining his composure and whimpering along with his weakened presentation.  I’m sure he hoped my math was really poor and that my memory was even worse when it came to ‘crunch the numbers time’ and ‘close the sale time.’ Needless to say, I disappointed him.  This one was toooo easy.  He didn’t even press the issue.  He was just hoping that I would disappear and his bad day would end without any further carnage.

In addition to the obvious poor return on your investment, there is another problem, builder and project stability.  The sales presentation scenario typically hinges on the developer being able to complete the build-out and sales of the project, while maintaining solvency.  In addition, if the project is not well planned and deteriorates, then the value of your investment and your ability to exchange it for other comparable properties through an exchange system suffers.

As an example, years ago I spent two weeks at a project in Puerto Vallarta.  It was a beautiful resort on the beach with several pools and lavishly kept grounds.  It was like paradise.  I returned ten years later for a timeshare presentation offered for a substantial reward.  It quickly became clear why they were providing such abundant gifts just to view the resort. It had degraded from a five star property to a two star property from lack of upkeep. The exterior of the buildings and tile roofs were covered with mold and the vegetation had withered away. You wouldn’t want to stay there, nor could you trade it for anything desirable. 

Hopefully, I’ve impressed upon you the improbability of finding a good value at a timeshare presentation and the risks involved.  I have elaborated on this aspect of purchasing timeshares at a retail level to ‘put you on guard’ and to warn you of the seductive charms of the sales promoters.

Before I suggest what you should do, it is very important to explain what you must NOT due if you are to profit from your association with timeshare projects.  It doesn’t make much sense to make a few dollars this way and lose a whole lot more that way. 

Making Money

NOW, let’s make some money with timeshares and their brethren.

Timeshares in ‘theory’ hold out some prospects.  The concept has some merit.  Why own a resort condominium in entirety if you’re only able to use it for part of the year.  You’d have to maintain it and either pay a huge premium for letting it remain idle or pay to have it rented out.  If you’re not in the property investment business and don’t have the inclination, timeshares in ‘theory’ could be a good value for you.

The first way to make timeshares work for you is learn to purchase on a wholesale level, not in the retail market. You can buy from an individual who has become disillusioned with his investment and is willing to take a loss and accordingly sell at a cost effective price level.  Or, you can buy from a timeshare broker who specializes in re-sales.  Either way, you can achieve a major savings over what you would pay on a retail level.  This savings can bring the cost down to a level where it can occasionally be attractive as a form of investment or for your personal use.  Look closely.  More often than not the economics of it will not be. 

Make sure that your dealing with a major well-funded company.  Then analyze the cost of purchasing and maintaining the property and the income you could derive or the savings you would incur. Compare the value of renting or using the unit to the three cost factors itemized above.  If it’s significantly profitable or less than you would pay to rent a comparable unit, consider buying it, if not negotiate until it is or walk away and pursue something else.

You will find timeshare re-sales advertised in the classified and travel sections of many major newspapers.  Individuals and brokers will both advertise.  The Internet will also provide you with many options to buy in the re-sale market.

The second way to make a GUARANTEED return on your investment of time or money is to simply become a connoisseur of timeshare presentations.  Seek them out on a casual or premeditated basis.  Learn to use the whole sleeeeeezy timeshare promotion business for the gifts they have to offer.  If anybody deserves it, they do. I suspect they’d ‘rip-off’ their own grandmother if she’d let them in the door.

Seek out presentations for the travel benefits and outright cash or cash equivalent awards.  It’s so easy it’s almost scary. You can even ‘wing it’ by looking for presentations while you’re on holiday in most major domestic or North American resort locations.  I’ve done this in numerous resorts in Mexico, Canada, Florida, Las Vegas, Colorado, etc,etc,etc., sometimes doing several in one day. Typically, you can make from $100 to $200 in either cash or cash equivalents, such as restaurants or leisure activities you would have paid to utilize anyway. They can subsidize the cost of your vacation and if done properly enhance your enjoyment.

