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.
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.
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? Is it comparable to buying another house? 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.
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!
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.
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? Contact a Home Loan Expert today! Or share your experience with other Zing readers in the comments section below!
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