On the cruise to Caribbean Sea, we met two Chinese families, both of them bought time-shares. To investigate if it suits ours, we attended a one-to-one conference by Westgate.
Westgate time-shares sell hotel/resort shares to you, one week as a unit. They have several locations in big cities like Miami, Orlando, etc. You buy a specific week in one year in a certain location; you can use that week in that hotel/resort every year if you pay the down payment and annual maintenance fee. You can also exchange your shares with another member of Westgate’s in another location in the states or even overseas.
You pay down payment to own the 1/52(one week of the 52 weeks per year) of that apartment/condo or room; you need to pay maintenance fee for the property tax, furniture, cleaning, and others. We talked about a 1bed/1bath room in Orlando, the down payment is $27000, and maintenance fee is $685 per year.
I see it as a trap because:
(1) You pay $27000 to buy 1/52 of a 1bed/1bath condo, that means you pay $1404000 to buy a condo in Orlando:
27000 x 52 = $1404000
That is a holy expensive condo!
(2) If one day you don’t like it and you want to come out of the membership, you cannot do it since there is no way you can sell that 1/52 condo out to anybody. And, you have the obligation to continuously pay the maintenance fee forever because you are the “owner” of it.
(3) Let do a simple math:
If you put the down payment $27000 in the bank as CD with a interest rate as 4.7%, that is $1129 a year, take 40% out as income tax, the final return is $667.5 annually.
667.5 + 685(annual maintenance fee) = $1312.5.
$1312.5 for one-week hotel fee, that is $187.5 per night. With that money you can stay in a descent hotel anywhere in the world, not mention the down payment you can never get back and the obligation of paying maintenance fee in your life no matter what.
