The idea of owning a timeshare sounds charming. You have somewhere to go every year to sit back and relax. However, there's one question that buyers always have. How much does it cost?
The timeshare market varies. Several factors can alter the price for this type of vacation ownership. And there are initial and lifetime expenses to be aware of. Follow this guide to learn what the average timeshare cost is and if it’s worth the purchase price or not.
A timeshare is a form of a vacation home using fractional ownership. The typical timeshare property is shared amongst different owners who split the costs and the time spent there. When you purchase a timeshare, you guarantee yourself a set time at the property each year. In most cases, timeshares are singular units within larger resort condominiums found in tourist attraction areas.
Timeshares are supposed to give people a chance to own a vacation home at a fraction of the cost. Why pay year-round for a property you use one time out of the year? The answer to that from the timeshare industry is to pay for the time you spend there, often one week. With multiple owners, the financial responsibility of buying a timeshare is less burdensome. How a timeshare works and costs depend on the type of agreement.
A deeded timeshare agreement is when you have an ownership stake in the property, similar to traditional real estate. In that sense, you own the timeshare unless you sell it. Upon purchasing, the developer should provide you with a legal deed of proof. Those with deeded timeshares tend to have more ownership rights and benefits.
A leased timeshare agreement, also known as a right-to-use, is when you have no ownership stake. Instead, you lease the unit for a set time. Leased agreements last anywhere between 10-100 years. While more cost-efficient, non-deeded deals have more limitations on what you can do with the property.
Whether you signed a deeded or non-deeded agreement, there are different timeshares as well. Which you choose comes down to preference of stability versus flexibility. Following are the three types of timeshares and how they differ:
According to the American Resort Development Association (ARDA), the average cost of a timeshare is just under $23,000. Some resort companies charge up to $50,000 for a brand new timeshare. If that's not already enough, several other fees get tacked on at some point.
Alas, many of these prices are considered "discounts" by the timeshare resort's sales staff. However, these so-called savings are short-lived as the value of a timeshare begins to depreciate as soon as you buy it.
It turns out there are several variables when estimating the potential costs. Other than the timeshare developers who price them, below are the most significant cost factors:
The most apparent factor in the price is the location. Like hotels, timeshare resorts in tourist areas are more expensive. For example, a timeshare in Las Vegas will cost more than one in the remote mountains of Tennessee.
Another prominent price factor is the season. If you own a beachfront timeshare, would you rather visit in the summer or winter? Location is a factor, but typically, the summer months and holidays are the most expensive times.
Larger timeshare units with multiple bedrooms and bathrooms cost more than the standard size. There are even timeshares suitable for large families, hence, the prices will vary.
A common misconception about buying timeshares is that they’re a one-time purchase. Instead, owners, in some aspects, never stop paying. Before considering an investment in a vacation property, take a look at what is included with timeshare costs:
To buy a timeshare outright, it'll require a large sum upfront. Even with a financing plan, most timeshare companies mandate at least a 10% down payment. Regardless of when you pay off the timeshare, a significant contribution is expected on day one.
Timeshares are often too expensive to pay for in full. Therefore, many buyers resort to taking out a mortgage loan or using a credit card to cover the upfront costs. While financing makes it easier to afford a timeshare, it has interest rates ranging between 14-20%, almost double the price of timeshares.
Timeshare maintenance fees are a never-ending expense that comes with vacation ownership. These yearly fees average out at about $1,000. Plus, maintenance fees also increase between 3-8% each year, making matters even worse. Needless to say, these ongoing fees make timeshares poor investments.
Depending on the timeshare resort, you may have to pay property taxes. They’re either included in the annual maintenance fee or billed separately by the timeshare company. Also, several real estate expenses were likely incurred such as the title, transfer, and recording fees early on. These fees can add up to another thousand dollars.
Last, consider the travel costs you expect to accrue while using your timeshare. Sure, the timeshare may be paid for, but you still have to pay to get there. Not to mention other typical vacation expenses.
Not only can timeshares be expensive right at the start, but the continued expenses are sometimes just as financially draining. If you haven't purchased a timeshare yet, consider alternative options beforehand. Staying at a hotel, buying an actual vacation property, or even renting out a timeshare instead can prove to be better options for some.
However, not everyone realizes how expensive timeshares can be before purchasing. If you already made the mistake of buying a timeshare and now regret it, you may wonder what you can do to change that. You can try your hand at the timeshare resale market, but the results there are often lackluster. On the other hand, timeshare exit companies, such as Wesley Financial Group, LLC (WFG)*, have proven to be a more reliable option.
If you’re interested in learning more about timeshare cancellation, call WFG and speak with one of their representatives at (800)-425-4081.
*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.