The Many Faces of Vacation Property
As previously mentioned, a timeshare property exists to cater to any pocket book. Foremost, the features you choose will determine what type of timeshare property or vacation property you will want to buy. The next determining factoring guiding your choice will the budget you devise to buy timeshare property. Once you begin evaluating your needs and desires you will realize there is a wide array of types of timeshare property. I will try to arrange these in a manner of most conventional to newly emerging.
Traditional Types of Timeshare Property
Timeshares have existed in the resort and vacation industry for a long time, and most people are vaguely familiar with the term. To those who are not abreast of the details on timeshare property, the assumption of owning a timeshare is the idea that you own the right to stay at a resort one week out of the year. While this assumption is somewhat true, when considering some of the other timeshare property types, it may or may not be. For example, of the more traditional types of timeshares, which are, Fixed week and floating week are essentially that. If you own a fixed week or floating week timeshare property, you are essentially owner of one weeks usage at a specific resort. However, the difference is always in the details of each type. With a Fixed Week property, you do not have to make reservation for use because you are locked into a specific week, whereas a Floating week you must reserve the week you intend to use each year.
There are advantages to both floating week and fixed week timeshares and the benefit that it will pose to you as the owner, will depend primarily on your requirements.
Some people that buy timeshare property choose a floating week because they do not have a set vacation schedule. If you know that you will get time off work for vacation during the second quarter, but your week of vacation is dependant upon uncontrollable factors in the work place, you may benefit from a floating week. Simply put, A floating week timeshare allows for more flexibility in scheduling the use of your timeshare property. And like a floating week, there are benefits that are specific to a fixed week as well. If you enjoy a resort and destination enough to return each year, and have no issues scheduling your use for the same week each year, a fixed week is a good option to have available.
When describing types of timeshare, a fixed week or floating week timeshare property types is about as conventional as you can get. I mention these two types first primarily because they are simple to explain, easy to understand and usually what most people think of when they hear the word timeshare. Though the overall descriptions are simple with floating week and fixed week, there is a world of details that pertain not only to each property type, but also relevant to the resort offering the property.
Other Types of Timeshares
Depending on your needs, you may also want to research some of the options beyond your typical fixed week or floating week type of timeshare property. Some of the other alternatives within the timeshare industry were developed to suit the needs of people buying timeshare property who may need more flexibility in scheduling or location. Beyond the traditional fixed or floating week timeshare, options such as right to use, vacation clubs and points systems are available to someone looking to buy timeshare property. All of these options offer a greater range of flexibility for timeshare owners.
Some people may not have the ability to utilize a full week for a vacation each year; some people like to visit different destinations instead of staying at the same resort. Also, the ability to upgrade accommodations or exchange a timeshare property is appealing to some owners who need flexible options in their use.
Right To Use
If you want to buy timeshare property in another country, such as Mexico for example, you will not always have an option to buy a traditional fixed week or floating week property. In some countries, you simply cannot own property in the literal sense of the word, however, you can own a deed to use the property. A Right to Use is a type of vacation destination that is similar to a timeshare. You have the right to use the property at a resort; however, your right to use the property will end after a specified amount of time. Though this doesn’t sound like a great option, there are benefits to a right to use option that you may not encounter with a traditional timeshare property. For example, A right to use option will allow you to “accelerate use”. If you decide to take two or more weeks of vacation at the same time or use multiple weeks within the same year, you will generally have the option to. A right to use option can be viewed as a lease. If you have twenty years on a right to use option, you can use one week a year for twenty years, or two weeks a year for ten years, etc.
Vacation Club
Another option that has similar characteristics to the right to use option is a Vacation Club. If you want to buy timeshare property, but don’t envision yourself visiting the same destination each year, then consider purchasing a membership for a Vacation club. This option offers a wide degree of flexibility to those wanting to buy timeshare property with the desire to utilize multiple destinations. Some vacation clubs offer lifetime memberships for a one time purchase price, while others are deeded or leased for a specified number of years. The benefits of a vacation club include the ability to use multiple resorts in multiple destinations, straightforwardness in making reservations at the desired resort and the ability to exchange your reserved week for a resort outside of the membership.
Essentially, being a vacation club member gives you the right to use the facilities of any resort within that specific membership. When you desire to use your week, you would select the destination and resort from a list of which you have the right to use. Some vacation clubs may have a larger or smaller inventory of resort destinations of which you could use, so it is imperative to review what will be available to you before you decide to purchase. If you are a member of an exchange program, which is an option we will cover later in this guide, you could use the ability to reserve a week at a popular destination and exchange it for a timeshare property outside of the membership’s inventory. Though this option will provide even greater flexibility to being a club member, the steps involved require a type of timeshare property transaction that should be handled by a timeshare specialist.
