Timeshares have long been a popular vacation option, offering an affordable way to enjoy a desirable location every year for less than what it would cost to stay in the same hotel at peak rates. But while these accommodations are not the same as a house or condo, you do have to shell out significant cash upfront for the timeshare, and also regularly for the annual fees. Unless you plan to rent out the timeshare (which requires significant upfront work), it’s hard to make this investment pay off, especially since fees often increase over the years.
When evaluating a timeshare, it’s important to look at the entire package—including maintenance fees, yearly property taxes, special assessments and utilities, as well as travel expenses and possibly the costs of food and entertainment during your visit. While the initial purchase price may seem reasonable, you will have to spend far more in the future to keep it afloat. This is why it’s best to approach a timeshare with the same care and caution as any major investment, instead of jumping at a slick sales pitch.
Many people who own timeshares end up regretting their decision to buy. In fact, the timeshare market has experienced a decline in popularity in recent years as consumers seek better alternatives to this type of vacation ownership. The reasons for the decline are numerous, including the fact that timeshares don’t appreciate in value, they depreciate just like a car, and the annual maintenance fees usually exceed what you would pay to stay in a comparable hotel room at the same destination.
Aside from these factors, it’s also important to consider that, for most timeshare arrangements, if you don’t use your allotted time or even try to sell the timeshare, you will lose it. This “use it or lose it” policy is why most timeshares are not considered good investments.
Buying timeshares on the resale market may offer a way around this problem, but this isn’t a surefire solution, either. While resales are typically cheaper than purchasing new, they can be difficult to find and require extensive work to be sold.
The bottom line is that timeshares are expensive, they don’t appreciate in value and, for the most part, they are not worth the money you’ll invest. If you’re considering buying a timeshare, be sure to read your contract carefully and consult the real estate professionals.
Mel and Lana King bought a timeshare several years ago for $15,000. They were allotted two weeks at a particular resort in a specific room each year. The Kings can either use their allotted time or, depending on the contract terms, they can rent out their rooms and collect a fee, or they can let friends or relatives use their allotted time. This is an example of the flexibility and freedom that some timeshare contracts provide, but it’s important to evaluate a timeshare just as you would any other investment. It’s not as easy to get out of a timeshare as it is to invest in a house or condo, so you must be sure that the investment is right for you before you commit to one.