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Economic Cycles and their impact on Time Share Values-What the Future Holds.

September 22nd, 2017

John C Botdorf-Blog Post

RE: Economic Cycles and their Impact on Time Share Values-What the Future Holds.

Dear MYTS Fans,

To Time Share or Not to Time Share? The question of the day. Certainly with today’s internet buffet on travel options it is possible to travel almost anywhere, stay in some comfortable digs, and if your attitude is right, you can have a good time and make most trips worthwhile. That said, the old saying can still apply, “There is no such thing as free”. Well we would have to define free. Time Share is the only real estate business in the world where it is very possible to cover 100% of your cost. We discuss this in detail in Mastering Your Time Share. But the old internet bargain does come with the “you get what you pay for ” more often than not. Generally huge discounts come with getting booked into less desirable units, back of the plane, and marginal food. Does not mean it may not be a bargain however. Cheap is Cheap.

Would if you want to travel cheap but stay in nice digs, a la time share and you want to know how to get started. It is important to understand economics because time shares have some valuable conditions that will by definition, perform very differently depending on where the country is headed in its next economic cycle. We are going to discuss in this blog a few concepts that we believe will apply to times shares in the next 15 years. We all know any of us can predict the stock market is going to crash or suffer a 25% pullback. I read everyday and have for the past 15 years that the market is tired, overbought, interest rates must rise, and we all need to sell everything and live in a cave. Eventually these predictors of dome will be 100% right. At some point the market will take a downturn and the doomsday pundits will flood their blogs with I told you so. Well, you and I can make the same prediction every year for 15 years, and we would be right as well at some point. My point is what good is their advice. It is like saying I predict the earth will have darkness in the next ten hours.

For those that have read our book, www.masteringyourtimeshare.com, you know we believe that certain time shares are undervalued relative to their housing counterpart. What do we mean by that? Well, in the Newport Beach, California area a two bedroom house with two baths with about 1,500 square feet on the water or with a 180 degree view of the water will cost about $4M today, if you could find it. One could purchase one year of time share, stay every year in an ocean villa, on the water in Newport Beach for about $975,000. My friend commented, “well you really don’t own it”. My answer was: What do you mean by own? Is not the right to occupy 365 day a year the same as ownership? Besides, less than 33% of the homes in the US are actually owned outright. The balance of the population has to pay the bank every month or they will not own their own home. So why does 1,500 square feet in one real estate environment need to cost four times as much for the exact same thing?

This brings us to the point of our blog. Some of us may remember the early 1980’s. Prime interest rates hit 19%. Inflation was running into double digits and it continued for years. What happened to the value of hard assets? They soared as inflation took off. Let’s examine the current state of the US economy. We now owe $19 trillion dollars to bondholders who own our debt. The current Trump administration is looking to mandate a US tax cut to help stimulate the economy and produce more jobs. The handwriting is now on the wall if you look outward for a period over the next 15 years. What is the single best feature or reason to own a time share? You got it. It is the rate or “points” they can charge you to summer in Newport or ski in Vail in the winter. The right time share cannot ever change the price you pay to occupy your villa. Why does this matter? It matters because many of us have not seen, are dead or can’t remember the last real inflationary cycle because it happened over 35 years ago. Most people in their forties in the United States don’t know what inflation is. These are the same people now entering their peak earning years. Why does this matter and what does it have to do with the future price of time shares? I would argue it has everything to do with downstream prices, for everyone.

There are two reasons that interest rates must rise in the future. When they do, the RRC spreads on time shares are going to explode. What does this mean? It means that while operating expenses will rise in line with inflation, rental rates will rise as much or more causing the economic value of real estate to go up. This is true whether you own a home or a time share. Beachfront property is beachfront property. The property itself does not care whether it is owned by 52 one week owners or just one 365 day owner. When taxes get cut nine times out of ten, production goes up, more people get hired, so more homes need to get built. Now the price of lumber and steel go up because all of a sudden there is more demand for copper, lumber, drywall, etc, because everyone needs it. Now the railroad company needs to charge more because it has more customer demand than open rail time. Solution. Just raise your price until demand equals your open supply of rail cars. This cycle then goes on and on. Now, this is reason number one on why interest rates rise. The demand for money goes up. Money is just like hot dogs. If you have ten hot dogs to sell for the day and 15 buyers, how do you solve the problem? You raise the price and go surfing!

