Don't you wish there were ways for you to make some extra cash using your timeshare property? Well, many timeshare owners explore the idea of utilizing timeshare rentals services. The notion of renting out your timeshare ownership for a profit goes all the way back to the pushy salespeople of these timeshare companies, who likely had you and many others believe that your purchase would be an investment.
"You can rent out your timeshare as an extra source of income if you aren't planning to use it during your vacation dates," is what you'll likely hear as a potential buyer in a timeshare presentation. Unfortunately, that rarely occurs. The best-case scenario for renting yours out is it helps to offset the cost of your annual maintenance fee and mortgage monthly payments.
If you're considering offering your timeshare out as a rental, do your due diligence beforehand and ensure your buyer agreement allows you to do so. Although timeshare point systems might allow flexibility with dates and locations, some exchange companies do not allow people to put their points toward rentals; the same restriction could also apply to traditional resort units under fractional ownership. Ultimately, this is a situation where you'd like to ask permission rather than forgiveness, so do your homework first!
Before breaking down the overall cost of renting and how much money it can make you, you must decide how to manage the rental process. Can you handle the business side on your own, or do you need help? It comes down to how comfortable you are managing it, but some initial concerns worth addressing may include:
Regardless of how people choose to manage their rental platform, it's crucial to have a rental agreement for each individual or group renting it out. This agreement is between timeshare owners and the renters using it at the time. If a timeshare owner chooses to hand over the rental reins to a management company, that company will generate the necessary rental agreement.
When pricing the nightly rental rate of your timeshare property, it's vital to evaluate internal and external cost factors. Internal factors would include the property's annual maintenance fees and any personal debts related to the timeshare. External factors include nightly rental rates charged in the nearby secondary market along with the cost of hiring a rental management business.
Most of the responsibilities, such as advertising, property photos (including resort amenities), bookings, check-ins, and direct contact with guests, are handled by the property owners, or a management company if they choose that route. Rental services, similar to long-term rentals, are charged depending on the agreement between the owners and the management company. Regardless, these expenses should definitely be factored into the overall daily rental price.
Ultimately, if you don't calculate a reasonable daily rent price for both the owner and the renter, you will waste your time and thousands of dollars when you attempt to rent out your vacation property. As the owner, you must factor in the costs needed to cover (or mostly cover) the average maintenance costs charged by the resort. However, the price you charge for daily rent must also be reasonable and accurately reflect the current market's prices.
How close in proximity to any cities or vacation amenities is it? If your vacation destination is nowhere near an ideal location, it's difficult to justify the right rental price for the unit each night. Like a property appraisal and purchase price in a traditional real estate market, the location plays a huge factor. No renters will want to pay top dollar and then commute to an area farther away to get the most out of their vacation.
The value of your timeshare to potential renters is a very similar model to long-term rental property value. For instance, one can find a telling detail in the value of your unit by looking at nearby resorts in proximity to your vacation home's location.
Is the timeshare unit size family-friendly? Again, much like traditional real estate, the timeshare market tends to demand family-friendly, multi-bedroom units to accommodate everyone in a large group. If your vacation ownership unit is not as accommodating, you may find it difficult to rent your timeshare intervals.
Time and time again, history proves that the timeshare industry is not a suitable market for financial investments. If you consider a timeshare purchase solely as a source of passive income, it'd be wise to look elsewhere. There are too many unnecessary fees with timeshare companies that make your actual vacations more expensive than they are with four or five-star resorts.
If you've already purchased a unit and find it useful some weeks but not others, you could look into offering it up to a renter here and there to cover some of the related costs that often plague owners. It will not likely make a profit for you or even cover all of the expenses, but it may help cover some of those fees.
It's important to underline that every process associated with timeshares (buying, selling, renting, or canceling) is very hands-on for owners, and you can only outsource so much of the work. Remember to do your research, and make sure you understand each step of the process. Whatever you choose to do with your timeshare, choose wisely!
A timeshare week may be ideal for some, but for many, it makes for far too restrictive vacations for the price. This is exactly why so many owners of these properties look for ways out of their agreements. Whether that's through rental services, the resale market, or the cancellation industry.
Wesley Financial Group, LLC* is a timeshare exit company that helps to cancel timeshare agreements for innocent people who were misled into purchasing. If that sounds like you, then they may be able to help you next! Call today for a free information kit or schedule a free consultation.
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