There are of course a lot of ways where we could lose money … but the big three are:
- Buying the wrong product
- Not understanding the system/jurisdiction you are in
- Buying without subject when you have not sold your current house yet.
For instance, if you had bought a regular condo (unlimited personal use) in 1998 in Whistler you would have seen values overall double, but had you bought a Phase 2 (limited personal use) condo … you would be just even. BUT, had you bought a quarter share you lost 40% or so and had you bought a hotel unit you lost 60% and more.
Also, people think that time share is real estate. It is not! It is a holiday purchase. Imagine you convert a 200-suite building into timeshare, you need to sell 10,000 weeks. The developer is forever in competition with you.
In every hot market – as now – there is pressure to buy without a subject-to-sell clause. At the same time owners are often told there is not a problem selling their existing house. I have seen it in every downturn. People get stuck with two houses, high rates and/or two mortgage payments.