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My wife Julie and I took a tour in Maui of the Westin Timeshares but didn't go through the salespitch.
I am not in the market for a timeshare, but I've always wondered if they would make a good real estate investment (and, I love the idea of getting free stuff for listening to someone tell me about a real estate deal).
Julie hates wasting time but was curious and reluctantly agreed to sit through the spiel.
We barely managed to get checked into the hotel, and we were ushered up to the fourth floor to begin.
We walk into what used to be a hotel room, and were offered the choice between two of the empty tables at the back.
We were both expecting a one on many presentation.
But, it looked like we were about to get a one on one sales presentation.
The room was buzzing with conversation as there were 8 other tables of couples listening as salesmen gave them their best pitches.
No less than 90 minutes later, we had walked our 22 year old salesman through our extensive travels over the past two years.
He felt bad that we didn't know about this deal sooner.
He told us we would have saved SO MUCH money if we had known about this deal before we went to Spain, England, France, Belize, Hawaii, and Australia.
He emphasized that this was an investment because when we would sell the property later we would get more than our money back.
He also slipped in the fact that we could 'game' the system by renting our property out at peak times if we weren't going to use it, and, make money from that to pay for future trips.
Careful to always show us the low amounts when referring to what each week would cost in terms of timeshare points (I will get to that in a sec), and to tell us the higher end of what we'd be otherwise spend if we didn't have this deal, he artfully painted a powerful picture of what life would be like once we were the proud owners of South Beach timeshare.
At this point, we knew the general structure of the deal, but we still did not know the price.
But here is how it works:
- Annually you get 7,800 points,
- The points accumulate and rollover, so unused points just roll into the following year,
- You can break them up and use them for 4 days or 3 days instead of only week chunks,
- Your friends and family can use your points so long as you make the booking,
- Your points can be used directly at any of their resorts or through their network of timeshares,
- There are no black out periods, and because you are buying at South Beach which is top tier you can more easily stay at other desirable locations around the world.
But, as we dug into it, we found out that 500 points was for what they called GREEN weeks, which basically means nobody in their right mind travels there during that period because of volatile weather conditions.
Realistically, with those points, we would get two weeks at a place we would want to stay during the time period we would want to stay.
By compromising on either the quality of property or the timing of the trips, we could potentially squeeze four weeks out of it.
But I can't say that with confidence.
This timeshare program definitely seemed to have some advantages over what we'd heard about timeshares from other people.
For example, you are not stuck to one specific week each year.
You don't lose your points if you don't use them.
And you can transfer to your friends or family as long as you make the booking yourself.
It also seemed very flexible.
Really, it didn't sound half bad.
I am sure Julie was nervous that I was going to want to buy one.
But, at this point we still didn't know the price.
FINALLY, as we are getting close to two hours sitting at this little table, and Julie is about to pass out on the table from exhaustion and impatience, we learn that all this could be ours for $36,000.
And with their financing, at the rate of 18% APR, your total cost for the purchase comes to $39,180 + $9,000 (required 25% downpayment) = $48,180.
In addition to that, your timeshare fees for maintenance, taxes and insurance are $963/year (total of $4,815).
So your grand total for owning this time share for 5 years is: $52,995 which works out to $10,599 per year.
Or, put another way, it's the same as paying $757/night at a hotel of your choosing during a two week vacation each year for 5 years.
Even if you buy it with cash (no financing) and hold it for 15 years, you are still going to be paying the equivalent of $240/night each year for your two weeks of vacation.
I don't think you can rent out your properties enough to cover your costs on that one!! And the worst part is that the locations they offered were not of much interest to us.
And you had to pay $154 to transfer your points for use at their network properties.
We ARE big travelers, but that also makes us pretty particular.
We know we like to be within walking distance of the sites and highlights of places we visit.
We don't want to be outside of the city, or at least not centrally located.
Our young salesman tried to convince us that the amount we were saving was going to make a $5 cab ride to get to the things we wanted to see or do worth it.
It would be more like a $25 cab ride...
each way...
every time we wanted to go anywhere.
What a pain! For $757/night, let's face it, we can stay in some pretty swanky places RIGHT IN THE MIDDLE Of the action just about anywhere in the world.
So, we said no thanks.
But, wait, we couldn't just leave because we decided this wasn't a deal for us.
We had to tell his manager why we weren't buying.
And after that we had to meet one last person.
This final guy sat down and actually told us that they didn't want to lose out on our business.
They wanted to give us the opportunity to enjoy the resort further.
To do that, they were prepared to hold the $36,000 price for us for two years, and they would give us 8,000 points to use for the low price of $2,200! Maybe it's a better deal, but we're still not interested.
Ok, so for most people, you won't make money or save money because you own this timeshare, but maybe you can resell it later for a higher price? I went onto multiple sites that have resale timeshares on them, and found this exact timeshare on sale for $21,000 with a note beside it saying "negotiable".
And a quick look around at other timeshares within this resort group showed a sad story of prices dropping, and people anxious to offload their timeshares at rock bottom prices.
So, it doesn't look like it's a good investment either.
And on top of all of this, the free gifts that I got all excited about are pretty much useless.
The hoops you have to jump through to get any of the rewards are ridiculous.
Take the free $100 in gas for instance.
You will enjoy a $25 rebate each month you spend $100...
but it has to be four consecutive months of spending $100 and sending in your receipts or you don't get it! I am sure 99% of the people never use most of the free gifts you get.
After the long presentation, Julie smugly said to me "So, you promise we never have to do that again?".
But, I'm a real estate investor, and when I see someone talking about a deal, I get curious.
So, I couldn't tell her that would be our last one, but I tried to reassure her that the next one would give us really good gifts!
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