Ok, so the latest studies show that a private golf course closes (net closings) every 9 hours. On average, private golf course cost $375,000 per year to maintain + staff, insurance etc. You might get 20,000 rounds played in a year and so net $200,000. BUT….
So, is it light black, grey or charcoal? Is it close, not to far or a moderate distance. Well, yes it is. The debate rages as to whether a second home….notably a vacation home, is a fractional or if its timeshare. Well, it kinda depends. Depends on what State you are in… “not state of mind”… Depends on how many owners are involved and in some cases depends on what type of deed is involved and other statutory and tax codes etc.
Lets boil it down to the simplest explanation and apply some common sense. If you and your best friend from the club and your brother in-law go in together and buy a beach house jointly, for each of your families to use as you agree and its not a commercial operation, then, in most jurisdictions, this is simply a second home with three owners on the deed. (We are not attempting to give legal advise. For your particular need, please consult your legal advisers.) So that’s simple and makes sense. What if there are 4 owners or 8- what then? What if a developer with a real estate license is one of the owners? What if that developer sold “interests” to others in that property? What if there are 50 owners…each with a deed? What if you own points that convert to weeks and there are 50 owners with enough points to own an interest? What if the owners, by deed restrictions etc, are forced to be members of an HOA or POA or COA?? What if a management company owns most of the “weeks” or an “interest” in the home or condo? It goes on and on…really.
So and again, we are not giving legal advise and are keeping it simple.
FRACTIONALS: Are generally defined by being a truly luxury, 5 Star, single family property with fewer than 12 owners. Real Simple. Most owners get a deed and participate directly in the equity of the property, ie, depreciation or appreciation and share equally in the repairs and upkeep. According to Jaime Escobar, with Dos Mundos Developments, Inc, fractional second homes are making a big move in the wake of the over-proliferation of low end and hard to resell timeshare properties.
Timeshare: Deeded: Very similar to Fractionals except that there may be as many as 50 owners and there may be a forced HOA membership and dues involved. More often than not, these properties are multi-family or multi-unit in design and are often a step (or two) down in quality. It may also be hard or impossible to participate directly in the underlying equity of the property but this is often overshadowed by the ease of use and the exchange-ability to other properties.
Timeshare Points: An even more “user friendly and flexible” form of timeshare that allows a person to buy and accumulate points to be exchanged for various length stays at various different and various quality properties. No equity is accumulated but exchange programs exist that allow use of points at thousands of resorts all over the world. Points can often be exchanged for cruises, airline tickets and rental cars adding to the ease and value of the timeshare.
Taxes: Property taxes, estate taxes, income taxes, etc. Not gonna touch this, but anyone involved in any type of fractional or timeshare property (and we are big fans of both), should visit with their tax adviser regarding these issue.
Chris Bounds Austin Texas
For more no non-sense resort stuff, contact Terry Christopher Bounds Austin Texas directly.
OK, so you know and understand that one man’s trash is another man’s treasure. One man’s loss is another man’s gain. This is very true with real estate. Especially during and after “crisis” type events. Sub prime melt down! Economic recession! Geo-Political problems! You also know timing is everything… or at least most of everything.
According to Chris Bounds, Director of Dos Mundos Developments, Inc, in Austin Texas, hurricanes are great opportunities for lots of things…especially real estate acquisitions. No need to be silly or macobre or act like a merciless vulture, BUT, hurricane damaged areas do produce opportunities for real estate investing. “Sure, go help with the clean up, donate to the area’s Red Cross and do a lot of praying for those adversely affected by a storm”, says Bounds, ” that’s just what we do. But we also like opportunities. ”
Storms have a way of shortening the decision time would be sellers (pre storm) take to finally agree to sell a property. Also, storms will sometimes expose the weak or marginal owners who were just barely hanging on anyway and give them a way out. Also, insurance payoffs and or the lack of coverage will also place properties on the market. My favorites are “under-construction” projects that are in some stage of completion. Often, lenders and or investors, will second guess the project and may be willing to make a deal. Those without interim or construction insurance make the best targets. Properties cut off from or in-accessible to consumers because of public infrastructure issues also create deals. Overall, damaging hurricanes put more inventory on the market, in concentrated areas, than can be absorbed. This naturally forces prices down and creates value for buyers.
So, be ready to move faster than normal and be ready to be patient. It may take weeks to get electricity and water back and months or years to gain access down certain roads or across bridges, but the earth will keep spinning and consumers will return to the market…not to mention lots of federal, state and local funding will find its way into the damaged area. 
