Are Vacation Homes A Big Waste of Money?

Posted on Posted in general

Rent is a waste of money, or is it? That's what we've been conditioned to believe for the last few generations. Even when the real estate market is more stable and prices are steadily increasing, buying a vacation home may not be the best decision for your wallet.

Should you buy a vacation home that you'll only use a few months a year? Let's take a look at a simplified example to highlight what it costs to own a vacation home. You purchase a vacation home, and the monthly costs including mortgage payment, real estate taxes, insurance, HOA, or other maintenance and utilities are $ 3,000 a month. You use the home for three months a year, although you're paying for 12. So, you're paying $ 3,000 a month for 12 months or $ 36,000 a year and using the home for three months at an effective cost of $ 12,000 per month ( $ 36,000 / 3). You could seasonally rent a similar home in the same area for $ 4,000 per month or $ 12,000 for the season. You'd be paying $ 24,000 extra a year owning the home versus renting it ($ 36,000- $ 12,000). Over five years, you would have spent $ 120,000 more to own the home ($ 24,000 x 5 years). Yes, the home might appreciate, but you would have to subtract buying and selling closing costs and a potential real estate commission from any appreciation.

Let's say you purchased a home for $ 400,000 plus $ 8,000 in closing costs for a total initial investment of $ 408,000. Let's assume it increased in value 5% a year (higher than normal market conditions). It would be worth about $ 510,500 at the end of the fifth year. If you sold the home and subtracted a 6% commission and $ 8,000 in selling closing costs you would net about $ 471,900. Your approximate profit would be $ 63,900, but remember you would have spent an extra $ 120,000 to own instead of to rent the home for those five years which would actually mean you spent $ 56,100 more overall (- $ 120,000 + $ 63,900).

Keep in mind that the home might have needed repairs and renovation work, which would have added to your cost as a vacation homeowner. You would, however, pay off some of your mortgage balance which would be a benefit of owning versus renting. But, know that during the first several years of a 30-year mortgage, typically 75% – 80% of each mortgage payment is interest and not principal repayment. You may also be able to deduct the mortgage interest on this second home, but the bottom line is for this vacation home, the overall financial costs would be greater than the benefits.

Every situation is different, but now you have the tools to conduct your own financial analysis. Sometimes it makes financial sense for you to buy versus rent a vacation home, and sometimes there are non-financial reasons to …

How To Be Successful Selling Timeshare and Vacation Owner – Get Your Share of the Big Bucks

Posted on Posted in general

Timeshare and vacation ownership. what are they about? What is it like to have a career in this industry? What does it take to make a six-figure income and to stay employed in the industry?

I am not writing these articles with the intention of hiring anyone since I’m not a sales recruiter. I do have an MBA in real estate development and management and my pet peeve in business is employee turnover. I just don’t like it. Turnover in the vacation ownership/timeshare industry is horrible.

My MBA side of my brain tells me that turnover is expensive and not exciting or positive for anyone involved. You’ve also probably heard that dissatisfied customers or employees can do more damage to the business in the long run than the happy customers and employees can do to improve your bottom line.

If something frustrates you or gets you mad, the best thing you can do, instead of anger management or psychotherapy, is to take action. So here I am.

Most salespeople hired to sell vacation ownership or timeshare need a real estate or timeshare sales license. If you have the time and the money, the more comprehensive full real estate license will allow you more career options and I highly recommend more education in any field if you want to be successful and stay in the industry.

What happens when a person gets a job selling timeshare or vacation ownership. At this time in the industry, potential guests or prospects are marketed and invited to a sales presentation. The majority of these guest invitations include an incentive or gift for the participant’s time. People love gifts, and incentives, and a good deal. We’re greedy, bargain hunters. The industry knows this and depends on us to fill the sales centers for presentations.

As a salesperson, the presentations you will make will often range from 90 minutes to 3 hours, depending on the company you work for. With timeshare or vacation ownership sales the unique factor is that the guest or participant you will try to sell has come to see your resort and product with intentions of getting a gift, getting out fast, and most have no intention of buying anything.

Selling people who have not come to buy anything and often who have an agreement not to buy no matter what you have, no matter how good it sounds, and no matter how affordable. This is such a different form of selling than working in a retail store where people have come in specifically to buy something and with intentions of taking it home with them.

The employee turnover in the timeshare and vacation ownership sales industry is huge. It’s horrible. Employers spend an amazing amount of money to find salespeople and salespeople get in the business and are shocked by the rejection and how hard it can be to sell people their vacations and they run away. A successful timeshare salesperson must be perceived by the guest as authentic and sincere. …