When people hear the word “timeshare,” they might think of a vacation property that’s been passed down for generations, but that hasn’t always been the case. Some people have invested in timeshares hoping to turn their purchases into income streams. But is that actually possible?
The truth is that timeshares aren’t good investments. In fact, they can be a waste of money for many. The reason? They don’t increase in value and they are difficult to sell. Plus, they typically have high maintenance costs that can make them unattractive to prospective renters.
A timeshare’s only way of making you money is if you can manage to rent it out for the entire year. But even then, you may not be able to get your money’s worth. According to SellMyTimeshareNow, the average annual maintenance fees for a timeshare are around $1,000 USD. This fee includes charges for general maintenance as well as utilities and taxes charged by the resort. It’s not unusual for this cost to deter potential renters from pursuing the purchase of your timeshare.
That’s why Ramsey advises against purchasing a timeshare in the first place, especially if you have no intention of renting it out. Instead, he suggests that people interested in purchasing a timeshare look at it as they would any other investment and weigh the pros and cons.
He recommends looking for a timeshare that is close to home, and one with perks that can be enjoyed even when you aren’t there. For example, one retired couple he interviewed bought a timeshare near their house and rented it out during the Sundance festival week in Park City, UT every other year. They were able to earn enough money from the rental to cover their annual maintenance fees for three traditional timeshares.
Timeshares aren’t all bad, however. For instance, some of them can provide a significant tax deduction. For example, Jim and Hope Grant paid $25,000 for a timeshare that gives them an annual allotment of 200 points to use at a variety of vacation destinations within their timeshare network. In most cases, these points will buy them $3,000 worth of lodging at current rates. So, by claiming these expenses on their taxes, the Grants can save almost $12,000 each year – and that’s not counting the money they make by renting out their timeshare.
Moreover, if you buy a timeshare and can afford to pay for it outright, you could get even more value from it by using it for your own personal vacations. This could help you avoid paying high hotel room rates and, over time, eliminate your need to buy additional rooms for family reunions or other special occasions.
Ultimately, though, timeshares aren’t for everyone. If you’re thinking about buying a timeshare, be sure to consider how it will impact your financial goals and budget before making any final decisions. And be sure to consult with a real estate professional before moving forward.