Maintenance Fees

[bournehall Junior Member Find all posts View Profile Close bournehall]

List,
I am a newbie to the TS concept. Went to a Bluegreen presentation this past weekend. It seemed to be a scam with the price they were charging. I do have a question on MF's. They said at the resort that when the development is 51% completed the owners take control of the admin., therefore the owners are in charge of the MF's. I find it very difficult to believe that one small condo e.g. takes $500 per year per week to maintain (to include the resort). 50 weeks time $500 is $25,000 per unit per year for maintenance. Why on earth would owners OK this amount of MF's or is the company simply pocketing a ton of cash?

[Dave M Senior Member Find all posts View Profile Close Dave M]

That's about typical as far as MFs go.

Yes, $25,000 for upkeep on what amounts to a single condo seems like a lot. However, the expenses are not the same as for a condo that you live in all year long.

I live in a condo as my primary residence. I pay $547 per month to the homeowner's association for landscaping maintenance, maintenance of the property (including amenities such as tennis courts and swim pool), a reserve fund to replace roofs, decks, sidewalks, building siding, parking lot pavement and a host of other "common area" items that need replacing from time to time.

In addition, I have my own property tax, owners' insurance, heat, electricity, water, phone, cable, etc. that I pay for myself. That adds about $800 per month to the costs. Property tax alone is about $350 per month of that. I haven't added in my costs for furniture and supplies.

Thus, before I consider the additional costs that I would pay if my condo were a timeshare, I'm up to about $1,350 per month or $16,200 per year!

Now for the timeshare resort, you have to add in the costs for a reservations staff (for a floating-weeks resort), accounting, billing, housekeeping, the cost to maintain and repair the inside of each unit, the cost to replace furniture, carpeting, drapes and other items inside each unit, a newsletter (for some resorts), the profit for the outside management company that will handle much of this stuff, check-in staff, an annual audit, legal costs, tax returns and a host of other expenses that are associated with a residential property that hosts a transient population.

Thus, the surprise (for me) isn't that the total costs are an extravagant $25,000 per unit. The surprise is how well the developer (and eventually the HOA) is able to pay for everything and still keep fees as reasonable as they seem to.

Still, what's reasonable for one resort may be at a much different plateau for another. There are numerous resorts where the fees per week are in the $300 range. There are also quite a few where fees per week exceed $1,000. The differences can be attributed to different amenities, different levels of luxury, difference in costs in various geographic areas and many other reasons, including occasionally, yes, mismanagement.

[Jya-Ning Silver Contributor Find all posts View Profile Close Jya-Ning]

If you look at a normal condo 's fee against this, look high. But if you look closely then you will realize this is very reasonable even if you are running the show.

A pool open from 10: am to 10m probably need 2 to 4 lifeguards to take turn. When you check out, the clean lady come up and pull all the stuff out and clean the room, it probably will cost $50. Then you add one or 2 supervisor there. There will be $100 there

The norm condo does not work like hotel, the front desk does not have people there to cut you a key, check-in and check you out. Also it will have no activities unless the condo's HOA volunteer. There will be another $100 here

The norm condo's condo fee does not include interior expense. Add sofa, bed, Window dressing, paint, TV, bathroom, tower, soap it will be another $200 here.

A norm condo does not pay each units' own electric bill, water bill, gas bill, it is $50 there.

A norm condo that usually charge about $200 per month in condo fee, so it is another $50 per week here.

Add all these, you get a $500 condo cost per week, if you just try to maintain it at low profile.

Jya-Ning

[aliikai2 Super Moderator Find all posts View Profile Close aliikai2]

You are not looking at the whole picture

That $500 a week includes new furnishings, linens, property taxes, front desk staff, cleaning crew, lawn/garden staff, pool maintenance, etc.
Then and on the electricity, water, sewer, phone service, a staff to handle reservations, it all adds up.
Try to rent a hotel suite that has a kitchen and sleeps 4 for a week for $500!!!

It sounds like you need to spend some time reading and learning about how a timeshare may or may not work for you, before you buy anything.

For us it makes great sense. We spend our 6-8 weeks a year in units we own, at various Ocean Front resorts and enjoy it immensely.
Does it cost us more that a Motel 6 inland somewhere??? Of course it does, but we are in very nice 2 bedroom suites on the ocean, with full kitchens and nice surroundings.
My folks used to RV, and to save money they would park in Safeway lots at night. This just isn't my idea of a vacation.....

fwiw, Greg

[BocaBum99 Super Moderator Find all posts View Profile Close BocaBum99]

I've done the actual cost analysis of the total maintenance costs of a Condo Hotel unit I considered as an investment property. I was amazed at how much it cost. Housekeeping and furnishings were huge.