For more no nonsense real estate talk, contact Chris Bounds directly.
Mom & Dad, mid thirties, two kids….so Disney World is a logical vacation destination. Well, it was. The 30 somethings and younger crowd often see a vacation in a completely different light. So pay attention. The interval ownership, timeshare and fractional folks are coming around slowly but they will get there.
Zip lining, hiking, biking or sitting in a coffer shop at the beach with your smart phone can be a vacation for these folks. Does not mean timeshare is out. In fact, these guys timeshare everything from cars via Uber etc, bikes via most urban areas “share a bike program”, sofas via Air BnB to lawn mowers via renting from Home Depot. No, they get it when comes to sharing stuff. Don’t forget that Gen Xers say that on average they will spend over $4,000 a year on “vacationing”. Now this might be made up of 3 or 4 two day trips to hike a mountain or see a concert or sky dive somewhere but they are spending money.
Also and importantly, they are getting married much later, if at all, having fewer kids and have less structure overall. So buying an old fashioned, brick and mortar condo overlooking a golf course might be a hard sell for some of these folks. And buying a bunch of points, well that is so 90s ish. And you don’t have an App that shows my unit on live web cam…well that seems weird.
Its not a perfect call and the fractional business seems poised for more great things but those that figure out how to compete for the GEN X timeshare crowd will have cool and flexible Club memberships that update Apps daily and that have a constant string of new activities to try and will have 2 day deals at many locations with drive to options outnumbering fly in destinations. They will have a lot of technology stuff around the resorts and will have programs for singles. That’s where we are headed. Recent stops in San Diego, Austin and Ft. Lauderdale re-affirmed this trend.
There will always be a market for the high end consumer but the mid-market consumer base is growing.
For other no-nonsense fractional stuff, visit with Terry Christopher Bounds directly.
5 Days & 4 Nights at an all inclusive, 4 Star resort, for two adults and two children for $499 – Total!! WOW? As the developer or resort owner, that is in business to sell club memberships, resort packages, resort memberships, timeshare, weddings, corporate retreats etc, why would you want to sell this $1,200 package at such a loss? Well lets study this.
1. Yeah you lost some revenue: You could sell that package for $1,200 and net about 10% directly off the sale. The guests would buy a few things from the gift shop and maybe book a snorkeling tour and so you make a grand total of $250 off the unit. And so if you keep that suite sold 80% of the year, (292 nights) which is 73, 4 night packages, you net $18,250. Not bad for an Inn keeper.
2. So lets say you sell that package at the discounted rate of $499….but part of the deal is that your qualified guests will attend a promotional presentation about your Vacation Club or timeshare interests or your points program. Assuming the industry average sales rate of 12% with an average ticket of $14,900, you will take in $130,500 in gross revenue from that same unit. These guests will still buy something at the gift shop and will still book snorkeling tours adding another $9,000+….but also, you still got the $499…So you are at $176,000 vs $18,000. Of course you have costs associated with your organized sales process but even if costs were as high as 75%, (which they should not be) you still more than double your revenue vs a straight rental program.
3. Now lets not forget that those membership sales bring with them some annual maintenance fees or assessments. Even if using the low side of the industry average of $650/year per member, that’s another $12,000 to help operate the resort. Many software packages and aps exist that can easily, efficiently and cost effectively manage this entire process.
4. Fly In only destinations have proven to be the best performing examples of this type of pricing for discounted promotional packages…hence Fly Buys. Numbers have shown that guests driving to a discounted lodging package buy at a slightly less percentage than those flying in.
So, if you own or are involved in a large or even small, boutique type resort property up in the mountains or at a beach or in a resort area, which counts strictly on short term rental income, consider the economic advantages that exist in the Club, Membership or timeshare sales programs. Some developers do both from the same property.
Chris Bounds Austin Texas
Manage your managers! Seems straight forward, right? WRONG. Its not easy. Its hard. Its time consuming. It gets complicated. It has to be done. Goals, accountability, reporting, timelines, budgets etc don’t just get done if not managed. Chris Bounds, Austin, Texas offers the following:
#1 Ethical Sales will cure most other issues. Lets be clear, its all about sales. Sure, someone has to decide when to order more copier paper and yes, it is sad that Rick’s father is dying from cancer and that the swim up bar at the adult pool has a cracked mirror; yeah those things must be dealt with BUT don’t let life’s distractions cloud your vision of what the goal is. Don’t stay busy all day doing things that don’t show up on the bottom line of the quarterly sales report. AND, don’t let your managers do it either. Is it coincidental that record setting sales figures seem to make it much easier and more pleasant to deal with life’s issue. I think not! SO & THEREFOR, never, ever let your management team get bogged down in stuff that has nothing to do with sales. NO, no excuses; just don’t let them do it. Try this for 3 months and watch what happens.
