Are Timeshares Worth the Money? - Quicken Loans Zing Blog

I’ve heard good and bad things about timeshares. I’ve heard they’re a huge waste of money. I’ve heard the opinion that revisiting the same spot year after year is just a dumb way to vacation. Then again, I’ve vacationed with people who have a timeshare, and in their opinion (and mine, quite frankly), timeshares are THE BOMB.

All opinions aside, are timeshares a sound financial investment? The high-pressure sales tactics often used to sell timeshares have given timeshares a bad name. On the other hand, why would so many people buy into timeshares if they’re not worth the money? Let’s take a look at how timeshares work and the fees and costs involved to find out if a timeshare could be a good purchase for you.

Types of Timeshares

The word “timeshare” has a few different meanings. Let’s talk about the differences between deeded and non-deeded timeshares.

Deeded Timeshares

According to Vacation Timeshare and Rentals, in a deeded timeshare, the owners have actual deeds recorded in the county where the property exists. It’s kind of like buying a home, but you only have access to that home for a specified period of time each year. You can sell the timeshare, rent the timeshare or even will it.

Non-Deeded Timeshares

A non-deeded timeshare is more like a rental agreement. Non-deeded timeshare owners don’t own any actual property, but they may have a lease, license or club membership to use the property for a specific amount of time each year for a specified number of years (or permanently, depending on the timeshare they buy). This type of timeshare can often be more flexible than a non-deeded timeshare. Since you’re not necessarily buying into a specific property, you could have the opportunity to visit another resort location.

Fees and Costs

So what the heck does it cost to own a timeshare? Well, the cost varies due to things like the length and frequency of your visits and the type, size and age of your property or membership. Here are the costs you’ll need to cover if you’re buying a timeshare.

Buy-In Costs

First thing’s first: You’ve gotta buy your piece of paradise. According to SmarterTravel.com, the buy-in price can be “as low as $5,000 or as high as $350,000.”

Maintenance Fees and Utilities

You’ll most likely have to pay an annual maintenance fee, which covers things like taxes, insurance, repairs, upkeep and staffing. BudgetTravel.com says that annual timeshare maintenance fees typically fall somewhere between $450 and $750 a year, but this can also vary widely.  I’ve heard of maintenance fees as high as $2,000 a year!

Occupancy Charges

You may also have to pay an occupancy charge for the time you’re actually spending in the timeshare. This could cover things like housekeeping, room service and other services that you charge to your room.

Travel

Unless your timeshare is a clubhouse in your neighbor’s backyard, you’ll probably have some travel costs. Whether you have to budget for gas or airline tickets, you’ll have to make some kind of yearly allowance for travel to and from your location.

What Happens If You Want Out?

Real estate is generally a good investment, but timeshares aren’t your typical real estate. What happens if you want to get rid of your timeshare?

According to LearnVest.com, the value of your timeshare will most likely decrease sharply after you purchase it. Even if it’s in a super sought-out location, the constant increase in the supply of timeshares means that the properties are less in demand and more likely to depreciate in value. In fact, LearnVest.com likens the purchase of a timeshare to the purchase of a car: “You may get a lot of use out of it over the course of twenty years, but it won’t be worth much once you try to sell it.”

Are Timeshares Worth the Money?

Well … like many things in life, it depends. A timeshare is a poor investment, but if you’re buying your timeshare only because you want to enjoy a yearly vacation, it may make sense for you.

Before you buy, do all the research you can. Get the numbers on buy-in costs, maintenance fees and anything else you’d be expected to pay. Figure out if you’d really be saving money over what you’d pay for a comparable yearly vacation in the same area. Ask as many questions as you can, and don’t allow yourself to give into the high-pressure sales tactics that are commonly used by resorts – even if they do offer you a free TV.

If you do decide that a timeshare is the right option for you, think about buying one secondhand. Make timeshare value depreciation work in your favor by buying from an owner rather than a developer. If you play your cards right, you may just walk away with one heck of a deal!

Do you own a timeshare? Are you thinking about buying one? Share your experience with other Zing readers in the comments section below!

 

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This Post Has 6 Comments

  1. Almost got into one in Cancun with a hotel resort for 20 years. Seems like a lot but after 10 years we would have paid it off and vacationed for another 10 years just paying the maintance fee of 1200.00 a year. This would be for 2 weeks a year, no black out dates and as long as you book 30 days in advance you are pretty much guaranteed a room. You can also use it at their other locations and through RCI plus another website that has deals. Oh, also this was an all inclusive timeshare that gives you points so that the points never devalue in money, that is what they said. My only fear is what if this resorts sells and no longer honors our timeshare. Any one has any advice on that aspect?

  2. I am looking at this right now in Australia. A lot of timeshare resorts became available between 15 to 30 years ago and now many of the original buyers want out because they don’t holiday as much (getting older) and can’t justify paying the annual management fee ($500-$700 per week purchased). Can pick up a lifetime timeshare for between $1k and $2k for 1 week a year, which seems a bargain – certainly compared to what these people paid originally (between $5k to $20k). BUT….. that annual and inescapable management fee is a bit of a noose around one’s neck and one must consider whether you could rent somewhere nearby for a week for that anyway. On the positive side, you can trade your week for other resort locations and also take advantage of ‘bonus weeks’ that let you rent at other resorts for really good low rates (when they are available).

    Still confused!

  3. We have a timeshare and the maintaince/membership fees is close to 1k. We try and use it for other locations but nothing great comes up and our week it is a time in november. it truly has been a waste of money. We got suckered into it basically.

  4. We bought one last year, and after running through all the numbers, fees, etc., we figure that what we’ve bought is a guaranteed 1800 sq ft resort room at about half price. The longer we keep it, the less the “per year” price is going to be, but — and here’s the thing — it’s never going to be for nothing, and too many people think otherwise.

    I just think you have to be doing it NOT as any sort of investment but as a discount off vacationing at that place. Too many people think of it as a real estate investment. If you couldn’t afford to vacation at that resort anyway, then you probably aren’t right for that timeshare.

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