spreadsheet

[hotwired]

Hi All
In making my decision on whether or not to purchase a resale TS vs. vacationing, I created a quick spreadsheet to see what my break even would be (how many years it would take to have TS'ing be cheaper than "Hotel'ing" -- I've uploaded it here: www.KenLaVoie.com/TS-comparison.xls

I was wondering if it would of use to anyone, and more importantly, looking at it, can you see anything important that I might be missing? Not just numbers wise, but in my "assumptions" as well? Thanks!

Some notes: Ts local means a timeshare within a couple hour's drive, whereas TS away simpl means one we need to fly to. I assumed we'd STILL eat out 20% of the time EVEN with a full kitchen, I've made "green" areas so one could change the hotel daily rate, purchase price of TS and MF of TS and the amount of money spent eating out when staying at hotel vs. TS.

Ken LaVoie
Winslow, Maine

[vintner]

I think you need to break this out further or differently.

You have Initial outlay, which would be your purchase. There are two ways to do that, the way you did with your purchase up front and out of the way, but in my opinion, you need to figure your purchase plus maintenance fees and then break then down over the number of years that you plan on owning the TS. You have $3500, lets make it $5000 (easier to work with and more realistic). Add 10 years of maintenance @ $500 / year (and it will always be going up). Over a 10 year period, you have spent $1000 per year for this timeshare. Your hotel cost is listed at $1050, which will also go up. Your cost of hotel vs. TS is a wash. Yes, you will be able to see nice places with both units. With the TS, you need to add your exchange fee, you have $164, so now you TS is a little more money.

Your big savings in your spreadsheet is your food, eat out vs. ability to eat in the TS.

Good way to do the evaluation, set up a spreadsheet and figure the costs of owning vs. hotel.

[wwomant]

I've been toying with the idea of making a purchase myself, so this is interesting data to me. I think another important consideration is what you would be doing with the $3500 if you didn't buy the timeshare. I'm assuming here since you didn't record interest in the spreadsheet that you are planning on paying cash for the purchase. But, don't forget the "opportunity cost." There is an article on TUG by Stephen Nelson that explains this well, here is a quote from it:

"As indicated, the money you use to purchase a timeshare is money that you could invest elsewhere to generate income. In buying the timeshare, you are giving up that income, so you need to include that lost income in the cost of owning your timeshare. That lost income is the “opportunity cost”, and it equals the after tax return that you expect to receive on your savings and investments. Thus, if you assume that the money you use to purchase a timeshare would yield 8 percent after tax, your opportunity cost would be 8 percent of the purchase price."

The entire article is at TUG Advice - Timeshare 101: an Introduction to Timesharing

I'm married to an accountant, and so I am frequently reminded about "opportunity cost" when I talk to him about purchases. But, if you are the kind of person who that same cash would have simply been burning a hole in your pocket, and you would have bought, say a new home theater system with it, then this part doesn't apply to you.

[pittle]

Originally Posted by vintner

You have Initial outlay, which would be your purchase. There are two ways you need to figure your purchase plus maintenance fees and then break then down over the number of years that you plan on owning the TS. You have $3500, lets make it $5000 (easier to work with and more realistic). Add 10 years of maintenance @ $500 / year (and it will always be going up). Over a 10 year period, you have spent $1000 per year for this timeshare. Your hotel cost is listed at $1050, which will also go up. Your cost of hotel vs. TS is a wash. Yes, you will be able to see nice places with both units. With the TS, you need to add your exchange fee, you have $164, so now you TS is a little more money.

Good way to do the evaluation, set up a spreadsheet and figure the costs of owning vs. hotel.

I totally agree with Vintner. We spread out the original costs too. We paid upfront, therefore should include a portion of the initial cost as a per year cost, plus the mf, and exchange fee. I have had a similar spreadsheet for years just to see how much it really costs. Whenever we rent one of our weeks to family members or friends, we use this number to set the base for rental fee.

The non-objective factor is that with a timeshare, you generally have more SPACE! That is worth a lot to me. We occasionally use a lock-off hotel unit, but really prefer at least a 1-bedroom unit so that we can have 2 rooms. Hubby can watch TV while I read in another room at night.

[BocaBum99]

A couple of things. First of all, I would NOT compare buying a timeshare to staying in a hotel and adjust for the saving in eating in vs. eating out. To create a true apples to apples comparison, you should compare the cost of owning a timeshare vs. staying in a suites hotel with a kitchen. Assumptions about Food can be very tenuous at best. Use Homewood Suites or Marriott Residence Suites equivalent accommodations.

Also, you need to determine an expect timeshare you will own your timeshare and assume a terminal value. I need to go out now, but I'll show you how to do that when I get back and have time. The time you own the timeshare, you should include in the cost of ownership a cost of capital for paying upfront vs. paying as you go. Somewhere between 5-8% is a good factor to use. I would assume ownership of 5 years or less. And, this will force you to estimate what you could get for it when you decide to sell. You will be surprised where this leads you.

It's a very simple way to model ownership vs. non-ownership. And, financially, it's a true apples-to-apples comparison.

After years of following this model, you will see that I learned the optimal time to keep a timeshare is about 1 year. And, with this approach, you will beat any non-ownership alternative.

Jim

[zdxlc9p6]

I''m beginning to question the value of a TS, mainly due to the MFs. We have 11 weeks banked with SFX, but are renting a 2BR, Ocean front at Wyndham Ocean Walk in Daytona this fall for 3 weeks for $2,136. My average MF is for 6 TS is $892, but rental is only $712/week. With the TS deposits, I also have an exchange fee, plus waiting for "availability."

[idahodude]

zdxl,

You have to consider that you may be getting an inexpensive rental due to the current economy. Timeshares are likley a better purchase when the economy is booming (as long as you are careful and do you math up front). Not that one should own timeshares as an investment exclusively.

As far as the spreadsheet goes, it might be nice to not restrict the values that can be placed in the green areas. This would help me to feel depressed as I calculate how long I need to own my timeshare before I recoup my original (developer) costs. At least I didn't spend as much as some.

[zdxlc9p6]

Originally Posted by idahodude

zdxl, You have to consider that you may be getting an inexpensive rental due to the current economy.

We have stayed here before, & it's a nice place; not what I would call inexpesive (#1 in TUG Daytona area reviews). It ranks better than 3 of the 6 we own. I rented from Extra Holidays by Wyndham; not an individual strapped for cash.

[BocaBum99]

Originally Posted by zdxlc9p6

I''m beginning to question the value of a TS, mainly due to the MFs. We have 11 weeks banked with SFX, but are renting a 2BR, Ocean front at Wyndham Ocean Walk in Daytona this fall for 3 weeks for $2,136. My average MF is for 6 TS is $892, but rental is only $712/week. With the TS deposits, I also have an exchange fee, plus waiting for "availability."

The problem is not with TS. The problem is with the timeshare portfolio. I recommend people use a combination of renting, exchanging and using their own timeshares to meet their vacationing needs. Always use the lowest cost approach that meets your specific need.

If rentals meets your needs. Just rent. I can get the same 3 Oceanfront units in the Fall at Ocean Walk for between $275-$550 depending on when I reserve it.

What does owning get you? If you rent and don't own, all you can do it rent. If you own, you can rent or reservation or exchange or get bonus time. When one knows how to build a timeshare portfolio and adjust it over time, there is no reason why owning isn't cheaper than renting. In addition, if you rent or sell timeshares, you can travel for free. Very tough to do that by just renting.