Now let’s look at reason number two on why interest rates need to go up. When you owe $19 trillion in debt you have to keep selling bonds. Lots of them over and over. When the world has wars, hurricanes, earthquakes that wipe out whole islands, what happens to the need for capital? It goes up. What happens if Russia needs $15B for a new pipeline, the US wants to improve our freeways (infrastructure) and we need $1 trillion just to upgrade our own highway and travel systems. We go shopping for money, just like Russia. Where do investors decide to invest their money? They take the highest combination of return with the lowest risk profile. So, if we need to borrow more and more money and compete with our own US citizens who need capital to grow, eventually the world economic demand for capital gets short on money. The answer: It is just like the hot dogs. The federal reserve raises the price it will pay for capital and it comes back to the US. But it comes at a cost, we are pay more for everything because the price on money is part of the cost of doing business.

Now back to time shares. Let’s pretend we forgot the 1980’s.It is not a matter of whether prices will go up in the future it is just a matter of how much, and how fast. In fact it is likely we will see relatively speaking, tame inflation into the next election through 2020. Inflationary cycles take years to take off and years to cool down. Imagined you owned a prime summer beach house and I came along and offered to rent it for $10,000 a month forever. You live on the east coast and decide that $10,000 a month for life is a deal since the market is only $8500 a month right now. You are smart enough to make sure that I have to pay the operating expenses. Now, let’s run the math over 15 years with 3% inflation and 10% inflation and see what that $8500 a month rent should be in the year (2017 + 15) 2032. In the year 2032 with 3% inflation the rent is now $13,242 per month and with 10% inflation it is now $35,506, per month, every month. Now for those of us that feel we will be alive in 15 years (your kids most likely will be), how would like to insure you will pay $8500 a month to summer at the beach every year for life, your kids life and your grand kids life and so on. You see, time share is an insurance policy against inflation. Yes, operating expenses will go up, but the rental rates will also go up, meaning the spread between the Daily Rental Rate and the Daily Expense rate (the RRC Ratio) will rise with inflation meaning you just make more money if you rent it out.

Now you can see how inflationary cycles can greatly impact the future value of time shares. You win pretty well if we have low or moderate inflation like we have had in the past several decades. However, when the economy shifts into higher inflationary cycles and your upside occupancy cost is frozen for life, the value of that time share has to soar. I used $8500 a month for an example. Right now prime two bedrooms with two baths on the water in Newport or Maui are renting for $900 plus a day. That is $6300 a week right now or $25,200 a month in 2017 dollars. Let’s run that out 15 years at ten percent inflation at 4.17 times the current weekly rate. $6300 times 4.17 is $26,271 to rent a summer condo for a week in 2032 if inflation hit 10%. There were years in the 1980’s that inflation was much higher that that. This is why time shares are the poor man’s way to own real estate. Whether you use it for pleasure, to live in, or rent it out, most of us would prefer an alternative to the current $6300 for a summer week.

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$950 a night villas for little or no costs

John C Botdorf
Blog Post
September 20, 2017

Subject: Booking a $950 a night Villa for little or no cost?

Dear MYTS Fans,

Yes, the above is possible and I will share with you how in this blog.

We have discussed in our book www.masteringyourtimeshare.com, the advantages of owning the right time share in the locations you prefer to visit. We have also discussed and identified the top seven global operators that provide over 90% of the time share product worldwide. I am often asked which Time Share program (TS) is best. That is a bit like asking “what is the best car to buy”. It clearly depends on what you are looking for, how you spend your vacations, are you married or single, do you like to host guests and visitors. Other factors include do you like more moderate villas at lower costs, or do you prefer 4.5 star and up villas that come with premium services. Factors like cost of ownership, trading rights, exchange rights, the ability to rent, etc, also might favor one program over another.

In addition to deciding what type of TS is best for you, many time share owners are fascinated to learn that it is indeed possible to stay in $950 a night (or more) time share for little or no money. Many want to learn how this is done and what do they need to do to make such a reservation. First of all, it helps to understand how the time share business works and what drives operators to offer such a low price. Once this is understood it is possible to regularly book these stays using the methods we discuss in our book.

