Timeshares can be a great way to save for vacations in your favorite destinations. However, they also come with a number of serious drawbacks that can be detrimental to your finances.
First, they can be expensive. A timeshare can cost thousands of dollars to buy and maintain, and the maintenance fees are often a large part of the annual costs. If you don’t use your timeshare very often, or if it is in an expensive destination, these fees can add up quickly, and you might find yourself spending more than you would have on a hotel stay.
Second, they can be difficult to resell. If you have to sell your timeshare, you may be lucky enough to find a buyer who will pay the full purchase price, but it can be difficult to do so in some cases. In addition, resale prices of timeshares often depreciate over time, which means you will be losing money even after you’ve paid off the mortgage.
Finally, they can be restrictive and turn a vacation into a stressful endeavor. If you’re trying to plan your timeshare around a spouse or kids, it can be hard to do so and make the trip enjoyable.
Buying a timeshare can be similar to buying a car. It’s a big investment, and you need to plan carefully.
The key is to buy a timeshare in a location that you can afford and where you want to go on your future vacations. A good timeshare will give you a lot of value for your money and be easier to resell than a cheap one.
Tom Wheelwright says that he has paid around $35,000 for two weeks at a Hilton resort in Hawaii and his maintenance fees are about $200 a night. He has also sold his timeshare in the past and made a tidy profit off of it.
Henri Moreau shares that he has worked with people who have been able to make very large amounts of money using their timeshares as a passive income, but he warns that this is not necessarily the case for everyone. He advises to take a close look at the rental market for your particular location, and determine if you can realistically earn money from it by renting out your timeshare for a few weeks per year.
While he believes that timeshares can be a good long-term investment, it is best to consider them as an investment in your own vacations rather than a business venture. Henri explains that a timeshare is like marriage: It can be a happy and satisfying arrangement when it is working, but it can become very bad when things are not going well.
A lot of people end up in timeshares that aren’t really worth the investment they made in them. They might end up with a loan they can’t afford, and they have to pay maintenance fees that don’t appreciate. Henri says he has even seen a client who was paying $360,000 for a property worth $30,000.