Research your area by consulting with the front desk or concierge of your hotel, brochures are readily available in areas where people congregate, kiosks set up along tourist areas or through tourist offices.  It won’t be too difficult if you try to keep an eye out for them.  They seem to be everywhere.  Sometimes there will be so many you’ll have to beat them off of you as you walk down the street, selecting only those that offer the most lucrative of offers.  In some areas you can even go back and forth between agents, encouraging them to bid against each other for the right to give you free stuff.  You’ll have to prioritize who can give you will allow to give you free stuff.

Simply compare the time involved versus the return monetarily and educationally. By being courteous, but analytical, and by applying the aforementioned cost analysis, you will typically find yourself ushered off to the prize redemption window well before the other participants. Insurgents are politely gifted and exited. Being a timeshare radical has its rewards. They have no desire to upset the other participants with logic.

Another way to facilitate an early termination of your presentation and a quick invitation to the prize window is by stonewalling the salesperson.  Merely say that you have thought about it or discussed it with your wife or husband and that you are simply not interested.  DO NOT provide details or this will backfire.  Just say you analyzed it and would prefer not to buy.  Stand firm and keep reiterating your position without elaborating.  If you provide a reason, they will use it as a wedge to finagle some type of absurd logic into that barely opened window and drive you crazy with goofy offers.  If you remain silent, they will have no opportunity to attack your sanity and waste your time.  You will be able to optimize your time spent.

Your goal is to get in and out as quickly as possible and have a little fun in the process.  Try not to take the whole process too seriously.  Realize that this is a game that is won by the party with the coolest head. As an added bonus you can get quite an education from some of the better presentations, giving you an insight into the area you’re visiting and enhancing the pleasure and planning of your holiday.

Most offerings are quite pleasant, especially those offered by note-able hotel chains, where reputation is a factor.  Timeshares have gotten some bad press and most promoters are conscious of this and will go out of their way to show that they’re methods are above reproach. If all else fails in your effort to terminate your presentation early, become a little indignant and raise your voice a decibel or two as you illustrate the above logic to undermine their sales presentation. That should alert ‘the powers that be’ that they have a radical in their midst who needs to be politely shown to the prize window before he or she panics the other sheep being led to slaughter. 

Don’t allow your ego to become entangled in the process.  Just keep in mind your objective, which is to have an enjoyable informative presentation, take the goodies and run as quickly as possible without upsetting yourself or ‘the powers that be’ any more than is necessary.

In addition to locating timeshares in resort areas while you are there, you can seek out resort offers prior to planning your vacation via the Internet by checking with the major hotel chains and by searching for ‘ timeshare offers’.  They will typically offer deluxe resort accommodations, car rentals and sometimes airfares at reduced levels. Many of these properties are quite nice.  They’re usually kept in top condition, especially when they’re in the selling phase. 

You can save hundreds of dollars by pre-arranging your specially priced tour.  Simply wade through a ninety-minute presentation.  It’s usually nothing more than seventy minutes of fluff and fun, followed by a twenty-minute inquisition.  You’ll walk away with a great orientation of the property and the area you’re staying in and the freedom to enjoy your cheap vacation with no further obligation.

In fact, use the opportunity to grill the salesmen and saleswomen on the best places to dine and find other leisure activities. They live in the area and will often provide you with great insights.  I wouldn’t trust a word out of their mouths regarding the timeshare project they earn a commission selling, but there is no reason for them to be untruthful about the best opportunities available in the resort area. Often, they know the best happy hours, dinner specials, ski runs or rafting tours. Take advantage of their home field advantage.

It Just Keeps Getting Better

Once you start availing yourself of these opportunities, it gets even better.  After you begin making inquiries and participating in presentations the whole process accelerates, even if you don’t buy a thing.  You become LISTED.  Your name is sold to other promoters or given away to their affiliated companies. You become a viable prospect and other offers begin flowing in.

Ironically, the more you take advantage of the system, the more the system invites you to take advantage of it. The invitations you receive for all sorts of free offerings will increase in direct proportion to your participation.  Timeshare companies and developers of all sorts want to give things away.

Don’t disappoint them.