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Warning: Don't Buy a Vacation Home or Timeshare Unless You Ask These Questions

Aug 17, 2007
These questions determine what investing in a vacation home or timeshare will mean to you:

1. How many weeks can you actually use it?
2. Do your own the property or just get to use it? Deeded Ownership v. Timeshare
3. When do you get to use it?
4. Who takes care of the property?
5. What is the monthly maintenance cost?
6. Do you share in the profit from any resale?
7. Can you deduct your investment in the property?
8. Can you really afford, or do you really want to afford to buy the whole property?
9. Can you afford a luxury million dollar home or do you have to settle for a condo?
10. Will you get a profit locked in when you buy the property?

Love to ski and longing to actually own a mountain home? Or have you always wanted to be able to enjoy the mountain climate and lifestyle during the summer months?

But:

- You can only get there for two to four weeks per year? Not enough vacation to justify owning the house?
- You hate maintaining your own house and dread the thought of having to take care of a second house
- Your pocketbook can't afford the house you would really want?
- You want a house with room to invite friends not a condo that doesn't really have enough room for your own family
- You realize timeshares are not a real estate investment and only make the timeshare seller rich?
- The maintenance costs of a second home scare the you know what out of you?

Ask yourself the questions above before you take any action to achieve your dream.

A mountain vacation home should be that dream. You should be able to buy the amount of the home you can actually use. It should be a real estate investment that builds equity for you, not a cash drain. You should be able to have someone else deal with the maintenance and cleaning. You should be able to go fishing or skiing without having to worry about the home when you get there or leave. You should not have to worry about the home when you are not there.

All you can find is 2 bedroom, 2 bath condos for over $300,000 plus the cost of running and maintaining it every month? Not exactly what you had in mind?

Why not buy more house than what you can afford but pay less than you would for the condo?

You want to own the house with a deed but why not just pay for the amount of time you can actually use at the house?

Would you prefer not to worry about the maintenance?

Would you prefer to just lock up and leave when you go home?

How to own a luxury, six bedroom, over 4000 square foot $1,200,000 home.

You could of course buy the house all by yourself. You would pay $240,000 down and have a 30 year mortgage for $960,000.00. Your payments would be $6,387.00 per month. You would also have to pay the taxes, insurance, utilities, and maintenance. You would though have a luxury home instead of a condo that really isn't big enough and is not what you really want.

However, since you can only use your house two to four weeks a year, just buy the piece of the house you can use. You can even use your house at other times on a space available basis

So how much would you pay to own two weeks? $300,000 to own a condo? $200,000, the cost to own a luxury timeshare for two weeks?

Buy a luxury home instead. Properly structured, you can buy your share of a house for $50,000 to $80,000. Use it for at least two weeks and space available the rest of the year. Want more weeks, buy another share. Just pay your share of the taxes, insurance, utilities, and maintenance. Those costs will run about $400 per month. Just renting a house like that will normally run $800 per night or $11,200 for two weeks per year or IF you could pay monthly, $933 per month for just those two weeks. But by buying, you also get the appreciation in value of the house and if the house is also rented, your investment could be eligible for depreciation and deductions for the upkeep payments. Your interest in the house can be sold, willed to your family, or gifted to your family. You can donate your time to your favorite charity for auction.

You can actually own the house for two weeks for less than you could rent the house for one week!

Trick Question: Is it better to pay $5,000 annually plus maintenance for at least two week's use (and not worry about the house when you aren't there) or rent the house for $5,250 for one week rental? A house like these luxury homes rents for at least $800 per night. One week's rental would be $5,250.00. If you finance the whole $50,000, your payments will be about $5000 per year. If you rent, your money is gone and all you have is the memory. If you buy, you own the house and you have the memories of at least two weeks.

What two weeks do I get? Time at the house is allocated by lottery. Your pick is determined by when you buy. Holidays are rotated so that everyone gets an opportunity. No more that 20 shares should be considered in any property.
About the Author
Mr. Montgomery is a real estate investor attorney. To get a free buyer kit on how to purchase a property as described above, send an email to jemmktg@mac.com with Buyer Kit in the subject line. www.stoneybrooke.net
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