Unstable economic times make investors think twice before investing in the real estate market and try to diversify. They are looking for ways to invest in unique alternatives and help create some kind of solid financial situation. Investing in a timeshare requires more thinking and assessment than buying any other property.
Well, let’s first understand what timeshare is!
Timeshare, or ”vacation ownership”, is a type of property ownership in which a group of people shares the use of a property. If you want to have a place to vacation regularly, the timeshare might be right for you. There are different types of timeshare:
- Fixed weeks. If you are the owner of a fixed week timeshare, you can use this property for a specific amount of time. For example, you fall in love with a place and can’t afford to buy. The timeshare in this location will give you a chance to come back to it for the next years – from 5 to 20.
- Floating weeks. Here you can reserve your own time during a specific period in the year. Sounds good, still, you have to act quickly to be able to reserve the best time for you, as the market is competitive.
- Right-to-use. If you have a right-to-use arrangement, you lease the property for a given amount of time each year for as long as the contract stipulates. However, bear in mind, that the developer maintains ownership of the property.
- Points club / vacation club. This type is more like floating timeshares. The buyers may travel to various locales depending on the number of points they have accumulated –something like travel reward programs, and use it as currency.
Now, when we have some information about timeshares, it’s time to point out some pros and cons to help you make up your mind and close this topic.
PRO: You don’t waste money
You pay for only what you use. For a vacation house, you pay for the whole year, and the house is an empty part of the year. For timeshare, you pay only for the period you stay there. Besides, you don’t have to pay for maintaining your home when you are not using it. So this option is affordable as well.
PRO: Your vacation is guaranteed
If you like predictability, a timeshare is right for you. This makes it easy for you to budget and save money, as you know beforehand where you will stay. Timeshare is a great and cheaper alternative to hotels and vacation homes/condos. Just make sure, you like the place so much to be willing to come back here each year after.
PRO: Affordability
Not only the above-mentioned points are good, but a timeshare is also great for large families or for groups. Hotels might be good for some people, but if you travel with your kids or large groups, you will have to pay thousands of dollars for a nice hotel. Cheap hotels are not good at all for a family. In addition, a timeshare usually has a kitchen, which may save you a lot of money on evening meals. So, if you like to travel with your family and love to feel like home everywhere, timeshare is definitely a sound investment.
PRO: Exchange programs / Flexibility
While the timeshares become more and more popular, different exchange programs are being set up. This allows the owners to travel to different places and on different periods of the year, exchanging their units and times with other owners. This also gives you an opportunity to stay attractive in the market, when someone wants to lease his timeshare.
With these positives listed, you might get blinded. But don’t hurry. Here are some negative points for timeshares, which are too common for some consumers and make them ignore this idea.
CON: Maintenance fees
While you do not have to take care of maintenance, you will have to worry about the annual fees. Note that annual fees are growing up by almost 4% every year. Sure, you don’t have to write taxes physically, however, you end up paying for all necessary things, like fixing leaks or getting TV cables. So in the end, depending on the location and your property type, the cost for annual fees can range from $200 to $500 US.
CON: Resale
The difficulty to resell a timeshare makes one of the main cons of timeshare ownership. Sometimes it’s almost impossible. Some contracts even restrict your ability to sell your property on your own. Besides, some developers may require commissions on your sales price. Timeshares often depreciate in value, so you may lose money in the resale. In any case, be sure to ask about resale politics of the property when signing the contract.
CON: Your money is tied up
Unlike the people who are quite ok with a prepayment of their vacations, others are not comfortable with this at all. This is a big commitment financially, and you should really take your time to examine all the advantages and takeovers of a timeshare before buying one.
CON: Location
If your location is not good enough, your contract can be constricting due to an unexpected change in the real estate market. If you have a timeshare in a place that loses its appeal some years later, and people are not interested to exchange their units with your place, you may be stuck.
CON: Limited options in vacation scheduling
Although there are exchange programs and your opportunity of owning a floating week timeshare, it’s obvious that networking is the key in a timeshare. You have to struggle for the period you want to spend your vacation. As most vacationers want to get the space at the same time, it may really become hard to come to compromises. Also, remember that you need to book your unit and time period as soon as possible, but you may lose your current job and after finding a new one you may not have vacationed at the time you were planning to.
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It’s up to you! Our advice is, to rent a timeshare week first, and only after it, think about investing in it. If you like the type of accommodation and find yourself quite happy with it, then purchasing a timeshare is for you. You can also speak to several owners and ask about their experiences.
By: Hermine Aslanyan