#2 Shift the focus of the time you spend with managers. With sales reps, you’d (hopefully) spend your time digging into the details of their sales production. But with your sales managers, you must dig into the details of their management. For example, in a review with an individual salesman (Bob), you might say, “Lets review your 30 day sales efficiency on X”. But with a sales manager, you would say, “How are you working with Bob given his 30 day sales efficiency report for X” Or rather than asking, “How could Bob have done Z better?” you instead should ask, “How could you have managed Bob to do Z better?” Make your managers answer these questions. Make them study and be accountable for their answers. This will bind the team and give them ownership of the process.
# 3 Know that you’ll teach by example, whether you want to or not. When you’re managing all phases of a project or development, you’re probably not real concerned that the kitchen staff sees you out of your professional dress when you snitch a cup of coffee on your day off. But when you’re managing managers, you and your behaviors, dress, habits, language etc., matter 24/7. REALLY. What they see, and so perceive of you, is what you are going to get back – and that can be good or bad. If you’re delegating effectively, providing useful and regular feedback, conducting useful check-ins, hiring wisely, and fairly holding all staff accountable, that’s what your management team will do. Conversely, if you tell one of your mangers that he can hold a pender over and close it the next month so he can get his Christmas bonus, then you just told him (and his piers) that cheating and breaking the policies is ok.
#4 Feed the tigers, ride the horses & shoot the dogs. It is very important that the sales mangers you manage, although operating fairly, for everyone, by the exact same policies and handbook of rules, understand that at the end of the day SALES is what we do. We do them ethically, straight forward and do not cut corners or skip any procedures, BUT our job is to sell. When managing a fast paced, high energy sales organization fairly and according to stated goals and budgets, your managers’ recipe must call for: 1. Feeding the tigers: give more leads, tours, and prospects to the #1 salesman/manager/team. The #1 seed in a tourney gets the #8 seed for first game. That’s just how it is. Make your rules and policies match 2. Riding the horses: We don’t ride pigs or cows. No, we want horses and when you have a horse why would you keep a pig or cow into the stable for riding. Horses are for riding, so when your salesman/manager/team is selling well, do not quit riding. Big mistakes are made when the top team is broken up because of promotions, lateral moves or reassignments. # 3 Shoot the dogs: we don’t want dogs in our stable; it creates caos. When a team/manager/salesman is just not performing and not performing consistently, despite your focused efforts, then you must train your management team to get the dogs out of the stable.
#5 Quick, fair & public trials: Nothing quite like a public hanging to get your attention and help you understand that rules must be followed and that the results of actions will not be dealt with in secrecy or privacy. Not withstanding proper adherence to employment and privacy laws, your mangers should see, know and understand that all matters, good and bad, will be dealt with immediately and in a fair and open forum. Showing managers that it is ok to post the weekly sales reports and comment openly on efficiency numbers is a good thing. There are no secrets in sales numbers. They are exactly what they are. No excuses, no what ifs and no where to hide. If you are second place by $0.50 then you are second place. Your management team must have the confidence to openly admonish wrong behavior and reward good behavior. Actively treating managers with this same philosophy will trickle down.
For more NO BS sales management stuff, feel free to contact Chris Bounds, Autsin, Texas.
Are we in a bubble? What a question. Its been asked for centuries and no one seems to get the right answer……until after the bubble bursts. Economic bubbles occur naturally in many business cycles and across all industries….that’s just how it is. But, when you are in one its easy not to see it, or even worse, think that it will get even bigger or, worse yet, think that the bubble is here to stay because of some new technology or paradigm shift. Well that’s all foo foo.
The fabled Tulip bubble of the early 1600’s in Holland is often used metaphorically to refer to various economic bubbles when trying to describe the extreme market pricing associated with very basic goods or services that otherwise have a much lower intrinsic value. But before the Tulip bubble there was the economic bubble that gripped Spain from 1492-1592, as the result of tons of precious metals being brought into the country from the “New World”, causing wild economic growth and run away inflation…which led to the end of the world-wide-web of the Spanish Empire. The bursting of both these bubbles led to century long problems for these countries. Spain has been effectively insignificant for the last 500 years and is bankrupt today. The Dutch have not been heard from in 400 years. SO, YES, BUBBLES EXIST and can cause serious damage even to those that have not participated in creating the bubble.