Dave M did a great job explaining it.

[bournehall Junior Member Find all posts View Profile Close bournehall]

I see more clearly now. I never thought of ALL the expenses. Thanks for your reply.

That's about typical as far as MFs go.

Yes, $25,000 for upkeep on what amounts to a single condo seems like a lot. However, the expenses are not the same as for a condo that you live in all year long.

I live in a condo as my primary residence. I pay $547 per month to the homeowner's association for landscaping maintenance, maintenance of the property (including amenities such as tennis courts and swim pool), a reserve fund to replace roofs, decks, sidewalks, building siding, parking lot pavement and a host of other "common area" items that need replacing from time to time.

In addition, I have my own property tax, owners' insurance, heat, electricity, water, phone, cable, etc. that I pay for myself. That adds about $800 per month to the costs. Property tax alone is about $350 per month of that. I haven't added in my costs for furniture and supplies.

Thus, before I consider the additional costs that I would pay if my condo were a timeshare, I'm up to about $1,350 per month or $16,200 per year!

Now for the timeshare resort, you have to add in the costs for a reservations staff (for a floating-weeks resort), accounting, billing, housekeeping, the cost to maintain and repair the inside of each unit, the cost to replace furniture, carpeting, drapes and other items inside each unit, a newsletter (for some resorts), the profit for the outside management company that will handle much of this stuff, check-in staff, an annual audit, legal costs, tax returns and a host of other expenses that are associated with a residential property that hosts a transient population.

Thus, the surprise (for me) isn't that the total costs are an extravagant $25,000 per unit. The surprise is how well the developer (and eventually the HOA) is able to pay for everything and still keep fees as reasonable as they seem to.

Still, what's reasonable for one resort may be at a much different plateau for another. There are numerous resorts where the fees per week are in the $300 range. There are also quite a few where fees per week exceed $1,000. The differences can be attributed to different amenities, different levels of luxury, difference in costs in various geographic areas and many other reasons, including occasionally, yes, mismanagement.

[timeos2 Senior Member Find all posts View Profile Close timeos2]

It's the purchase cost thats lost

Where the scam portion of timeshare ownership is far more likely is in the purchase price not the on going fees. As shown here it is easy to track where the money goes each year and the results (or lack of them) if they are mismanaged or under funded (poor maintenance, no upgrades and dissatisfied owners/guests if too low). On the other side the purchase cost is lost money. Buying a timeshare for $1 or $25,000 does nothing to make the overall experience better. In fact the higher the original expense the more you begrudge the necessary on going fees that will actually make your resort better. That purchase money paid to the developer only covers the original cost of construction and their profit. The resort is already "using up" those investments from the day the doors open and needs cash flow to sustain itself going forward.

Now no one should think that a developer doesn't deserve a fair profit from the major risk involved in building a resort. But the model that has evolved that requires 50% or more of the original purchase cost to go to marketing and other lost expenses means that few if any timeshares make sense to buy at retail. But it also opens the door to the knowledgeable buyer who swoops in after the depreciation kicks in to pay pennies on the retail dollar and then the true cost - the annual fees which are the same for both types of buyer. The timeshare concept is a great one especially if you buy a good resort or resort group at resale pricing.

[Theo Senior Member Find all posts View Profile Close Theo]

I am not disputing the statement, but I am curious to know how/where you have come to obtain and cite "50% or more of the original purchase cost to marketing and other lost expenses".

You might very well be correct and I am not (and do not claim to be) in any position to dispute the statement. I would just like to know where the claim originates and/or what backs it up.......

[T. R. Oglodyte Moderator Find all posts View Profile Close T. R. Oglodyte]

I am not disputing the statement, but I am curious to know how/where you have come to obtain and cite "50% or more of the original purchase cost to marketing and other lost expenses".

You might very well be correct and I am not (and do not claim to be) in any position to dispute the statement. I would just like to know where the claim originates and/or what backs it up.......

That number has been pulled from financial reports of some publicly traded companies where timeshare sales info can be extracted from the financial. You will probably also get a similar number if you take a unit at a typical timeshare project, project what the developers gross revenue would be for selling the units, then compare that with what the unit would sell for if it were whole ownership.

For example, consider a developer building ocean front condos in Hawaii that would sell for $1,000,000 each average in whole ownership. If a developer markets that as timeshare, the developer will sell 50 slices of each condo for about $40,000 each, grossing about twice as much as if the project proceeded as whole ownership. The end returns on the project aren't that different - if they returns were significantly greater in TS developers would build more timeshares instead of whole ownerships. So much of the difference goes to marketing and lost costs.

