Several years ago, I was on vacation in Florida. My trip took me to the theme parks in Orlando. I visited Disney World, Universal Studios and Epcot Center as part of a long planned relaxation vacation. This was an adult trip taken with my late girlfriend. While in Orlando, we planned to take on as many sites as we could and even decided to look at some real estate while we were there.
I had been toying around about getting some investment property in the area for quite some time, but I hadn’t done much research on the area. I had been involved in investment homes for a few years and some success in both reselling them for a profit and using them as rental income. I was about to have my first encounter with a type of salesmen that I was completely unfamiliar with: the timeshare salesman. Of course, he lured us in with the offer of free tickets to theme parks and a free vacation weekend to Las Vegas, but we were already talking about buying some property, so we felt that we couldn’t go wrong.
The salesman took us to see a model for the timeshare that was immaculate. I did know enough not to take the model as my tour and immediately told them that I wanted to see the actual property up for sale. They took me back to an office where they gave the appearance of diligently looking for the actual unit that I would occupy. Then they took me to a unit that was unfinished with a spectacular view and set up.
I then started talking numbers. He promptly took me to the “financing expert” who seemed very interested in getting young professionals like myself in the community as we were the exact demographic that they were looking for. They made the numbers easily affordable, but being an experienced real estate buyer, I knew better than to immediately jump onto the horse. We were told that they were attempting to reach sales goals and subsequently were authorized to slash the prices even further and provide us with even more free incentives. I fell for the tactics and that’s when the real horror story began.
Within one year of making the purchase, I received a phone call from a couple I met that purchased into the timeshare about 2 years earlier. I was warned to watch the maintenance fees. I signed a deal that included fees of $250 per year. About two weeks after the phone call, I got a notification in the mail that due to rising costs, the fee was going up to $500 per year. After thinking about this, I figured out that since I only purchased one week per year, they were collecting annual maintenance fees for 52 weeks. That comes to $26,000 per year on maintenance costs. I owned four homes at the time and only spent half of that on maintenance costs per year. That was when I started really researching.
I paid $25,000 for one week at this location. Assuming everyone paid that amount. The seller makes $1.3 million on a condo that would sell for no more than $500,000 outright. When I started pricing other comparable timeshares in the area, I found that they were selling for $4,000 – $8,000 less than the price that I paid and some were actually quite nicer. Another group I contacted allowed you to spend your week in different locations around the world. I was also sold on the fact that if you didn’t use your week, the company would find you a renter for that one week. I used them for three straight years, and for one week in July for three straight years in Orlando, they weren’t able to locate a renter. Also, each year the maintenance and taxes went up on the location. What started out as $250 annually in the beginning was over $800 just six years later.
After six years of dealing with the timeshare (that incidentally didn’t have the view that I was sold as shortly after I purchased it, they began construction on a new building directly adjacent to mine and now had a great view of the new building and parking deck), I began to try to sell it. Anyone who has ever tried to sell a timeshare knows that it is nothing like selling a house. I got lucky. An elderly couple that absolutely loved the place and the location was interested in getting my week and thus decided to buy it. Believe it or not, I’m not opposed to buying timeshares. I would simply warn to not fall for the high pressure sales tactics and to thoroughly do your research before entering the deal.