Was the technology bubble leading up to the new millennium a thing? Did it burst? Was the housing bubble created from 2002-2009 real? Did it burst. Chris Bounds, Austin, Texas says bubbles exist and they all burst. Being aware you are in one is complicated and forces you to set emotion/ greed aside and be logical.
The entire US economy is in a bubble according to Chris Bounds, Austin, Texas and worse yet, there are geographic bubbles within the Macro-Bubble. Some markets in the US are in a very basic, garden variety bubble while others are in hyper-bubbles within the overall bubble. The Nashville, Tampa and Austin markets are just three examples of real-estate related bubbles in very defined geographic areas.
So, without providing investment advice, Mr. Bounds’ current opinion of real-estate related projects is that if you are involved in one of the hyper-growth areas of the US you should:
1. Know your exit strategy. Write it down and date it and then re-read it monthly.
2. Keep some powder dry. Be ready for a pull back or a problem.
3. Be able to move quickly given extreme news….good or bad.
4. Make sure your partners, investors, lenders, vendors etc, have staying power and wont panic.
5. Don’t be greedy. Really….Don’t be greedy.
6. Be thrifty starting TODAY. Just get real lean right now.
7. Start pricing your inventory/ services/products down on a regular basis. Increase required downs. Pre Credit qualify sales when you can.
8. Don’t believe anything that anyone says at any time unless you can document it. The internet or some financial rag is not a source of information upon which to base logical decisions unless you have vetted it yourself.
9. Look up and read stories about otherwise fine developments and companies that did not survive the last downturn….particularly in markets such as Miami, Phoenix and Las Vegas.
10. Be honest with YOURSELF! You will know you are in a bubble when you catch yourself saying ” You won’t believe what I sold that unit for today…some rich dumb ass just overpaid by 50% for that thing and now I am buying a new BMW”
Terry Christopher Bounds
Austin, Texas
Timeshare resales CAN give you all the diversity and variety you count on when buying vacation ownership from a developer (the timeshare brand), yet you can sometimes buy resales at a fraction of the developer’s price. Like anything else, this is because timeshare development companies must mark up the sale of each timeshare to cover their development and sales costs. This is perfectly normal and reasonable. Similarly, if you buy a used sofa, you would expect to pay some fraction of what the selling price was of the sofa when it was new. Its just common sense. But lately, there seem to be many “re-sale” weeks available at 50%+ discounts compared to the original price. Below are some helpful tips about the realities of purchasing a re-sale timeshare.
OK, the sales person may have told you that your timeshare could appreciate in value. This is simply not always true. While many fractional ownership units to re-sell for more than the original selling price, many do not. Resale timeshares often sell for only 60-70% of the original price — some for as little as 25-35% in distressed situations. You will generally be sorry if you buy a timeshare that is in a “distressed” situation….but there are deals out there”. The resale price of a timeshare is often the most difficult truth for a seller to bear. But please realize, you are trying to sell something that must not have fit into your situation, ie, the week no longer fits your vacation schedule, the property next door was finished so your window looks out onto a wall or your kids are grown and you don’t travel like you used to. ALSO, you are not a professional Timeshare salesman. Whatever the reason, after an owner has used his timeshare for 5-6 years and saved thousands vs what he would have paid to rent, it seems logical that the re-sale price could be lower than the original price. The total cost of your ownership was marked up to cover development costs, sales presentations, incentives etc. In the long-run, it’s timeshare purchasers who absorb these costs. Think about this: If you bought a deluxe, flex week at a 4 star property for $19,900 and used it for seven years, saving over $10,000 in lodging fees and then sold that week at a 30% discount ($6000), getting only $13,900 back….have you lost money? My answer is no, absolutely not. You had ownership in a development, received all types of concierge services, maybe rented the week one year on HomeAway for $2,500, let your kids use it for Spring Break and now you get 70% of you money back. I’ll take that deal.
Given the 2008, Sub-Prime, financial meltdown, many timeshare developers went bankrupt. Many banks foreclosed and liquidated the inventory at just pennies on the dollar. That has now about run its course and prices have stabilized and at quality properties in quality locations, are now going up. With so many owners desperately wanting to sell their timeshares, it created an environment in which illegitimate companies were able to swindle hundreds of thousands of dollars from owners. There are many timeshare re-sale scams — both past and present — however, the most common involve companies that claim to have a buyer waiting. Once they have hooked you, they will charge you a fee to appraise or transfer the property, but the sale never goes through. Another common scheme is to pose as a “relief company” and charge a fee to take your timeshare off your hands; similarly, the transfer of ownership never goes through and you remain responsible for the unwanted timeshare and fees. Just be smart, YOU KNOW WHEN SOMETHING IS TO GOOD TO BE TRUE.