Remember in one of our chapters in MYTS, we are reminded that people do not book reservations anymore, that is done by computers. Even when you call in for personal service you are just asking someone else to log into a reservation system and interface with you guessed it, a computer. Understanding how computers work and why most places have several different reservation buckets is key to understanding how to book the best locations at the best resorts.

In essence their are two (2) kind of ways to get terrific bargains. One is through promotional offerings that can be repeated over time but this type of reservation requires you sign up for a time share tour and depending on the operator, time of year, and degree of promotion you can get a voucher to use for generally a year at a number of sites owned or controlled by the operator. Many of these do not have black out dates and some do. Interestingly these vouchers are sometimes the only way into a crowded summer or winter site because operators reserve a block of villa’s for marketing purposes and these villas are booked under a separate reservation pool. I have often been able to extend or procure my stay(s) even though my resort is sold out because I used a voucher to block an extra 3 or 4 days. If you go and enjoy the project, you should engage in the tour and see if the program is right for you. We emphasize the tours are staffed by commission only salespeople for the most point, and you should remember their time is also valuable. Be attentive and do your homework. What you will get is a voucher to stay for usually 3 nights up to week in some cases. Prices range from $50 to $100 a night, well below what these villas rent or sell for. Good luck and happy hunting. These promotions are part of the business and can help to lower you vacation cost by 25-75% per stay.

The other option is more complicated and involves a much higher level of TS knowledge. Essentially I have used this method year after year for over 25 years. It works well and works every year. If you were to reverse engineer math for a $950 a night suite and actually pay zero for the stay you first need to learn this does not come from one step. There is no such thing as going onto a web site and booking a five star 3 bedroom, $1500 a night villa and hit the “free” button. However, by following the steps we outline in MYTS, you can do it every year, year in and year out. It comes from starting with getting to the top of your program on those programs that offer their customers short term discounts. This is no different that going on any one of a number of cruise ship web sites and booking a last minute cruise for $1500 that sells for $8500. This happens every day of the week. In the time share business it is more complicated but not difficult to do once you understand the rules. So, in essence you start with booking right after or before the season changes when you still have either prime summer months or winter skiing. I stay every year at the beach right on the water in September, when all of the kids go back to school. Frankly I love kids but don’t need 15 of them in the Jacuzzi with me when I am there to relax. Go in September and you will notice 90% of the kids are gone. You also can get short terms discount with many of the large TS operators as the season is about to turn.

Next you play the “Platinum”, “Presidential” of “Chairman” card when you book you villa. Remember you got 30% for booking off season, now you get another 30% when you book at the highest level because your operator may well have a discount for their top customers. You need to research this clause because not all operators offer it. Even when they do, you need to understand all of the rules. I get it every time I book, 365 days a year. This is why I spend six months a year in times shares. I love $950 a night suites, providing I do not pay much or anything for them.

Lastly, to get to free to you need to generate some income to pay for the 33% bill that is left. As we discuss in MYTS, only the top ten percent of time shares are “highly rentable”. These times shares command $900 a night and some a lot more. Once you own them, you own them. Renting is done on line and takes minutes once you master how it is done. This provides the income to pay your maintenance fee and also covers your remaining cost to occupy. There are several more methods we recommend that will and can significantly lower you cost of ownership. Once you understand how to manage your RRC ratio (rental rate over cost per day) and that number turns positive, all of your stays for the rest of your life are free. It does not matter if the villa is worth $1,000 a night. The principals are the same.

Happy Hunting and God Bless your next trip.