Vacation clubs are also very popular because of the varying level of pricing. Memberships cater to a wide range of income levels and can be an affordable option for many people who may not choose to purchase a fixed week or floating week timeshare property.
Points Programs
Points programs are another option to utilizing timeshare or vacation property. The system of using a points program provides another level of flexibility to vacationing. The general idea of a points system is comparable to a rewards program. Points can be used to obtain specific vacationing needs and can vary drastically in terms of value and use between one resort to the next. Points can be thought of as a type of vacation currency that can be utilized within the participating resorts and affiliations. Some points systems reach as far as the transportation industry and can be used for car rentals and air fare.
If you buy into a points program, instead of owning or being deeded a specific timeshare property at a specific resort, you are the owner of a specific number of points which can be used in a manner of your own discretion. Once you use up your points, they are not re-allotted until the next calendar year, however, in some systems, the points you do not use one year, will accumulate or roll over into the next year where they are added to your beginning points balance for the new year.
Some programs allow you to reserve intervals of stay within a week at a resort destination so that you do not have to utilize a whole week’s stay at once. This comes in handy when you just need a weekend getaway. Some people opt to use their points for a cruise vacation instead of using it at a resort destination. The goods or services that points can be used for really depend on which resort and points system you belong to, so keep this mind when shopping around. When comparing points system, also consider that the actual value of the points not only differs between points systems, such as Marriot or RCI, but also can vary between the resorts you want to use within the same system. For example 10,000 points may get you a weeks stay in one destination, but if you choose a resort or location that is in higher demand, a weeks stay for the same timeframe may cost more or less. It all really depends on availability and demand for the resort you choose to use with your points.
Here’s an example of how a person would utilize a points program:
Owner of 85,000 Points could use them in this manner:
YEAR ONE 85,000 Points---------------------------85,000
1 Weeks in a 1 bedroom resort in Florida ---------25,000
1 Week Car Rental -----------------------------------20,500
Total Points Used in one year ----------------------45,000
Total points un-used ---------------------------------40,000
YEAR TWO Points + Unused previous year -----125,000
7 Nights at 1Br Hawaiian Resort -------------------35,000
Weekend Nights in 2br Colorado resort-----------14,500
4 day Carribiean Cruise for 6 adults ---------------75,000
Total Points Used in one year-----------------------124,500
*Some points systems may also allow you to borrow points from your next year’s balance.
Exchange: How it Works
The Points Programs, Right to Use, and Vacation Clubs are all great alternative to the traditional timeshare property. Whether you choose to buy timeshare property as a fixed or floating week, or choose some of the other options, you may also want to consider the option to become a member of an exchange company. Of the multiple exchange companies that exist in the timeshare industry, Resort Condominium International, also known as RCI, if perhaps the most well known. The popularity of RCI is easily contributed to the amount of properties within their network as well as the number of RCI members that are part of the timeshare industry. With over 3 million members and properties in over 100 countries, RCI is a primary choice for people looking to use the exchange system.
By owning a timeshare property and by being a member of an Exchange company, you can deposit your property or your reserved week onto the exchange company’s inventory and receive a list of comparable properties to choose from. When you deem a certain property is acceptable and desired for an exchange, you may then, at that point, exchange your property for the one you desire from the exchange company. The criteria used to determine the properties offered to you by the exchange company are based on the value of your resort and include:
Week owned, Rating, Amenities, Number of Bedrooms and Demand.
By becoming a member of an Exchange company, you will have more options to visit the destinations you desire. The exchange process is a very exciting aspect of the timeshare industry. Some people enjoy the thrill of banking their week just to see what they can get in exchange for it. If you want to play the exchange game, like many people do, then you should consider shopping for a property to use for exchange. This is a common trend. Buyers will purchase a property with a good rating, or in a popular destination or ultimately in high demand, and use this property specifically for exchange. It doesn’t even have to be in a location that you intend to visit. But, for good leverage on the exchange market, the demand for the property must be high. When shopping for property to use specifically for exchange, take your time, compare prices and have the patience to wait for a good deal to come along.
Beyond Conventional Timeshares
The timeshare industry caters to all levels of income. Aside from the traditional fixed week and floating week properties and some of the other conventional options available to the consumer, there are options to suit the needs of those looking to purchase a vacation property that offers more than a conventional timeshare. The common element of these types of vacation properties are shared ownership, but their characteristics differ enough to be categorized as options other than timeshare properties. The four main classes of the alternatives to common timeshares are Fractionals, Condo Hotels, Private Residence Clubs and Destination Clubs.
