Publication Date: Wednesday, April 7,
Where would you like to be?
Timeshares are an investment in vacations, not property
by Susan Golovin
that you could own the most desirable beach-front property in
Hawaii, or a two-bedroom apartment in a luxury building near
Lincoln Center, or a flat in London a stone's throw from Harrods
-- for far less than each property is worth. The caveat? It's
only for a limited time -- usually a week -- every year.
Menlo Park residents Esther and Richard Sirinsky bought
their first Marriott timeshare, in Palm Springs, nine years ago
when Richard retired. They now own three two-bedroom units. "Each
has a master bedroom, a luxury bath, a living room and dining
room," explained Esther, who her husband describes as a "timeshare
"Basically, with a timeshare, you pay the bulk of your money up front and
from then on in you have inexpensive vacations," she said. "We just
returned from two weeks in Kauai, and the total room cost was $300."
Of course, that low rate did take some clever manipulation on her part. And,
how did they get from Palm Springs to Kauai?
Timeshare owners can earn points when they don't use their unit. This enables
them to trade their unit for anything else in the exchange fund that is worth
the same number of points -- including airline tickets and cruises. Or they can
put part of their unit into the exchange fund to accumulate points. For instance,
for a $75 fee the Sirinskys often lock out one bedroom in order to accumulate
"We request that the points be exchanged for wherever we want to go," said
Sirinsky, pointing out a thick book of worldwide Marriott resorts. "Now
that doesn't mean that we will get our first choice," she added. "This
system works best if you can make your plans 13 months in advance. Since
we own more than one week, if we make timely reservations we usually
Most of the well-known resorts -- Marriott, Four Seasons, Westin, Hilton, Sheraton,
Hyatt -- belong to an exchange company that facilitates the process. Each timeshare
owner pays a yearly fee to belong to an exchange company -- and another fee if
the exchange goes through. The fees are higher for international trades.
You can either specify "floating time," i.e., you tell them where and
approximately when and they search -- or specify "fixed time," a
specific date, such as Christmas. The latter is more expensive.
Further, some plans include three "colors" of time, each indicating
popularity. For instance, ski season in Tahoe falls in a higher color category
than the less popular (thus lower point cost) summer in Miami. Hawaii is "red" hot:
popular all year round.
"This is not a good purchase for someone who is in it purely for exchanging,
because someone has to put their property into the exchange for you to take it
out. And, when you're requesting a much-sought-after locale (such as Hawaii)
you often have to wait," Sirinsky said.
However, if you are interested in doing any exchanging, it is prudent to consider
if your location is popular and if the property is appealing. You can't exchange
a studio for, say, a one bedroom. So it is a good idea to buy the best unit you
can afford. These factors, plus how far ahead of time you can plan all effect
the success of your exchange.
One other way to utilize the system is of great benefit to local fundraisers.
Some owners donate time in their timeshares.
The upfront costs of a timeshare vary according to location, seasonality and
size. Currently, the least expensive Marriott unit is a $7,200 two-bedroom, garden
view (as opposed to ocean view) in Hilton Head, North Carolina, in January. By
contrast, you could shell out $85,000 to usher in New Year's at the Penthouse
(ocean view) in the new Ko-Olina resort in Oahu.
If you want to get good utilization from your unit, buy where you primarily intend
to use it, Sirinsky advised, adding that if you don't use it on a regular basis
there is really no point in owning one. Some people buy enthusiastically and
over time tire of their location or feel like they are slaves to their vacation.
"If you have to finance in order to purchase then it's not worth it because
you have to pay interest," she warned. Also you want to make
sure that you buy from a quality vendor so that the property is
properly maintained, she said.
There is a yearly maintenance fee.
"One of the reasons we chose to buy a timeshare is that it's a very comfortable
vacation. You're not coming back to a hotel room, you have the comforts of home," she
said. The Sirinskys also appreciate the fact that they can provide
their children and their families with inexpensive vacations.
Sirinsky, who is currently enjoying their annual Palm Spring
vacation, also cites yet another advantage of taking the same
and location each year: "We've
made friends away from home who have similar timeshare arrangements."
"The people who pay the most are the ones who buy from the developer," said
one Palo Alto resident who owns timeshares in Venice, London and
New York -- all in prime locations. She tells of the secondary market: auctions
and real estate companies who specialize in timeshare sales, where one can
a much better deal.
Both owners emphasize that timeshares are not an investment in property, but
an amortization of vacation expense. (The Sirinsky property is fully amortized
12 years after purchase.)
Of course your money is tied up in timeshares and is not providing
any income. Also, you cannot expect a profit when you sell. "If you sell through Marriott,
they take a big chunk," Sirinsky said.
"It's an investment in vacations, not in real estate. If purchased when
you're young enough, you'll have many years of enjoyment. And then you can will
it to your children," Sirinsky said.