Kindly,

John C Botdorf
www.masteringyourtimeshare.com

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Top Timeshare Tips and Locations for The Vail Valley

August 14, 2017

Blog Number 3

The Vail Valley/One of the Great Time Share Markets

We will focus on one of the great time share markets in the country in today’s issue. I have logged well over a year’s worth of time in Vail Valley over the past 15 years and have always enjoyed the activities, views, weather, and fine restaurants. Once more, the valley continues to invest heavily in infrastructure, new projects, and improved traffic circulation. This has brought new restaurants and more exciting reasons to continue to visit the valley. Vail now boast over 5,280 acres of ski-able terrain, with 193 trails, seven back bowels, and one ski run, Riva Run, that logs over four miles from start to end.  It’s cousin, down valley by three exits, is world famous Beaver Creek, a large master planned European Village themed around a center ice rink, old school stonework, large art pieces and water features including a two story waterfall near the top of the village. Beaver Creek is often home to many exciting skiing events like the World Cup and Alpine Ski Championships. It sports over 1,800 acres of terrain served by 25 ski lifts, most of them high speed. The summer in the Vail valley has also become quite popular with cultural events at top venues in each town, as well as a number of summer sport tournaments which now attract summer visitors all over the country. Soccer has become quite popular in the summer. The broad array of white water rafting, snowmobiling, hiking, horse back riding and world class golf are just some of the reasons the Vail valley winter and summer seasons are now pushing slightly into the shoulder seasons as hotels, condos, and time shares have more reason than ever to flock here.

The extended Vail and Beaver Creek markets now include over 30 worthy time shares projects with most qualifying as Category One and Two projects. There are a few Category Three projects that help provide more affordable rates for many families but the prime luxury time shares served by restaurants and ski-in/ski-out are now running over $1,000 a night for a two bedroom in prime ski season. Category One 3 and 4 bedrooms can more than double on the rental market. Off season rates can be a bargain but open times with huge discount windows are becoming a bit more rare than ten years ago due to rising demand for summer occupancy.

In today’s blog we are going to feature what has been rated the top winter time share in the United States, as well as the Ritz Carlton in Vail, two of our favorite time share stays.  We are also going to feature two of the most beautiful lakes in the Vail Valley as well as in the state of Colorado. Both are well worth the trip and only cost you your energy to visit.


The Westin in Avon, Colorado:

The Westin Resort Hotel and spa has been voted the number one resort destination property in the United States off and on over the years by various agencies. It is easy to see why once you visit the property. It is located in Avon, the town just below the gates of Beaver Creek. This property has the unique advantage of sitting on the river, which divides around the property on both sides, providing terrific river views from almost every room. The property has 68 guest rooms but also is part of the Westin Vacation program. Part of the property is therefore dedicated to time shares, with some of the best views in Avon. In addition, the property was able to get a chairlift approved that departs right out of the building, and while technically not ski-in/ski-out, provides the exact same benefit. This property was very well designed to maximize views, provide 5 star ski service, and has restaurants and entertainment on site. It is also within easy walking distance to other area restaurants. The summer experience in this hotel is also worth the visit. A quick check in August shows room starting at $249 but taxes and the $34.00 resort fee have now pushed this mega resort up to $300.00 a night off season. Winter rates are of course much higher. For us time share users, this is one to pay attention to as their time share program is the way to go if you want a comfortable villa here for years to come. They have luxury three bedrooms up to 1,900 sqaure feet. Many of the larger top villa’s have rounded glass with floor to ceiling views that are some of the best in the Vail valley. We of course recommend doing the math research we talk about in “Mastering Your Time Share” to understand how best to acquire the right to stay in this property. This is one destination property you buy into just for this property. It is truly a one of a kind.

The Ritz Carlton- Vail:

I have been staying at the Ritz Carlton in Vail for over 15 years now and it continues to delight and surprise on every visit. I have enjoyed this location and usually stay in the four bed room and have friends and family join me. It is truly a marvel in every way and the experience is always memorable. The property sits on the west end of Vail with a Marriott hotel across the street to the east and down valley about one half mile, sits four more Marriott time shares properties, each offering a different price point, allowing families to pick the program best for their stay. I like to call this the Marriott Mile. Of course us Marriott loyal know that Marriott owns the Ritz so we have executive cross-over privileges   to use our time share currency with a certain amount of membership buy-in.

