Imagine this: You go to a bank and borrow money to build a big resort with lots of condos or bungalows or hotel rooms. You draw down your credit facility at 6% or so. You then get to build all those structures … and sell each of them fifty-two times!
Even better, some of your buyers may finance them at 13%, giving you additional profit by playing that mortgage arbitrage. Oh, and you get to collect money for all the services you provide in these vacation structures — food, telephone, laundry service, etc.
Welcome to the world of timeshare stocks. Once, this sector was thought of as sleazy. Today, now that all the big timeshare companies have been purchased by big hotel chains and spun-off, they have enjoyed newfound optics. It’s a lot nicer to call something the Ritz-Carlton Destination Club than “Bob’s Cabo San Lucas Timeshare.”
So, which timeshare stocks are the ones to buy? Read on.