The timeshare business has grown into a billion-dollar industry, yet many people, even some owners, don’t know how they work. If you’re considering buying a timeshare, don’t walk into it blindly. Stick around, and we'll cover everything you need to know about timeshares in this article. Learn how to use them, how much they cost, and everything else the salespeople won’t tell you!
A timeshare is a vacation ownership program for properties found at destination resorts. What makes timeshare properties unique is their shared ownership model. One timeshare unit consists of multiple owners who share the expenses. In return, each owner reserves a set amount of time to stay at the property, often on a week per year basis.
The theory behind timeshares is they're supposed to give people a chance to become vacation homeowners at a fraction of the cost. Because buying a timeshare means you own a percentage of the property. For example, if you buy one week, you own 1/52nd of the unit.
Essentially, you only pay for the time you stay.
The timeshare model has become popular within the travel industry. Today, various vacation resorts, condominiums, campgrounds, and more offer some timeshare ownership. However, not all timeshare agreements are the same. Let's have a look at the two common types of purchases:
A deeded timeshare property divides the ownership interest between everyone evenly. Like traditional vacation real estate, you receive a deeded title to the property and have similar ownership rights. Deeded timeshares do not expire, and owners are free to sell, rent, give, or will their property to others. Still, deeded ownership has limitations and cannot compare to typical real estate.
A right-to-use timeshare allows you to lease the property rather than own it. A shared leased ownership interest comes at a set number of years, anywhere between ten and a hundred. Since you're renting the property, you don’t get a title deed as the timeshare developers keep it. Besides being less expensive, leased timeshares do not offer as many ownership benefits as deeded timeshares.
You can choose a strict routine vacation schedule or something offering more flexibility. There are several timeshare systems to choose from:
A fixed-week timeshare provides an owner exclusive access to use their property at the same time every year. This system is ideal for those who favor predictability with their vacations. On the other hand, it can be restrictive for buyers without set schedules and unable to book the same week every year.
Floating-week timeshares allow owners to use the same property each year, but which week is up to them. This system is ideal for those who enjoy vacationing at the same location but want flexibility in when they go. Owners are designated a season to select a week from each year. The downside is others might be vying for the same week as you.
A points-based timeshare tosses out the concept of weeks in favor of points. Points are used as a currency in exchange for vacations. Each year, timeshare owners have a certain number of points to spend. They can use them to reserve various vacation destinations at any time. Points offer more flexibility, although there are often disparities in how they’re allocated and distributed.
It's not uncommon for timeshare owners to grow tired of visiting the same resort over and over again. To offer more locations, many developers utilize exchange programs. Timeshare exchange companies enable owners to trade their week at one place for someone else's week elsewhere. However, it’ll cost you additional fees.
Timeshares often sound like a good deal until finances come into the picture.
Timeshare resorts brag about the long-term savings they provide clients. Still, timeshares are by no means cheap. While prices vary based on location, time of year, and unit size, most require a significant initial payment along with future expenses. Here's what you can expect to pay if you decide to purchase a timeshare:
First, you have to pay the timeshare's purchase price or at least make a down payment. Recently, the American Resort Development Association (ARDA) released studies that show the average cost of a timeshare interval to be more than $22,000. That's the average, so summer weeks at a beach resort can be pricey.
If unable to pay the total price upfront, you'll need a loan. Your bank won't give you a loan for a timeshare (which may be a hint not to buy), so you'll have to finance through the timeshare company or a credit card. That means you'll face exorbitant interest rates, sometimes up to 20%, doubling the initial cost over time.
Paying off your timeshare doesn't end with the purchase price. In fact, it never ends. Annual maintenance fees are a never-ending expense that all owners endure. These fees go toward the regular upkeep and repairs to the property. As long as you own a timeshare, always expect a maintenance bill coming your way.
ARDA claims that the average cost for timeshare owners' yearly maintenance fees is $1,000! Alas, it gets worse. Timeshare maintenance fees also increase 3-8 % each year. That’s why many people regret buying a timeshare; the fees.
Considering how expensive the purchase price and maintenance fees are, timeshare companies still expect you to cover other vacation expenses! Transportation, entertainment, food, and much more with each visit to the resort.
Consider these extra expenses and how they will accrue overtime before getting locked into a lifetime agreement with them.
For the most part, the perks and benefits of timeshares are the focus of attention. However, consider a few other things before signing the dotted line. To help keep you from making a regrettable mistake, the following are five aspects of timeshares that the resorts don't want you to know:
That’s probably not news to many. Their timeshare sales presentations are notorious for being hotbeds of high-pressure sales tactics. As a result, thousands of regretful timeshare owners get burdened by something they never wanted. Purchasing a timeshare is a critical decision that salespeople shouldn't interfere with.
The idea behind buying a timeshare is paying for and reserving your future vacations today. However, if you have a points-based timeshare or are in an exchange program, you may run into some booking issues. Whether it's a lack of available locations or dates, some timeshare owners are always left unhappy or, worse, vacation-less. Reserving your timeshare shouldn’t be saddled with a stressful approach and extra fees.
Timeshares may get referred to as real estate, but nobody treats them like it, not even the resorts that sell them. Nowhere is that more evident than when you look at the investment value of a timeshare. A timeshare’s value depreciates as soon as you buy it. It's never a good idea to buy a timeshare to profit from. They're only ever considered a good investment if you're using them to their fullest potential every year, which is often a challenge.
While the resort sales staff will do their best to make you forget, there are other ways to spend your vacations. When you’re at the timeshare resort and are being waited on hand and foot, of course, it'll seem like a great idea to buy. But consider your other options. Whether it's a hotel room, a rental property, or even buying a vacation home, there's always an alternative.
While left unbeknownst to many buyers, timeshares are often lifetime commitments. A deeded timeshare agreement, as mentioned before, has no expiration date. Lifetime ownership of a vacation property should be good, right? Probably not, considering those annual fees and the prevailing lack of property value. A timeshare is perhaps the only vacation ownership you don't want to be permanent.
By the time you read this article, you may have already purchased a timeshare and realized that the experience is nothing like the salespeople promised. Those with shared deeded ownership may worry there's no turning back from their timeshare purchase now.
You can try selling it, but that's doubtful with the lack of timeshare resale buyers. Renting it out may be an option, but it will not get rid of the burden. Alas, a new opportunity for dissatisfied timeshares owners has arrived in recent years. Timeshare cancellation companies! These businesses don’t try to resell your timeshare; they cancel it and end your relationship with the resort.
Wesley Financial Group, LLC* (WFG) is a perfect example of a timeshare cancellation company. They're a timeshare exit team that specializes in canceling timeshares for owners deceived into purchasing in the first place. WFG is not new to this either. They've been around for over a decade with the numbers to back up their words. Since 2011, WFG has canceled over 16,000 timeshares and saved over $300,000,000 in timeshare mortgage debt.
*Wesley Financial Group, LLC, and its affiliates, successors, or assigns are not lawyers or a law firm and do not engage in the practice of law or provide legal advice or legal representation. All information, software, services, and comments provided on this site are for informational and self-help purposes only and not intended to substitute for professional advice, legal or otherwise.