DO YOUR HOMEWORK !!
1. Make sure the HOA or POA is well organized and well funded. Get a copy of their financials and a copy of the last few board meeting notes. This will tell you a lot.
2. Don’t sign any transfer, purchase, sale, assignment etc, paperwork until you have read the title documents including the deed!!!!
3. If the property is close enough, go look at it. If not, have someone go look at it. I once hired an UBER driver in Hawaii (I was in Texas) to drive to and walk around and video a development and email me the video so I could see what was there. The pool was green, the bar boarded up and the security fence falling down!! No wonder the week was offered at $1,100.
4. Talk to other owners in the development. With AirBnB, HomeAway etc out there, its really pretty easy to find other owners.
5. Call the real estate commission in that state and find out if all the State required forms and registrations are in place.
6. Don’t be cheap!! You get what you pay for. Folks that buy 3 Star + interval ownership AND use it, are almost always very happy and very often enjoy much higher re-sale values.
Chris Bounds Austin Texas
Hard Money: Just sounds bad. It’s not the money that you make from digging ditches or plowing a field…..that is literally hard money made the hard way.
These days, with all the “house flippers” and get rich quick ideas involving real estate bouncing around on TV, radio and browser pop up ads, the words HARD MONEY are filtering into everyday language. So what is it? Well, for those trying to start a career in the real estate industry or those who want or need to add a little leverage to their projects, may often hear yet not understand the words hard money. So, MY definition of ‘Hard Money Loan’ is: A loan of “last resort” or a “short-term bridge loan” or “sub, sub-prime loan” that is backed by the value of the underlying property or other asset, for which the “hard money” will be used to purchase. These loans are generally sought out by borrowers that may not have good or enough credit for a time sensitive opportunity requiring funds. Hard money loans are not backed by the credit worthiness of the borrower but by the property or asset itself. Meaning the asset itself is used as the only protection against default by the borrower. So, because of this, hard money loans have much lower loan-to-value (LTV) ratios than traditional loans.
Hard money loans carry interest rates even higher than traditional subprime loans. Since traditional lenders, such as banks, do not make hard money loans, hard money lenders are sometimes private individuals that see value in this type of potentially risky venture. Hard money loans are used in turnaround situations, short-term financing for acquisitions, and by borrowers with poor credit but substantial equity in their property that for which they wish to stave off foreclosure. Hard money is also used to take advantage of opportunities that require quick action and or quick closings and settlement.
Chris Bounds Austin Texas, reminds borrowers that hard Money Lenders (HMLs) are not banks and do not offer bank terms. This is a big deal and borrows should read AND understand the documents they will sign for a hard money loan. At times, an HML may also want a “piece of the deal” or an “equity” interest in the project or property….. Meaning that not only will the borrower pay above market interest rates, but may also be asked to pay the lender more money when the property being acquired is sold or pay the lender a piece of ongoing revenue streams produced by the asset or project being funded. Do your homework.
Chris Bounds Austin Texas
Interested in double-digit returns secured by real estate but without the common headaches? Then it’s a good time to discover how to buy mortgage notes or notes secured by real estate!
Terry Christopher Bounds, Austin Texas 07/20/2015
Today’s savvy investors know they need solid returns backed by secure assets they can control. This is one of big attractions to note buying. If something goes wrong and you have to foreclose you could end up with a piece of land or a home or a note that can be held as an investment or sold for cash.
No question that there can be risk with any kind of investment. Real estate notes are no different. What if you could invest in something familiar, set your own return, AND determine your level of risk? It may sound too good to be true, but that could be some of the benefits of purchasing private mortgage notes or notes collateralized by real estate. You still have to do your homework.
A seasoned note (one that has a history of on time payments) that is collaterized by an improved golf course lot which has a market value of 2x or 3x the face amount of the note and carrying an interest rate above that of a CD or AAA bond can be very interesting. You collect interest and principal payments monthly according to the amortization schedule (cash flow) but do not have to change out toilets, deal with lease contracts or late rent payments.
But there are downsides to owning real estate notes:
When you own a note, you are acting like the bank. You are the one receiving the payments. If something needs fixed the owner has to do it. And like the bank, you also have the right to take the house or lot back in the event of non-payment.
To make the situation even better, you can structure a transaction so you are not owed anywhere near the value of the property, giving you tremendous leverage. 