KBC just converted 1 week deed to Hawaii Trust

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

HI all,

This is my first post. We just attended a sales presentation yesterday and converted our annual 1 week at Kaanapili Beach Club (KBC) to the Hawaiian Trust and bought an additional 6500 points to reach Silver for approximately$18995 and we received free maintenance for 2009 as an extra perk (about a $1500 value).

We are having some buyers remorse in not having a deed to Kaanapali Beach Club anymore. Now, we own 15,000 points (Silver Elite) in the trust and are eligible to transfer our Kauai property into the club annuallyfor an additional 8500 points for an annual $99 transfer fee. So we have about 23,500 points to use. Our typical usage is two weeks per year so we would have some amount of extra points to rent.

This all sounds good... but we are having some remorse in giving up the deed to what we feel is a valuable property based on its neighboring resorts.

One of the factors in deciding to purchase was having the ability to rent unused time to pay maintenance fees and recoup some of the purchase price.

My questions are:

1. Was this a fair price
2. Should we be remorseful in converting to the trust instead of retaining a deed in KBC (we would typically go to this resort most of the time instead of any of the others in the trust)
3. How likely are we to be able to rent a week at KBC or one of the other home resorts in the trust for about $1400 /week

Thanks,
Gary

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

Welcome to TS4Ms!!!

Gary,
1) ~$3/pt is about the going rate for a purchase from DRI
2) After spending $19K you should certainly be having second thoughts
3) Renting is not easy.

All these answers are already posted in this forum and you could learn a lot more by reading every post here.

PLease tell us EXACTLY what your salesman said about renting, sounds like that was a 'selling' point that they got you with. What did they say, exactly?

HI all,
This is my first post. We just attended a sales presentation yesterday and converted our annual 1 week at Kaanapili Beach Club (KBC) to the Hawaiian Trust and bought an additional 6500 points to reach Silver for approximately$18995 and we received free maintenance for 2009 as an extra perk (about a $1500 value).

We are having some buyers remorse in not having a deed to Kaanapali Beach Club anymore. Now, we own 15,000 points (Silver Elite) in the trust and are eligible to transfer our Kauai property into the club annuallyfor an additional 8500 points for an annual $99 transfer fee. So we have about 23,500 points to use. Our typical usage is two weeks per year so we would have some amount of extra points to rent.

This all sounds good... but we are having some remorse in giving up the deed to what we feel is a valuable property based on its neighboring resorts.

One of the factors in deciding to purchase was having the ability to rent unused time to pay maintenance fees and recoup some of the purchase price.

My questions are:

1. Was this a fair price
2. Should we be remorseful in converting to the trust instead of retaining a deed in KBC (we would typically go to this resort most of the time instead of any of the others in the trust)
3. How likely are we to be able to rent a week at KBC or one of the other home resorts in the trust for about $1400 /week

Thanks, Gary

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

Thanks Spence,

The salesman did add the disclaimer that we shouldn't buy as an investment -but a property attorney had "coached" him on a way to make money with timeshare. The attorney had already purchased approximately 200K in points and was still buying more. My salesman had purchased about 130K in points and was still buying more. Their goal was to have an ROI in about 5 to 6 years. When I do the math at $1400/week in rent, it doesn't add up unless I can get renters during the last 59 days so I can only use 50% of the points. The selling point was that the current price is cheap based on the future price of Maui ocean front real estate. If we buy now, we can expect good profit potential as room rates continue to increase. Also, by playing the game with getting rents in the 59 days before arrival, we can have double time available for rental.

We won't be able to use 15000 in points at this stage in our life so renting makes sense if there is a viable market. We have about 20 years until retirement.

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

Did he point out the clause in THE Club rules that specifically allows this?

In addition to the renting is easy lies, the availability of anything 'rentable' is close to nil in the 59 day window.

