If you love returning to the same beautiful vacation spot year after year, a timeshare can be an economical and convenient way to spend your annual trips. Timeshares are shared property owned by a variety of buyers that each take turns using the unit for one week to several weeks a year. Less maintenance than a vacation home, more spacious and convenient than a hotel room, and more affordable than both in the long run, a timeshare can be a great option for those that desire guaranteed, stable vacation plans. However, there are also several unsatisfactory aspects of owning a timeshare to consider before you make the purchase. This guide will weigh the pros and cons of timeshares for you to give you a little background information and help you to decide if it is the right buy for you.
The pros
- Long-term savings vs. hotel stays. Hotels can be quite costly-- paying upwards of several hundred dollars a night to stay in a luxurious resort can cost you well over a thousand dollars for a one-week-vacation. If you purchase a timeshare, you will make a down payment of about $8,000 (depending on the property) and pay yearly maintenance fees of around $550. While the maintenance fees do tend to periodically increase over time (about four percent a year), hotel rates will as well. In the long-run a timeshare will be more economical than renting a hotel room annually.
- Better accommodations. A timeshare is similar to a condo or an apartment, and typically has several bedrooms, bathrooms, a full kitchen, and much more extensive amenities than a hotel room. Even an expensive hotel suite typically lacks the space, the separate bedrooms, and the convenient laundry facilities that a timeshare will offer. Rather than crowding into a cramped rented room as you would in a hotel, a timeshare allows you to experience the spacious privacy and advantages you would have in your own vacation home without the high costs.
- Exchange ability. If you fear visiting the same resort year in and year out will become mundane, timeshares usually offer an exchange program where you can swap units with other affiliated locations. Though you will typically have to be pay a membership fee for the exchange program as well as the fees associated with the actual exchange, this feature allows you some flexibility and versatility when planning your vacations.
- Pre-planned vacations. Vacation-planning can be a hassle and a frustrating distraction from our already busy lives. Coordinating time off, researching hotels, browsing travel brochures, and choosing a destination each year can make the relaxing luxury of taking a vacation feel more like a burdensome chore. If you own a timeshare, your vacation is already planned each year--all you have to do is take the days off from work. With so little prep work involved, you may be more likely to actually take your vacation and spend some valuable time with your family.
- Less maintenance and more affordable than a vacation home. A timeshare is a much simpler and more economical option than a vacation home for a variety of reasons. Of course, you only pay for the time you use--rather than purchasing a full-price home (often extremely costly because they are in prime vacation locations) that you will only spend one to two weeks a year enjoying, you will only pay a small down payment of several thousand dollars and monthly fees for maintenance. Additionally, there is no upkeep required --all landscaping, repairs, and even decorating and furnishing is taken care of by the resort. Your fees will also cover insurance and surveillance on the property at all times, unlike vacation homes that are no one's responsibility but your own while they are vacant. Timeshares may even offer you access to a variety of amenities included in the cost of your unit, such as pools, gyms, spas, golf, and tennis courts.
The cons
- Possibility of scams. Like many other industries, the timeshare business has a reputation for scams, under-handed sales tactics, and false incentives to attend a timeshare presentation. You are encouraged to always read the fine print, never commit to buying or selling on the spot, letting an attorney read any contract before you sign, and if you are offered a prize or incentive for attending the presentation, never agree to pay for the shipping and delivery. With timeshare scams, the prize will often be something much less valuable than what was promised, and the dishonest sales person will have swindled money from you in exchange for the false giveaway. You should also ask for references from the resort before buying, never give in to high-pressure tactics, and conduct thorough research on the market, industry and resort before considering a purchase.
- Lack of flexibility. If you prefer spontaneity rather than routine, a timeshare may feel restrictive to you. Most owners prefer to keep the same weeks each year, which may make it difficult for you to swap if you choose to change your vacation time at any given year. If you aren't exactly keen on visiting the same destination each year, you can sign up for an exchange program and trade a timeshare with owners of a unit in a different resort--however, these programs carry additional fees as well.
- Depreciation. Unlike most real estate, timeshares typically do not appreciate in value. This means a timeshare should not be thought of as a investment, but more like a purchase similar to a car, which will depreciate over time. Because about half of the upfront payment you make to purchase your timeshare goes to cover marketing and sales costs (even those spent on people that never purchased one), it is unlikely that you will make any profit if you resell it.
- May be difficult to resell. Speaking of reselling your timeshare, this can often be hard to do. Timeshares have a difficult resell market, with many more people looking to sell their timeshares than buy them. Additionally, many developers restrict your ability to sell the timeshare on your own in your contract. They often reserve the right to first refusal and require that they receive a commission on your sale even if you sell it independently. What makes a timeshare so valuable is not the ability to sell and make a profit, but owning it for the long-term and saving money on vacations that would otherwise be spent renting costly hotel rooms.
- Rising maintenance fees. Because the costs of goods and services raise over time, your maintenance fees are unlikely to remain constant over the years. While the fees are still less than what you would spend each year on a hotel room, they will climb over time--up to about four percent a year. To get a better idea of what you can expect to pay in fees before purchasing your timeshare, ask to see past data and statistics regarding the fees to determine how much they are likely to increase in the future. Remember, while costs associated with your timeshare will grow over time, so will the rates for hotels--possibly more so.