The Ritz has become a favorite and has one of the best pools in Vail because it enjoys maximum sun exposure due to the way the pool was designed to fit into the building. It also sports top mountain views while in the pool. This property has always provided me with excellent shuttle service to any restaurant I have wanted to go to, and therefore driving once I get here is rare, but for planned day trips out of the area. The villa’s are superbly appointed right down to martini shakers and Bose music. The kitchens are stocked with separate wine refrigerators and each villa comes with a complete set of wine glasses, one for every type of wine. Most villa’s over 2 bedrooms have multiple decks and many have floor to ceiling views. Nothing here not to like. Top service 24 hours a day, plenty of luxury as each room has a separate bathroom. Even the laundry rooms are luxurious. As those of you know the best part of these $250 plus a night per room apartments  (4 bedrooms run as high as $1,000 a night-off season) is we use our time share currency to check in and out, leaving our $13,000 stay at $0.00, over and over every year.

The Ritz Carlton-Bachelors Gulch:

Sitting almost half way up the Beaver Creek Mountain, Bachelor Gulch is really for the avid skier looking for the top skiing experience. Of course this Ritz sports three restaurants (with the new WLYD) opening this season, and comes with all of the expected Ritz Carlton service. Since the property is self-contained on the hill, the restaurants provide great food on site, since walking to somewhere else in not a likely option unless you enjoy steep hikes and long walks. That said the on site experience is worth the stay. Just watching the wildlife and snowfall from this location is a wonder to behold. The pool and jacuzzi’s also provide prime winter viewing with skiers coming right down to the base and turning to get into the Chair lift line. If the fence was not there, they could just ski right into the pool. Summer also provides views and hikes worthy of a summer visit. This one is for the purest, looking for that prime winter night stay. Since you are already half way up the mountain, chairing up in the AM, gets you near the top on your first run out of the property. Plenty of energy going on after skiing, the apres menu after skiing is pure Ritz and the vibe is international, as their cliental circles the globe to get here in December. A bucket list even if you don’t ski and only make it here one time.

Unbelievable Half Day Hikes:

I have known people who have come to Vail or the Vail valley for over thirty years and yet they have never been to two of the United States most spectacular lakes. Today we are going to feature two of them, both an easy drive to get to from the Vail Valley. The first is actually discovered by leaving Vail right in the middle of town, with departure starting off the norther frontage road at the Sandstone exit, where you head into another of Vail’s prime residential area’s. About a half mile up the road you will find the Lake Piney exit. From there you will travel 9.0 miles on a dirt road to get to Piney Lake. You should have a vehicle with good tires and decent suspension. Something is going to feel the bumps. It is either your spine or your suspension. Driving at a moderate yet safe pace you will arrive in thirty minutes. When you get about 20 minutes in the road heads up and splits down without warning. You will want to head down. As I rationed, there are not a lot of lakes at the top of any mountain.

Lake Piney:

There is really nothing I can write that can compare with photographs so I will let the photographs below do most of the talking. Truly one of the prettiest lakes in Colorado set among the Rockies. The lake has opened and closed restaurants over the years but on this day, a new, bigger restaurant was open. I did not sample the food and being a Foodie, this might have been a mistake. I am always looking for the best of the best. The complex sports a handful of larger cabins for rental in the summer and I can only imagine what waking up to this setting must feel like but if done even one time, would like mandate return visits. My guess is reservations may book out a year or longer. Lake Piney grows everything big. This includes the Mousse and Bear. Bring your camera and be ready. On the day I drove up to take pictures, there was a 700 pound Mousse drinking from the far side of the lake. You spot him in the far background in the photo below. He was a wonder to watch. Hiking is plentiful and provides some of the best vista’s in the Vail area. This is a must go trip and requires very little hiking ability. Unlike the next trip, this is one where the car does most of the work. The lake trails are flat or contain pretty soft grade changes. Heading there into September provides beautiful views of the leaves starting to change. The gate to Lake Piney closes in late fall making due to snow potential. Even one snowfall would make getting back home impossible if it were a big storm. Therefore, the short summer window is all we get to enjoy this magnificent lake.

