Hey, It worked.
Hey, It worked.
Timeshares The Balsams proposal, as I remember it, was not exactly a timeshare but has much of the sme concept and risks. The risk of the project not going forward is minimized somewhat by the fact that all they want is a refundable deposit held in escrow. I expect they have or will have a waiting list for popular units or suites. The purpose from the developer's side is as another source of capital that they can point to the major lenders as a resource.
Many people have had bad experiences with timeshares, the annual cost sometimes coming up to or exceeding the cost of a rental for the same time period. Usually that only occurs when they're raising money for major capital needs ... which ultimately all real estate needs. My experience over 30+ years has been a good one but it is perhaps unique in that it is a house (sleeps 6 in 2 BR and a den), in a location we fequently visit (Cape Cod), is well run, and the average cost to us has been in the range of 1/3 the cost of a rental. We've used it every year since we bought it, it has become a family tradition at the shoulder season (Memorial Day) which meant we paid off season price for what, to us, is prime season time. We tried exchanges a couple years but were not happy with either the process nor the uncertainty about what we'd get ... our trips are planned in more detail than that ... and our ideas of destinations are a lot different than the myriad of disneylands that are available.
Timeshare have a lousy connotation and I dont think any developer would consider using that term. Its a modified "interval ownership". Unless things have changed, the buyer buys the right for 100 nights a year in perpetuity for a specific unit. There may be a recorded instrument for the sale but to call it a conventional deed will be stretch. Its really a long term contract between an individual and a very complex ownership structure. If and when the ownership structure changes, usually the contract gets changed. I understand the escrow concept and expect that the units will get built and that some level of amenities will be developed. How long those amenities exist and operate is another story. In some ways its a legal Ponzi scheme, those up front make out for awhile but eventually the original developers have cashed out and the project dies when the demand drops. There is a kicker that the resort will attempt to rent the units as short term motel rooms and share the income obtained when the owner is not occupying albeit with nebulous administrative charges. This is being advertised as part of the deal but I seriously doubt that there are any guarantees on return but lots of promises . There will be attempts to make the resort 4 season but to date there is no resort that has pulled it off in the Northeast although many have tried. Realistically at best there are about 6 peak weeks at the ski resorts in this region, Christmas to New years and two weeks in February with some overlap into other weeks.
Your experience with timeshare is pretty contrary to my and others experiences. The standard business model is high pressure/high commission sales. Generally construction standards are using poor quality materials that look good. Les Otten was pretty infamous at Sunday River for shoddy workmanship and he had a full time crew for quite awhile whose job was to patch up things when things went bad. The town of Newry didn't have any real inspection or code enforcement so many corners were cut. Luckily Coos county does seem to have put in place a mechanism to fund oversight but given the scope of the project I still expect corners will be cut in the big rush to get it open. The developer generally retains control of owners association initially and they intentionally underfund any long term maintenance accounts to keep the fees low up front. Inevitably when things start to wear out or code enforcement catches up and things have to be upgraded, the accounts are dry and the developer has handed it off to an unknowing association. Generally the annual meetings where decisions are made are at inconvenient times of the year and usually the developer has restrictions that all work has to be done by resort approved firms that usually are friends of the developer so they get a cut of the cost to repair their poor workmanship.
In the three cases I am fairly aware of in the family, the relatives ended up having to abandon the units to the associations when they got sick of paying the nearly yearly special assessments for things like upgrades due to missed code issues, premature roof replacements, ongoing maintenance issues where they would find out that their units were not ready for occupancy when they showed up. In all three cases the amenities promised diminished or disappeared over the years. In all three cases, the associations made it quite difficult to abandon the units, they would hire law firms that would try to shake down owners who wanted out by delaying the transfer and hitting up the owners for special assessments long after they had notified the association that they wanted to walk away.
I expect you went into the timeshare market armed with a lot of knowledge that most folks don't have and was rewarded by getting one of the rare ones that worked. I expect given the Balsams primary backers background and history, they will be marketing to those who are not financially astute who want to buy into the good life concept.
The reality of the old Balsams was that it had been losing money for years. The owner had numerous patents and owned multiple companies (including at one point Pearson Yachts). He ran the Balsams as a hobby and made sure that when it needed cash the cash was there. Local folks who worked in the restaurants would comment that most of the food from the multicourse banquets went out the door as garbage as there weren't enough guests to eat it. The Ski area frequently ran with almost no one skiing. Thus anyone who visited was being subsidized by the corporation. The reason it closed down after the owners death was that it was specifically in his will that the subsidies would stop. The few firms that looked at the books all came to the conclusion that the operation was unsustainable and after an aborted attempt by one firm to take it over it ended up being sold to whomever would buy it after the SPNHF money bought the price down. The current owners stripped much of the history and sold it at auction and some ham handed demo work stripped the project of the ability to get historic tax credits. There was quite a bit of wood on the property that had not been cut for many years so they cut it hard and made back their bucks. They are essentially free and clear over what they paid for it.
Yes, peakbagger, I got a good one but even then the liquidity and market value leave a lot to be desired. I miss the old Balsams and am resigned that it probably won't come back anywhere near the "old" Balsams. Was tempted a few years ago by a similar concept with 8 weeks in Santa Fe, a 2 BR condo-like unit, operated by Fairmont Hotels, generally 5 star operations, with better rental economics and reciprocal use at other Fairmont hotels ... but there's nothing like fee simple. Love your "woodlot"!
For less than the price of the Balsams deal one can get some decent homes or land in northern NH and Maine that, selected and managed properly, can yield terrific returns over the long run.
Another update. http://indepthnh.org/2017/04/19/otte...th-to-success/
Otten: “I think we’re fairly encouraged that we are on a path to success,”
The project has many – but not all – of the state and federal permits needed to move ahead and there’s strong interest in condominiums, he said.
Buyers have put down 5 percent deposits on “over $20 million” in condominiums and another $6 million to $7 million “are in the pipeline,” he told commissioners Brady and Grenier.
Those are refundable deposits, however, and Otten does not yet have permission from the New Hampshire Attorney General to sell units.
The comment about "some construction could occur this summer" is definitely getting old in the north country. Some local firms reportedly made investments in their businesses based on assurance that construction would start two years ago.
IMHO, there will be no significant investment in the Balsams until NP is resolved one way or the other.