The Hawaii Time Share Benefit

Years ago we shunned offers for Hawaii time shares marketed to visitors to Hawaii. The sales people gave super discounts on activities and deals to stay for a week if you listened to their spiel.  But, we believed buying a time share was a bad financial deal because we viewed it as overpaying for vacation condo ownership without all the benefits.  So we bought a condominium in Kona and used it for our vacations to the island for years and rented it to other visitors while we lived on the mainland.

However, when friends were visiting last month, we advised them to buy a time share for their annual two weeks of vacation, rather than investing in a condo.  Here is why we convinced them:

First, every time we came for a “vacation” we ended up spending the first three to four days fixing a long list of issues with the condo.  It was a lot more work than we would have guessed.  Since we did not have our tools in Hawaii, we ended up buying a new set of tools every vacation. Eventually, we made a small portable tool kit that we brought with us each time.

Second, owning a condo meant that  we always came back to the same place.  If we had a time share we could have visited other places in Hawaii or the world.   We could have upgraded.  In retrospect, that is not a small thing.

Third, the great tax advantage that we anticipated did not happen.  During our high income years on the mainland we were blocked from taking the losses we had from changes in IRS rules and in recent years, our losses on the condo have given us no tax benefit because our taxes are so low from lack of income.

Fourth, any savings from staying in hotels by having a condo was more than offset by the ever increasing Home Owners Association fees that went from $300 a month to over $660 a month. Insurance, taxes, upkeep and the associated bookkeeping to track the money we lose every year is expensive and time consuming.

Fifth, our anticipated equity benefit from real estate prices going up in Hawaii has not happened.  Many properties on Hawaii Island are still down by over 50%. We could have bought a really nice time share for what we have lost in equity over the past 10 years.  Though the condo is in a great location, it is too small to live in full time so it is still a vacation rental.  Even one year of our annual operating losses would have more than paid the annual fees of most time shares.

Looking back at our ten years of our condo ownership, we can see the great benefits of having  bought a time share rather than buying a vacation condo.