Hanging Lake:

The Hanging Lake trip is very different from your average hike, lake trip or outdoor
adventure. For one it is down valley well into the Glenwood Springs Tunnel and Highway that was built
to ferry cars through one of the prettiest canyons in the country. Just driving through Glenwood Canyon
is worth the trip. It is like taking a freeway through the Grand Canyon. About half way into the canyon is
the Hanging Lake exit, about a good mile and one half past the actual trailhead. So if going west out of
Vail, you need to exit and head back east for the actual parking lot exit. The biggest problem is this trip is
so popular there is just not enough parking. Even the over flow lot books full, leaving the noon arriver no
choice but to circle with 20 other cars looking for one space or you have to leave. Get there early is the
best advice. The second challenge is the actual hike itself. This is not so much a hike as it is a 2,500 step
stair climb. It is simply disguised as a hike.

Think of climbing the empire state building on a dirt trail. While there are actual 15 foot sections of trail
that do not have a step, they still go up. There is a reason this is called Hanging Lake. That is because it
hangs out in the clouds would be my guess. For the avid climber, biker, or 90 day skier in Colorado this
is just another walk in the park. For the rest of us, after getting 90 percent of the way there, if your
friend is a quitter they can actually talk you out of finishing, and start to head back down the hill,
exhausted. Don’t do it. Don’t go with anyone either out of shape, depressed, or who gives up easily. This
won’t work on this hike. The last three percent is intended to torture you. It ends with extra large step
up a wall staircase. Smokers beware. When at the top you will see one of the cleanest lakes ever. The
park service does not allow entry into this lake. I see why. It would not look the same if we jumped in.
They want it the way it was 100 years ago. No sunscreen, no human intervention. I cannot imagine the
blue hue beaming off the sunlight ever being the same if Coppertone added its two cents. Now one last
tip. Once you get there, catch your breath, the Gods at Hanging Lake have one last bonus. A huge
waterfall that sits above the lake. There is one slight problem. It requires one last hike and it is not
downhill. This is a must. It is only two more minutes, uphill of course so bring a fight song with you if you
need a motivational nudge. This is a good spot for it. You can always sing the USC or Notre Dame
Football anthem. Either one will get you there. Once there you will see one of most powerful waterfall
showers in the US. You can walk underneath this fall from grace and experience a nice chilling off. If you
are dumb enough to walk through it you will leave three inches shorter. Best to just walk around it.
Bring the camera, leave the cream rinse. This is one hike you will still be talking about at dinner.
Our Food Philiosophy at MYTS- I was a gourmet cook in college and I helped finance my college
education by learning how to cook at large parties in Beverly Hills, Calif, where I rented a guest house in college.

I was soon asked to cook for neighbors and other parties. Thank God I got to experiment with
the Hollywood famous. Somebody had to try my food. I have always enjoyed good food ever since. On a
future blog, I will tell some funny stories about this early experience I had when cooking for the rich and
famous. The main thing in life is to be confident, do your homework and well, just do it. This worked
pretty well or me the vast majority of the time. This is the reason we here at MYTS, will always endorse
great food or food receipes. They will be a larger part of future blogs for sure. In this never ending quest
we look to discover the best food in any area we visit.

The World’s “Most Best Taco” in the Vail Valley:

In Vail we found the World’s “Most Best Taco”
off the beat and path in the Vail Valley. The cost is $2.50. Scratch made with six home made sauces. This
place is the bomb except it is not a place. It is a food truck located in a small industrial area. Not exactly
the Ritz and anyone in route to Vail would never know about this place. It is a hidden gem. I would put
their taco up against anything in the Vail valley, at any price. If you are going west, exit Highway 6 at the
Midturn exit and continue west into town. Get ready to turn left at the “Most Best Taco Sign”. It comes
up fast on your left. Head down to the food truck. Can’s miss it. The brewery next store can provide a
nice cold one to go with your tacos.

10 th Mountain Limo-private Limousine Service:

Every now and then you meet someone who provides a
level of service and you just know you have found something special. Meet Dave Utes from Vail. A 20
year veteran of the Vail valley, Dave offers private car service from the Denver International airport and
from Eagle-County Regional Airport back and forth to the Vail Valley. He has relationships with all of the
top hotels and resorts and is a wealth of knowledge about where to go and what to see in the Valley.
More over he has a 20 years track record of getting families to and from the airport, safely and on time.
If you would like to try his service or would like a tip on Vail, feel free to give him a call at 970.445.7068.
Until next time.

Signing Off,

John C Botdorf
Inventor, The Great American Travel Company