Renting or owning Essay Example
Renting or owning Essay Example

Renting or owning Essay Example

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  • Pages: 6 (1487 words)
  • Published: December 29, 2017
  • Type: Essay
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In the past, Florida tourism was typically linked to the time share industry because of sales strategies and bankrupt developers. However, notable hotel corporations have now joined the market and more rigorous laws for consumer protection have decreased questionable conduct.

"Resort" time shares are a fast-growing segment in real estate, according to Pauta Morabito, Senior Manager at E&Y Kenneth Le Venthal Real Estate group in Miami. These time shares range from converted hotel rooms to new three-bedroom townhouses. Vacation ownership, also known as timesharing, allows consumers to purchase fully furnished condominium-style vacation accommodations at a reduced cost compared to full condominium or vacation home ownership. The options for vacation ownership include fixed weeks, floating weeks, points-based clubs, fractional ownership, and cruises. There are two types of timesharing units: fee simple, where t

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he buyer receives title to a fraction of the unit, and right-to-use, where the purchaser can use the unit for a specified time but does not have ownership. Purchasers pay a one-time price and yearly maintenance fees and taxes to own their vacation either indefinitely or for a set number of years.

Over 5 million families have found that purchasing one or two weeks of vacation ownership is more advantageous and affordable than owning a condominium unit or second home year-round. Vacation ownership offers numerous benefits, including locking in the purchase price of accommodations to ensure future vacations at today's rates at a top-rated resort that rivals high-end ski areas with superior amenities and concierge service. Owners commonly cited the high-quality accommodations and service at the resorts where they own, along with the cost-effectiveness of vacation ownership, as reasons for purchasing their vacation homes

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and condominiums. Unlike hotel rooms or rental condos that require payment for each use at increasing rates, vacation ownership allows for enjoying a resort year after year without additional payment, only requiring a one-time purchase price and yearly maintenance fee. Vacation ownership is truly a home away from home, providing ample space and flexibility to suit families or large groups' needs.

Although vacation ownership suites typically contain two bedrooms, they differ from hotels in that there are no charges levied for extra guests. Furthermore, they often feature a fully stocked kitchen complete with a dining area, washer, dryer, linens, stereo, televisions, VCRs and other amenities. The cost of maintaining both the unit and the communal areas of the resort are shared among owners.

Vacation ownership purchases are commonly financed with consumer loans lasting from ten to twenty years, which vary based on the amount of the down payment and purchase price. Factors that determine the price of suites include unit size, resort facilities, and location. The greatest advantage of vacation ownership is the chance to travel internationally through exchange vacations. Since international vacation exchange networks exist, owners can exchange their timeshare interval for comparable vacation time at resorts worldwide. Therefore, vacation ownership provides unparalleled flexibility and reasonable worldwide travel opportunities.

Resorts are commonly linked with an exchange company responsible for managing the exchange service available to its members. The exchange company will typically entice members by directly offering annual membership. Owners have the option to decide on becoming members of the linked exchange company. Members of the resorts and exchange companies can also take advantage of a reserve program for saving or banking vacation time for

future use. Additionally, the exchange company will generally provide other travel-related services, like discounted airfare and car rentals.

Discover the tax benefits of owning a vacation property. The time share ownership program offers valuable insights on how to legally lower your taxes. Learn effective tax deduction and strategies to maximize your savings. Through the program, you can acquire knowledge on how to write off timeshare purchase, financing charges, and maintenance fees. Additionally, it provides guidelines on maximizing itemized deductions for personal use and getting tax-free cash when renting out your timeshare. You can also use your timeshare to create maximum business deductions and develop an ideal tax strategy for your property.

Our comprehensive guide will teach you how to enhance your travel experiences, save money and earn more with your timeshare. You'll discover a "special business" that allows entertainment, recreation, dining out, golfing and cruising activities associated with timeshares up to 100% tax deductible. Part two of the guide offers advice on expanding vacation ownership as well as buying or selling timeshares. Despite the slowdown in domestic travel due to the Iraq war, the vacation-ownership market is still growing. Industry executives attending the American Resort Development Assn.'s annual convention and trade show at Gaylord Palms in Orlando have expressed optimism about its long-term prospects. Although high-end fractional interest projects saw sales decline from twelve per month in 2001 and ten per month in 2000 to an average pace of just five per month in 2002.

