 Playing
the name game with time shares
|
 Dear
Steve,
While researching buying a second home, I came across Web
sites for "destination clubs." At first, they seem like
time shares, but the "club" says they're completely different.
Most prices are out of reach -- up to $300,000 -- but I found a
new club offering memberships from $4,200 to $15,000 a year. They
say if you decide to leave the club, you'll get 80 percent of whatever
the current membership sells for, thus gaining equity. What do you
think of these clubs?
-- Christine
 Dear
Christine,
To twist a phrase from Shakespeare: Would not a time share by any
other name:
A) "... smell as sweet?"
B) "... have as many thorns?"
C) "... be the same thing?"
A and B are subjective calls. C is an absolute.
While the rules and regulations vary, a destination
club is essentially the same thing as a time share, which is the
same thing as a residence club, a vacation club or a "fractional"
ownership club. They have many names, but you're still buying into
a program that qualifies you to use a hotel room, resort, condo,
home or other domicile for a set period of time every year, ranging
generally from one week to several weeks.
The names started changing after time shares got a
bad rap for the hard-sell tactics telemarketers and other sellers
employed to hawk them to sometimes unwitting buyers. By no means
are time shares inherently bad deals, mind you. Several highly regarded
resort-hotel chains have gotten into the time-share vacation "club"
business and do a reputable job of marketing and selling. Many time-share
owners buy several around the country and count the days until they
get to use their time. But other owners -- particularly those who
are having a tough time unloading theirs -- rue the day they plunked
down their money.
Time-share buyers need to be especially prudent about
what they're getting for their money, what their units' potential
resale values are, whether they can easily trade their time in one
location for time at another location, and exactly what fees they
are expected to pay. I'd have a good accountant or real estate lawyer
crunch the numbers and examine the fine print before you take the
plunge.
As for the "80-percent guarantee," generally
it's the more expensive time shares that offer the 80-percent buybacks,
so with the low price range you're looking at, that would seem to
be a bargain. But be careful.
Unlike other investments in real estate, most new
time shares depreciate quickly and usually settle in value at only
50 percent to 60 percent of the initial investment.
That's why it's probably better to buy into a resale
time share. Let somebody take that initial loss. (See my previous
Bankrate column, "Selling
your time share," for more information.)
You should also determine what the cost per week at
these locales will amount to for you, whether that's less than what
you'd pay for a similar "dream vacation" at a conventional
hotel or condo resort. and whether the use of these upscale home-like
units really makes up for that privilege, at least in your book.
Good luck.
|
