So you’re thinking that you might buy a timeshare for you and your family to enjoy, but you’re not completely clear on all of the associated costs besides that primary mortgage payment. Here, we’ll list and break down some of the most common costs associated with buying a timeshare and just how these costs impact your bottom line as an owner.
Timeshares are sold based on two ownership options: Shared Deed Ownership and Shared Leased Ownership Interest. These two options are sold as viable, consistent vacation opportunities for timeshare owners.
Shared Deed Ownership alots each owner a percentage of the timeshare. That percentage of ownership typically depends on the total number of that timeshare’s owners. If a timeshare unit has 52 “owners”, then you would probably purchase your fixed week along with 51 others to total the year’s availability. Shared deed ownership timeshares are often pitched as “a great investment that can be passed down to your family,” while in actuality, they are not an investment that your family will enjoy receiving from your willed estate when the time comes.
Shared Lease Ownership Interest serves as a “right to use” specific timeshare properties and is less defined by a physical property or timeshare management company. In this case, the property deed is still owned and held by the timeshare company itself. This type is similar in nature to the “points system”, as the vacation industry has become more about wide travel to new destinations rather than regular, consistent travel to the same area.
Although timeshares aren’t traditional real estate, most of the transactions that take place when you purchase a timeshare are treated as real estate transactions. The types of upfront fees charged could include (but certainly aren’t limited to):
If you don't have the money upfront, the sales representative will push you to sign up for "exclusive" credit cards (with reward points! Yippee!) to help make your lump sum down payment on the vacation home. They will do a financial background check throughout this process as well (including checking your credit score) to ensure you qualify for said credit card opportunity. However, chances are slim that you won't financially qualify for their "exclusive" credit card. Most sales representatives aim to "cast a wide net rather than a deep one" with their deceptive sales tactics, so they won't often disclose most of this information at the initial sales meeting.
Sounds like quite a few fees before you even get to stay at your luxury timeshare community, right? But hold on, they’re just warming up.
Timeshares have monetary costs, of course, but step back and think momentarily about the logistics of planning a trip to that vacation property you love so much. How long does it take to get there (by car, plane or otherwise)? Can you consistently plan a trip to this vacation spot with you and your family’s schedule in consideration? Furthermore, is this something you and your loved ones can commit to paying as lifelong timeshare owners? You’ll have to pay the annual fee regardless of your ability to actually reserve that specific week each year.
For timeshare owners that purchased into the points systems, you might have a little more flexibility, but even then you’re limited to the resorts where the billionaire resort developers have so benevolently built locations for the owners.
Remember, most timeshare agreements are for life. If your vacation plans can adjust according to the timeshare company’s availability, then a timeshare could perhaps work for you. If not, then it might be time to reconsider if a timeshare is right for you.
A Mortgage Fee is paid monthly on your timeshare loan. A “mortgage” on a timeshare is not usually funded by traditional lenders (banks, credit unions, etc.) like a home or property mortgage would be, so many timeshare companies finance the mortgage fees and other fees in-house.
Annual Maintenance Fees are ongoing fees that are monthly or annually charged depending on your timeshare agreement. Just like traditional real estate property, a timeshare also has included maintenance and upkeep. However, unlike a traditional property, a timeshare’s annual maintenance fees can extend well beyond the day from which you might “pay off” the mortgage--that is, your maintenance fees associated with the timeshare do not end once the mortgage is paid off. These same maintenance fees will rise in price annually, and the types of maintenance fees can vary year by year. Most years these fees are consistent, yes, but if extensive maintenance is required on the resort property that particular year, you and other owners within the community will most likely be footing the bill for those repairs.
Property Taxes are also required to be paid by each timeshare owner, and these taxes are charged by the local/state municipalities (depending on where your timeshare is located) and are charged along with all of the regular fees administered by the timeshare company. It’s important to read the fine print of your timeshare agreement very carefully to ensure you understand and comprehend all of the applicable fees with your timeshare prior to purchasing.
Timeshares do not appreciate in value over time like traditional real estate. Salespeople might tell you that you can treat your timeshare as a piece of real estate by renting it out when you aren’t using it, or that you can pass it down to your children in your will as a valuable asset, but do not believe them. After all, they are masters of deception. Your children will inherit your timeshare and its fees, but it won’t be as valuable as you might think--if you owe money, they could easily inherit your debt related to the timeshare.
If you or your family then try to resell your timeshare, they’ll quickly find it worth MUCH less than what it was purchased for. You’ll also find thousands of other owners attempting to resell their timeshares at pennies on the dollar for what they paid as well. This is because so many people are attempting to dump their bad “investment” on potential timeshare buyers looking for deals or exchange opportunities themselves.
The little amount that timeshare owners would sell their timeshare for makes it nearly impossible to calculate a resell or depreciation value on a typical timeshare. Typically, you’d want to evaluate the savings of annual vacation costs compared to the annual expenses of a regular timeshare option--this gives you a more accurate comparison of how a timeshare purchase might or might not benefit you as an owner. NerdWallet estimates that timeshares sell for 10% or less of their original purchase price.
This, along with so many other reasons, is why you shouldn’t consider a timeshare as a valuable asset or anything worth passing down to your loved ones.
All in all, timeshares tend to cost more than a traditional hotel room or resort stay for those who do not consistently vacation yearly. Timeshares could work for those who know their vacation plans one or two years in advance, but most growing or working families will find it difficult to find the time or availability between themselves and the timeshare resorts where they might like to stay.
Most timeshare owners will also find that timeshares are not a good long-term investment, and that timeshares do not maintain traditional real estate value. If you are considering buying a timeshare, you should fully evaluate if such a lifetime commitment would be best for you and your loved ones.
If you are already a timeshare owner and find yourself overwhelmed by associated costs and the money involved with keeping or exiting your timeshare, it might be best to hire a timeshare cancellation company to assist you through the process.
Consider a highly-ranked, effective timeshare cancellation company like Wesley Financial Group, LLC (WFG) to assist you through your timeshare exit journey. They have thousands of reviews from verified customers, they offer a 100% money back guarantee if they are unable to help you, and their CEO has firsthand knowledge of the timeshare industry.
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