Between 2000 and 2002, the sales of products rose from $2 million to $11.2 million but then fell to $10.8 million. Most projects saw a rise in price, with 58% experiencing an

increase, whereas only 8% lowered their prices and 34% kept them steady.

The swiftness of movement commonly corresponds to the high cost of items. In fractional interest investments, the classification often relies on the expense per square foot. Those with a sales price that exceeds $1,000 per square foot are deemed "high-priced", whereas those between $500 and $999 per square foot are categorized as "moderate-priced". Nevertheless, there exist numerous fractional interest choices obtainable at values under $500 per square foot.

Although "moderate-priced" projects had a sales volume that was roughly 50% lower than "high-priced" projects in 2000, the graph shows that the gap between them has widened over the past two years. In particular, in 2002, "moderate-priced" projects had an average sales volume of about $5.8 million while "high-priced" projects sold for approximately $14 million.

When analyzing monthly sales rates, the disparity between "moderate-priced" and "high-priced" ventures is negligible. The former sees an average of four sales per month, while the latter has six. In revenue terms, "high-priced" projects generate 9 million. Initially, luxury fractional interest properties were introduced by independent developers; however, in recent times major hotel brands like Marriott, Four Seasons, Hyatt, Hilton and Starwood have entered this market.

Similar to traditional timeshare, branded fractional interest projects have generally had greater success compared to independent ones. According to data from 2002, hotel-branded resorts sold on average twice as many units per month (eight) compared to non-branded resorts (three). Additionally, branded resorts had a much higher annual sales volume, with an average of $19.2 million compared to independent resorts' $5.2 million.

While brands offer stronger marketing and sales power as well as consumer loyalty and confidence, independents have also

found success on a smaller level. For instance, a non-branded solo venture in a Colorado ski resort sold 85% of its first phase within three years.

The pace of monthly sales increased from an average of four per month to even higher levels during the ski season, and then again after the units were available for occupancy, which occurred over two years into the sales process. The sales strategy did not involve pre-construction reservations but rather involved owners signing contracts to secure pricing. These contracts were ultimately converted into closed sales by 2002. Currently, with only 25 intervals left to sell in the initial phase, the sales rate remains consistent, partly due to the sense of urgency prompted by an upcoming price increase in the second phase.

Location is a crucial factor to consider when choosing a development site. This is especially true for high-end fractional offerings compared to traditional timeshares, where proximity to attractions is crucial. Ski destinations are known for being the birthplace of high-end fractional development. In North America, as of February 2002, 65% of existing high-end fractional interest projects were located in ski areas. However, 67% of projects planned at that time were going to be situated in beach and/or golf-oriented communities.

In 2002, fractional interest projects located in ski and beach areas had an average sales pace of six per month, while those in golf-oriented settings only had a slow pace of two per month. The difference in annual sales volume between these locations is significant: beach locations generated $15.7 million, ski locations generated $14.3 million, and golf-oriented locations only generated $2.2 million.

In 2002, it was noticed that new high-end fractional ownership

properties were often incorporated into a larger community that offered different real estate choices. This inclination led to greater success in sales for projects with hotel or timeshare features when compared to standalone properties. Mixed-use properties had an average monthly sales rate of seven, while standalone properties only averaged five.

Despite the impact of the slowing economy on high-end fractional interest sales performance, there has only been a deceleration in sales rather than a complete stop. This is evidenced by both sales volumes following a consistent pattern, with an average of $16.4 million compared to $9.4 million.

Amid the economic storm, developers are discovering inventive methods to endure. The products that are performing well are those that are high-priced, branded, situated in ski or beach locations, have mixed-use functionality, and were already selling before 2002.

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