Vacation ownership ? An Investment?

Posted by | July 4, 2010 | Vacation Ownership

Why Port Royal ? : My journey towards my vacation rental “investment” began in the summer of 2003 when my family decided to vacation in Port Aransas, TX We visited what is probably  the premier resort on the Texas Coast – Port Royal.

What is Port Royal ? : Port Royal is a full service resort with an incredible series of swimming pools that cascade into each other and stretch 500 feet with swim up bars, in ground sunken hot tubs, set on 25 acres of manicured gardens. The rooms (which are really condos with full kitchen, dining rooms, patios etc)  are all very nicely equipped and the service is like a high end hotel.   In the peak of summer a 2 bed unit goes for about $400 per night and the place is usually at full capacity. In the off season the prices drop considerably  and it is much quieter.

 

Why Port Royal again ? Anyway back to the story – we stayed about 10 nights and had a marvelous time and paid a princely sum. It struck me, that maybe we could buy a unit, have the management team manage it for us, rent it out when we aren’t using it and have guests stay and help us pay for our vacations! 

 

Decision Port Royal : So the investigation began and I decided to but a Port Royal Condo. We  put 20% down and took out a 15 year mortgage.

 

Port Royal 2003 : The first few years were good., we used the unit a lot ( 30 days a year) primarily in the off season and had the unit in the rental program for use by paying guests and received income that covered the property taxes, condo fees etc. Leaving a little to help me pay the mortgage ! Yes- … with prices rising, it still felt like a good investment.

 

Port Royal 2009 Now roll forward to 2009 heading into 2010. Prices have dropped and the unit is probably worth about what we paid for it in 2003! Meanwhile I have been paying a mortgage consisting of principle and interest. I calculate that the interest I have paid the last six years amounts to  approx $54000.

 

So lets summarize – what has the $54,000 got me?

A unit that has hardly appreciated, it is probably worth the same today as it was when I bought it. So zero capital gain. That is NOT good! A forced savings plan  – we do pay principle and over the last 6 years we have paid off $43,000. That’s good! An investment that will in a year or two hopefully begin to appreciate again. Prices actually had increased about 30% between 2003 and 2007 before falling recently. 6 years closer to owning the unit outright! Yes- we have a 15 year mortgage –  with 9 years to go.  That is good!

 

In summary, as an investment, based on today’s value, Port Royal ownership has not fared well.  However, prices will return to 2007 highs and at that point the “return” will be reasonable.   But most of all, we are buying a place, ‘our place on the ocean’, we are in the market and so when the time comes to retire, our unit will be paid for and no one will be able to take our unit away from us and we will own a wonderful place to spend some quality retirement time!

 

I created a web site last weekend that I hope will help drive occupancy up.

Our occupancy rate for 2009 is around 45% , so there is room for more guests and so if you are looking at staying at the premier resort in Texas, we would welcome your business!!

 

Tip 1: Condo prices at this premier resort are at 6 year lows….now maybe a  GREAT time to invest!

 

Tip 2 : If you are interested in learning more about Port Royal Condo ownership, feel free to contact me. . www.port-royal-condo.com.  I will share the ‘fine’ detail with you.

The author ‘invested’ in a vacation condo in 2003. It has been a learning experience. www.port-royal-condo.com

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2 Responses to “Vacation ownership ? An Investment?”

  1. Comment made by Chris on Aug 27th 2011 at 5:39 pm:

    Interesting overview. My family visits Port Royal almost every summer and we’ve considered buying a unit and entering the rent pool as you did. I have some questions:

    How much are the condo fees, which you’d need to pay even if you’re not in the rent pool?

    To participate in the rent pool, you must pay some of the gross rentals. What is the average gross and your net average rental income?

    Has the condo association raised your fees or initiated any special assessments since you bought in?

    Can you drive potential renters to your specific unit, or are you just in a random pool? I know some units are very nice; others are so so; and we always ask for the better, more updated units.

    Thanks much for any info you can share.
    Chris

    • Comment made by DDR2.0 on Oct 5th 2011 at 1:26 am:

      Hello Chris,
      Personally if I where to purchase a week for rental purposes, I would make sure I didn’t pay retail. For any success with vacation ownership rentals the resort needs to be high demand which makes it quite hard to get a deal on the price. As with any business you must understand that if there are 2 units available for the same week and you own 1 and the resort owns the other, guess which one will be rented 1st…
      Now if I paid under a 1K for that week, well the worst that can happen is that I spend a week with my family in my villa! Look around for private resales. Don’t go to Timeshare Resale Co. and under no exception should you go to a resale company to rent or sell your week. Big upfront expense with no return.

      TC
      Dan

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