Is now the time to buy a time-share?
Howard Nusbaum, president and CEO of the American Resort Development Association (ARDA) spoke at a recent conference about the increasingly popular time-share industry performance amid the current economic meltdown.
Nusbaum says much of the current downturn is due to uncertainty in the credit markets and the possible changes in the upcoming US elections.
…the credit markets didn’t lock up overnight and won’t unlock overnight. People look at the stock markets too much as the economic barometer, rather than the credit markets. It’s the credit markets that directly impact mortgage-backed securities access to mortgage loans plus the availability of loans for time-shares.
As far as the election goes, both parties have totally different philosophies. Based on results, the business community will need to plan on how to develop in the coming year. There may be different tax structures and rules and regulations. “Until they’ve been defined, it will be some time before we see real big changes in the industry.”
What does the economic meltdown mean for the normal traveler who would rather stay in a time-share than a hotel? Well, there’s good and bad news. In the past 20 years the industry has seen double-digit growth. The coming year will be flat. In spite of the economic pinch, people still want to take vacations according to Vacation Better. Many people feel vacations are essential for their health and well-being.
People who have some capital to invest and qualify for loans may find excellent buys as some time-share owners want to bail out. Also look at new time-shares where the developers may be under the gun to meet their financial obligations. Or this may be the time to snag a good rental on a time-share apartment as people need to pay their costs and may be short on cash-flow.
Any traveler deciding to delve into the time-share or fractional ownership market should hire a real estate lawyer to carefully review the financial documents. Even though it’ll cost a few dollars, the lawyer’s time will save far more after contracts are signed in time and money. The last thing any vacation property owner needs, whether or not it’s a time-share or fractional ownership, is dealing with logistical or legal problems from afar. When time-share deals are poorly structured people can lose their investment in one fell swoop.
These unsettled economic times might be just the time to lock in future vacations at a more than a decent price and possibly see some appreciation in your real estate/time-share portfolio.
Karen Fawcett is president of BonjourParis
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2 Responses to “Is now the time to buy a time-share?”
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Hah!
Please stop implying that buying a time-share is an investment which might go up in value with your statements like “People who have some capital to invest”… and “..and possibly see some appreciation in your real estate/time-share portfolio.” Though I will concede you at least suggest buying second-hand as one option. If you’ve spent your money and are getting nice vacations, that’s fine, but you are *spending* money and should not look at it as an investment.
I have never ever read of anyone making money on their time share purchase. Most of the stories one hears are people who are begging anyone to take their time share off their hands just to get out of the maintenance fee. A quick visit to any site like sellmytimesharenow will find any number of phrases such as “thousands below resort price”. I took two minutes to visit sellmytimesharenow, looked into the first resort that caught my eye (Mayan in Mexico), and found weeks for rent ($500) just above the annual maintenance fee ($369). (No I didn’t spend any time to actually investigate which weeks cost how much.) So why would anyone put up with the cost of being the owner?
That would be my take but there are many time-shares or fractional ownerships in France and in Italy that have appreciated. Some of the up-scale developments that offer all types of (or different) perks, have attracted a select group of owners. Perhaps their portfolios aren’t impacted by down markets.