posted 02-17-2005 18:08               

quote:

---

Originally posted by doggiesdad:
Carl,
Thanks for the new information. It make sense that in the case of repossesions the resort has the ability to play with the price/residual issues. This adds a new twist to the issue of residuals in certain sales circumstances. One fact remains clear and that is that people should not purchase with an expectation of gettting this money (as Hoc points out). They should buy at the Royals because they love the Royals and want to stay there.

Mike

---

posted 02-18-2005 04:50               

I consider mf's from a couple of perspectives but I don't ever add it to the cost of capital ie. cost of the TS.

I do add the mf to the calculation to compare it to the cost of renting the same week at the same resort (or as near a comparable as I can). In this case even with dividing in the upfront capital cost I'm not very far off the market rent figures - it's close enough that I consider it a wash.

I also consider the same mf/capital value to what I can rent the week out for - again, in this situation it's income neutral. I can't expect to make money on the rental but I shouldn't lose any money either.

To be more correct I should add in the opportunity cost of the invested capital but when the numbers are this low and going interest rates are at historical lows that number is immaterial to the overall decision IMHO.

I don't agree that it is appropriate to add it to the cost of the capital investment and here's why: If I can rent the week and in this case effectively break even (recovering all mf's and the initial capital) over the 8 year life of the TS then (ignoring the opportunity cost of an alternative investment) ultimately I have not expended anything for this ownership - this assumes I get $0 for the residual BTW.

Now if rather than rent the TS I decide to use it I fail to see how that decision can impact on my investment decision since the two are actually mutually exclusive. In other words my decision to use the TS hasn't actually cost me anything I wouldn't have otherwise spent since I'm going to spend those dollars anyway on a vacation regardless.

By adding the mf to the capital cost you've effectively added the cost of a vacation into the cost of an investment (hopefully nobody will object to me calling a TS an investment) and I maintain the two must remain separate.

Having said all of that, if you can do what you are suggesting and still come out ahead then more power to you!

And yeah, I'm very happy with the deal no matter how I look at it

quote:

---

Originally posted by doggiesdad:

Carl,
Not trying to rain on your parade but you must remember to factor in MF's when figuring your cost of ownership. Like you we paid $5000 and have a pretty high residual (13,000). When I figure the cost of my vacations I also add in the money spent on MF's over the time of the ownership and add that to the cost. I suppose a person would also want to add any interest the moneys might generate over the time period and that would then be divided by the years and a true cost figure would arise. No matter how you do the math it's a great deal by any reasonable standard.

Mike

---

posted 02-18-2005 08:49               

I agree that the residuals was an excellent marketing tool.

Mike

posted 03-09-2005 02:01               

You can rest assured that you will not lose your residual rights at the Royal Sands if you purchase through the "non-resort" resale market. The last resale purchase I made and received the contract back from (Less than two weeks ago), it still have residual rights in the contract.

Just encase you didn't know, the Sands does not have a set residual valve like the rest of the Royal Resorts and it doesn't matter what week you own or how much you paid. In the end, each week you own will be worth one share and the profits from the sale in 2050(long after we are all gone) will be split evenly amongst the "share" holders.

posted 03-09-2005 07:32               

quote:

---

Originally posted by akgolfer:
Just encase you didn't know, the Sands does not have a set residual valve like the rest of the Royal Resorts ... In the end, each week you own will be worth one share and the profits from the sale ... will be split evenly amongst the "share" holders.

---

I believe that's true of the Royal Islander as well - perhaps someone will confirm.