Thanks Spence,

The salesman did add the disclaimer that we shouldn't buy as an investment -but a property attorney had "coached" him on a way to make money with timeshare. The attorney had already purchased approximately 200K in points and was still buying more. My salesman had purchased about 130K in points and was still buying more. Their goal was to have an ROI in about 5 to 6 years. When I do the math at $1400/week in rent, it doesn't add up unless I can get renters during the last 59 days so I can only use 50% of the points. The selling point was that the current price is cheap based on the future price of Maui ocean front real estate. If we buy now, we can expect good profit potential as room rates continue to increase. Also, by playing the game with getting rents in the 59 days before arrival, we can have double time available for rental.

We won't be able to use 15000 in points at this stage in our life so renting makes sense if there is a viable market. We have about 20 years until retirement.

[konaemi Contributor - Bronze Find all posts View Profile Close konaemi]

In February,we converted an every other year scenic view at Poipu Point for 4500 club points and purchased 4000 points for a total of 8500 points.We also own a one BR Kanaapali Beach Deluxe oceanview(mostly oceanfront units) which we decided not to convert and retain the deed.

The main reason we did not turn in our week at KBC is that we will need more points to reserve a holiday week. The conversion would give us 11500 points but reserving a holiday week with the club in our type unit will require 16000 points. This limitation will certainly impact the resale value.

We were attracted to the club because of the ability to reserve partial weeks, the upgrade using less points and 50% discount on points for last minute travel since we plan to move to Hawaii in a few years.Also, we have some weeks that do not trade well and want to increase the potential with Club Select.Our Poipu Point was a garden view and joining the club gives us the ability to upgrade to a better view when we stay there. Our KBC maintenance was higher if we converted the deed to the Club. ($1380 vs $960)

Unfortunately, it is difficult to fully understand how a timeshare system works until you own it and try to work with it.Here are some things that did meet our expectations and things that did not.
Met Expectation
-Prices have increased since we purchased in February.
-Winter weeks do have availability if reserve early in the Home Club period
-Immediate upgrade if unit is available
-Seen availability in discounted club points period (59 days prior)
-Strong trader with II
-Depositing to Club Select was quite easy
-Good selection in Club Select for those extra vacations

Did Not Meet Expectation
-KBC points are automatically deposited into club points each January. Therefore, if we wanted to reserve Christmas week, it will need more points. The only way around this is reserve an oceanview week for 11500 and upgrade to a deluxe oceanview for $99 if available.

You need to consider if converting the deed to the trust will be an advantage or disadvantage to you. We were also concern about the number of weeks at KBC that are in the traditional deeded week vs the number of weeks in the club because it may impact our ability to reserve the week we want. No one has been able to give us an answer. They throw around the number 50% but we do not believe it is accurate.

KBC does not rent well. I have seen rentals for under $800. I think because other Sunterra club members who own in less demand places are reserving Hawaii and renting them out. Don't expect to make the big bucks on this.

The club works for us because of the reasons we quoted that attracted us into joining. We cannot really find a good reason to turn in a deed other than if it is a scenic view since that has low resale value anyway.If you decide the club works for you, you can cancel and request to buy less points.

Hope this helps in your decision.

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

Thanks for your input Konaemi, everyone's situation is a little different so your view is important.

Re: Club Select, DRI is silly to take what you describe as "some weeks that do not trade well" as this may result in noone using that week and thus increases fees and lack of other availability. You probably have it in writing as terms of your conversion that they'll take them but if you don't they may/should not accept poor weeks.

As I stated before, renting is not easy, there are so many people out there that don't use their timeshares and all they want in the world is to get their annual MF back. It's hard to compete with someone who is willing to lose money.

[konaemi Contributor - Bronze Find all posts View Profile Close konaemi]

Hello Spense,

DRI is losing value with the Club Select program since they are trading Club points for them. Currently they are able to absorb it probably because of excess inventory they may have at their resorts from either owners non use or unsold. We do have the program in writing but I'm sure it can be changed at their discretion as with all programs. We had to register all our currently owned timeshares when we joined the club. So future purchased will not be eligible. They will only take RCI Gold and Silver crown, II Premier and Select resorts so there are limitations.

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

In addition to the renting is easy lies, the availability of anything 'rentable' is close to nil in the 59 day window.