Fractionals
The term fractional or more complete, fractional ownership, is a common approach to becoming one, or many owners to a specific property or item. The concept is nothing new, and is a popular method to attaining use and partial ownership to anything from sports cars to vacation homes. An assumption about fractional ownership is that the value in the option is that an owner doesn’t have to forfeit money for the full price as the purchase price is split two or more ways between each fractional owner. Though this reason is a good motive behind a fractional ownership purchase, the more compelling option is the frequency of use. Take a fractional ownership of a vacation home for example. If the intended use of the vacation home is to get away for a few weeks each year, then what is the value of the vacation home when it is not being used? Essentially you would be paying for the full price of what you would be using 1/12th of or less. The amount of use in an item or property is what makes fractional ownership a valuable option.
Typically, fractional ownership of a vacation destination is split between twelve people and the usage is one month each. The owner possess a fractional value and a right to use the property and may sell or deed their portion of the property when they choose. Upon selling the owner will incur market gain or loss depending on the fluctuation of the market value of the property.
The attraction to fractional ownership of vacation property lies in the deluxe accommodations and amenities superior to other vacationing options on the market. Some fractional ownership may include a condo at a popular vacationing destination or a residential home in a popular tourist area. The option of fractional ownership opens up a new avenue to attaining hard to find or expensive to purchase vacation properties. Your vacation budget can go much farther when you multiply it times twelve. You may not be able to purchase a ski lodge in the mountains with that nest egg that you’ve been sitting on for a decade, but, if you find eleven other people with the same kinds of funds, it could be yours for a month each year for the rest of your life.
Condo-Hotels
Condo-Hotel is also commonly referred to a hotel-condo and a condotel. A condo-hotel is typically built as a high rise building intended to operate as condominiums as well as a luxurious hotel. These properties have condominium units which allow vacationers to have access to a full-service vacation home. When an owner is not using their unit for vacationing, they can allow management of the property to rent and manage their unit as a hotel room. Some owners initially see this as a good idea with the assumption that it can be a source of income, or an investment. The wrong assumption with this involves the fact that hotel reservations and use fluctuate according to holiday seasons, vacation weeks, and the economy. Your rental of your unit may also be at the mercy of the hotel’s vacancy. It would be in the best interest of their management operations to rent their vacant rooms, as they would receive 100% of the cost whereas only 50% with renting out the unit you own.
Destination Clubs
Destination clubs pose a striking resemblance to some of the points systems in the timeshare industry. For those looking to buy timeshare property, and are not satisfied with the idea of buying into a points system, the option to buy use to timeshare property or a vacation destination through a destination club may be an attractive option. The way most destination clubs work is by paying a one time upfront membership fee and annual dues to get access to a roster of luxury vacation homes which can be booked for use.
The types of properties offered by destination clubs can be a unit in a condominium up to a three to five bedroom vacation home near a key location. The amenities and furnishings offered by destination clubs are luxurious in class and the service levels offered surpass that of a hotel. Some destination clubs offer help in vacation planning, on-location concierge services, and special club events. The benefits of a destination club offer an owner more choices in vacationing without requiring real estate property ownership. If you are a member of a destination club you can simply select the resort you wish to use from a schedule Instead of having to utilize an exchange system or a points system to gain access to different vacation destinations.
Utilizing a destination club can be an excellent retreat option for the vacationing family. Vacation clubs are optimized exceptionally well for families and especially kids. Being that a typical floor plan configuration of the properties offered by destination clubs range from two to five bedroom units, you will get the privacy needed for a whole-family vacation.
Private Residence Clubs
A private residence club is form of fractional real estate that exists on the most luxurious end of the vacationing spectrum. Private residence clubs offer the type of lodging that you would find in a second home or vacation home, but offer the amenities and services like what you may find in an exclusive high end of a five star luxury hotel. Unlike traditional week intervals of timeshare property, the amount of use at a private residence clubs can be bought at any level of desired use to best suit the needs of the individual member.
Though private residence clubs are a type of fractional ownership, they differ slightly from a customary fractional ownership of a vacation home. For example, a one-eight share of a $1 million luxury home is purchased for $125,000. The PRC member then can book the weeks they desire to use at the property on a first, second and third choice basis. But along with usage of the property also comes the access to services, amenities and facilities associated with the property.
Another important point to consider about a private residence clubs is the phase in which you join. Private Residence Clubs are always developed with founding members. The cost to buy into a private residence club is always less at the beginning phases and more near completion. There is a risk to buy into a PRC during development because there’s no track record or expectation; therefore, the fee is generally less because you cannot be sure if the property or the club will appreciate in value over the years. Also, if you decide to join into a PRC at the early phase, you may have to wait up to several years for the property to be built.
Private residence clubs offer flexible accommodations for weeks owned and for guest use. Generally, a PRC member owns up four to five weeks of use at their property. Taking five weeks of vacation is not always an option for some people, and most prc policies allow for guest usage and will accommodate the stay of the member’s guests without the member being present. Another flexible option is the ability to exchange reservations at one PRC location for another. Since there is no specific standard or policy on how a PRC operates, the exchange process may be unique between each private residence club.
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