Exclusive membership, unique settings, beautiful resorts, fabulous locations, great marketing pitch, and access to above ordinary amenities. These are just some of the things that may encourage an individual to invest in a timeshare.
You may already know the wonderful perks included in timeshare offers, and since it’s been made obvious from day one by agents with great marketing schemes, there is one question you need to consider before putting your hard earned money in this arrangement. With all the wonderful amenities that you will receive, is it all worth it? Will you get your money’s worth? Timeshares are not cheap because you have to pay for exclusivity, but is it a good investment in the long run.
A timeshare, also called vacation ownership, is a type of ownership wherein you may not actually own the whole facility or property, but you get rights to use it. Timeshare arrangements can be applied to condominiums, resorts, hotels, houses and even vehicles like private jets and yachts. There are many types of timeshare arrangements. Timeshares can be considered real property if the timeshare is purchased with deeded contracts. You become a part owner, and you can use the facility for the time allotted to you. You can also leave it to an heir.
Another type of timeshare arrangement is the “right of use.” With this arrangement, you get less security since you only get the right to use the facilities or property for a fixed period of time, and the contract can expire and all rights will be turned over to the owner.
What do you get from a timeshare?
With a timeshare, you get exclusive members-only (or owners-only) access to different facilities (as in a resort). You are allotted a specific time (it can be flexible depending on the contract) wherein you can use the property. Timeshares mostly are used for vacations and out of town getaways. Compared to actually buying a vacation home or a condominium, buying properties in timeshare actually costs less, but, of course, you do not actually own the property. You can also purchase a timeshare as a gift or give it to charity.
Some people consider timeshares as an investment because you can sell it, or you rent out your time allotment. Especially if the resort or property is popular, you can actually get quite a nice income from renting it out. There are many people who may rent your timeshare if the resort is exclusive and offers amenities they can enjoy. You can rent out the all the time or save some for yourself. Usually timeshare resorts and hotels have more amenities and perks as compared to ordinary hotels.
Point systems are available in some timeshare contracts wherein you can get a certain amount of points each year depending on your ownership level. Some points can be exchanged for airline tickets, amusement park tickets, hotel accommodations, etc.
Why can timeshares be a bad investment?
If you have a lot of money to spare and if you are into vacationing in exotic and unique places then a timeshare may be reasonable for you. However, keep in mind that unique may only be applicable to the first few visits to the property, and you have to use the property over and over again to get your money’s worth. After a while, the property may lose its unique appeal to you. If you are considering buying serviced apartments or a timeshare as money-making investment, it is a bad idea. Aside from the huge upfront payment, it is laden with fees and other yearly expenses, making it an expensive investment that is hard to sell.
Weighing the facts, do you think timeshare is a worthy investment? Do you have a timeshare? Why did you buy yours?
YFS is owner and author of Your Finances Simplified. He was born and raised in West Philadelphia and is now a financial adviser, IT contractor, landlord, and treasurer of a non-profit. He created his blog partly due to his desire to help people with their finances.