Another thing to consider is that, while DRI shows Hawaii availability right now in the 59 day window, how many people are going to take a spur of the moment trip to Hawaii with the current price of airfare? Some yes. But probably not enough to plan on rentals being a major source on income.

I've had some luck renting units booked within the 59 day rental but they've been drive to destinations.

Just so you can compare, when we converted in January, we purchased 6000 pts to reach Silver for $14,000 and were given 1 year maintenance, 2 airline tickets and 6000 one time use points available in either 2008 or 09.

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

Hello Spense,

DRI is losing value with the Club Select program since they are trading Club points for them. Currently they are able to absorb it probably because of excess inventory they may have at their resorts from either owners non use or unsold. We do have the program in writing but I'm sure it can be changed at their discretion as with all programs. We had to register all our currently owned timeshares when we joined the club. So future purchased will not be eligible. They will only take RCI Gold and Silver crown, II Premier and Select resorts so there are limitations.

No, they're not 'losing value' I believe that as with all of their options programs, this all gives DRI the ticket to 'Monetize' inventory that belongs to members.

While you state some limitations, there should/could be more. Except to convince someone to buy more DRI Points WHY on earth should they take a "mud week" no matter how the resort was rated.

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

Thanks all for your comments and input. The sales person pointed out in the Club rules that they don't disallow renting. The Club provides no mechanism to rent our unit. We would need to do it on our own using ebay, redweek, my timeshare resort or VRBO.

I'm not getting the warm and fuzzies that renting may be a viable option. It sounds like there may be a higher risk to reward factor.

We still have 6 days to cancel. If we cancel, do we get our deeded property back and the whole transaction is voided in it's entirety?

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

Right now I believe there is significant availability in Hawai'i due to increases in air fares. I'm not at all surprised that there is availability in the 59-day window.

Nor am I surprised that people are dumping Hawai'i rentals into the market, accepting essentially whatever they can get for their units.

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

The sales person pointed out in the Club rules that they don't disallow renting.

Read the rules again, the sales person is interpreting them differently from the corporate office to help his sales.

We still have 6 days to cancel. If we cancel, do we get our deeded property back and the whole transaction is voided in it's entirety?

That's what should happen, they shouldn't initiate the transfer until the rescission period has passed.

[konaemi Contributor - Bronze Find all posts View Profile Close konaemi]

As far as I know and have seen in the rules, they do allow renting. I agree this is not a true indicator of availability in the 59 day window for Hawaii. However, we have owned our KBC for 4 years and we rented it out the first year because we could not use it. It only rented for $1200 while our Marriott Maui rented for $2100. The rental prices have increased for Marriott while I watched the prices decline for KBC. There were loads of them on Redweek and 2 years ago, I wrote to the owner member on the board and requested that some change be made to restrict rental of properties that owners did not own or give them a smaller window to reserve. Not much the board could do especially since it is still developer controlled. Check eBay and you can see loads of rentals for KBC at a very low price.

When I said I give them my lousy weeks for Club Select, they are still II Premier resorts, just not prime season weeks. With DRI, I am able to exchange for Marriott slightly off season while my weeks that went into Club Select would never pull them. It is an enticement to buy from DRI and I hope this benefit will be grandfathered should rules change.

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

As far as I know and have seen in the rules, they do allow renting.

Read the rules again, the sales person is interpreting them differently from the corporate office to help his sales. Key is definitions, to DRI Periodically means occasionally and commercial means a profit of any kind.

Not much the board could do especially since it is still developer controlled.

And with the Trust business model, the developer will stay in control forever.

When I said I give them my lousy weeks for Club Select, they are still II Premier resorts, just not prime season weeks. With DRI, I am able to exchange for Marriott slightly off season while my weeks that went into Club Select would never pull them. It is an enticement to buy from DRI and I hope this benefit will be grandfathered should rules change.

There should/could be more restrictions on deposits. Except to convince someone to buy more DRI Points WHY on earth should they take a "mud week" no matter how the resort was rated.