There are also some timeshare projects that have eschewed the traditional marketing practices, and their sales prices have been about one-third to one-half of developer pricing for similar units in the area.

Obviously a developer who can sell timeshares for less cost is going to find the market much more profitable. Conversely, a developer who looks at the timeshare market but doesn't know how to set up and run a TS marketing organization will take a beating.

[BocaBum99 Super Moderator Find all posts View Profile Close BocaBum99]

I am not disputing the statement, but I am curious to know how/where you have come to obtain and cite "50% or more of the original purchase cost to marketing and other lost expenses".

You might very well be correct and I am not (and do not claim to be) in any position to dispute the statement. I would just like to know where the claim originates and/or what backs it up.......

It is an industry wide and well recognized number. Cost of Sales and Marketing (and some include overall G&A) for resort developers is roughly 50% of sales. All you need to do is look at the income statements for publically traded timeshare companies.

A more normal percentage cost of sales and marketing is 15% of well established companies. It's a lot higher for startups who need to establish a brand and have relative low sales volume.

[JudyS Senior Member Find all posts View Profile Close JudyS]

.... It seemed to be a scam with the price they were charging..... I find it very difficult to believe that one small condo e.g. takes $500 per year per week to maintain .....

I want to second the comment by John (timeos2) that the scam is in the original selling price, not the ongoing fees for maintenance. As others here have noted, a maintenance cost of $500 annual per week owned is reasonable when one considers the various expenses of running a resort. On the other hand, the average cost of buying a week of timeshare purchased "new" (from the developer) is around $15,000. $15,000 for one week times 50 weeks is $750,000 per timeshare condo. When you consider that a typical timeshare resort costs maybe $200,000 (and maybe less) per condo to build, it's pretty clearly a rip-off.

I hear good things about Bluegreen, but I'd strongly advise buying resale. BocaBum is a Bluegreen expert and should have Bluegreen resale packages for sale. I'd suggest buying from him.

[tonyg Goomba & Super Moderator Find all posts View Profile Close tonyg]

One of the keys to selecting a timeshare to buy is due diligence on the management of the company. There are still a few resorts out there with low fees and good upkeep- with no record of special assessments. I'm not sure what the current average fee is but it was around $ 400 just a few years ago. Now anything under $ 500 looks attractive.

[brucecz Moderator Find all posts View Profile Close brucecz]

It is easy to verify with common sense as you check out comparables units prices on resales and the same bought through a resorts sales staff.

If you compare the price charged if bought through a resort engaged in active sales and compare it to a resale for same unit type for the same type of usage. You will see that the the resale in most cases are 50% to 90% less in price.

A fair example is that the OP may have been quoted a finial price from Bluegreen of about $1.50 per Bluegreen Point, but could get similar Bluegreen Points from Boca Bum for about 2/3 less in price at about 50 cents per Bluegreen Point.

Bruce

In regards to Maintenance fees, for 2006 we paid out over $14,000 in maintenance fees without including houskeeping fees, etc.

I am not disputing the statement, but I am curious to know how/where you have come to obtain and cite "50% or more of the original purchase cost to marketing and other lost expenses".

You might very well be correct and I am not (and do not claim to be) in any position to dispute the statement. I would just like to know where the claim originates and/or what backs it up.......

[1950bing Senior Member Find all posts View Profile Close 1950bing]

Be sure not to overlook the cost factor of people who do not pay their fair share. Guess who pays for the ones that don't pay mfs ? You do ! Also, the board can increase your amount just because they can. You are all ready fueling the big money machine and what are you going to do if you don't like the increase ? You are going to pay anyway. I have always felt that all owners should vote on issues concerning increasing costs. I don't trust a board to look out for me and my pocketbook. Owners do not have a voice.

[sideshowbob72 Junior Member Find all posts View Profile Close sideshowbob72]

Appropriate Maintenance Fees

As one who has yet to buy a timeshare, the one thing that really makes me uneasy is the fact that I am agreeing to pay maintenance fees for as long as I own it. The MF is known at the time of purchase, but there is no guarantee it will remain at that amount in the future. There is no cap on fee increases and there is always the possiblity of a special assessment.

I understand that maintenance costs can vary widely depending on where the resort; is there a beachfront, golf course or other high maintenance amenities. This is especially true in Hawaii, an area we are very interested in.

How do you determine if the MF of a resort is appropriate?

Are there any resort chains that are especially good, or bad, in this category?

Thanks in advance,

Bob