If you own a timeshare, you may be paying thousands of dollars each year for an ownership interest that has absolutely no resale value. This investment is certainly not one you want to make without first knowing the facts about this popular vacation ownership product.
Timeshares have become popular with many people, especially retirees who find them an ideal way to save for their vacations. They also can be a source of additional income for those who can rent their unit to other vacationers. But what many people don’t realize is that the money they spend on annual maintenance fees and special assessments can quickly add up to more than a typical vacation.
A timeshare is a type of vacation ownership that gives owners the right to use a specific property for a week each year or a portion of a particular season at different resort locations. Unlike real estate, timeshares are not an equity asset and do not appreciate in value, but they are typically much cheaper than booking a hotel room for the same trip. But as with any major financial decision, you should take your time and consider all the costs involved before making a final determination to purchase.
Despite the promise of affordable vacations, timeshares come with significant hidden expenses and are often considered scams by many consumers. For example, some timeshare companies will charge sellers upfront to promise access to eager buyers for their units and then fail to follow through. In addition, if you fail to pay your annual fees, the resort may sell them to a collection agency, which can negatively affect your credit score.
Some timeshare companies will offer to take over delinquent accounts, but they may do so at a substantial cost. In addition, they may require you to sign a new agreement and possibly increase your annual fees. Regardless, you should never pay any company upfront to take over your timeshare.
The main drawback of a timeshare is the ongoing maintenance fee. This averages about $900 a year but can be even higher on high-end properties. Resorts that have been damaged by natural disasters or are undergoing improvements also often charge extra “special assessments” to owners.
Fortunately, you can reduce these annual maintenance fees by renting your timeshare to others when you don’t plan on using it for the allotted vacation weeks. This is not as easy as the sales pitch would lead you to believe, but it is possible.
One couple recently told us that they used to own three traditional timeshares and rented out all of them. Their rental revenue more than paid for the annual maintenance costs of those three units combined. We can show you how to do the same if you have a timeshare that you’re not using. So don’t let a shady timeshare presentation lure you in with false promises – our office is happy to help! Call today.