Timeshares Aren't Investments: Here's Why You Shouldn't Buy One

Timeshare ownership may leave you feeling scammed. It often does not offer a good return on investment, and in many cases, people end up losing money on their timeshare.

Every day, we hear terrifying stories from owners of these vacation properties who are experiencing fear, pain, or an overbearing amount of debt. The list of reasons not to buy a timeshare property can be lengthy. Still, we'll do our best to present the most prevalent and impactful disadvantages of timeshare resorts in this content article.

WHAT IS A TIMESHARE?

So, what is a timeshare? Understanding the concept can be challenging for those lucky enough to have never stepped foot in a timeshare presentation.

A timeshare is a resort vacation property purchased under partial ownership. That means many different people have a stake in the same timeshare units. The more common deals give owners a designated week each year to stay at the property, though more flexible options are available, too.

When you purchase a one-week timeshare, the general impression is you're saving money by prepaying for an annual vacation. Theoretically, this sounds like a good idea. However, timeshare ownership seldom plays out the way people expect. Obstacles often prevent people from fully utilizing their property.

How Do Timeshares Work?

A timeshare is a type of vacation ownership in which multiple people share the use of the same property unit for a set period each year. Timeshare vacations often last for one week, although some are for a longer duration. For example, you may have a timeshare that lasts two weeks or even a month. With this fractional ownership model, each owner and their family receive reserved vacation time on a scheduled basis. Just as the time spent at the resort is divided among the owners, so are the expenses.

What are the different types of timeshares?

There are two types of timeshares - fixed and floating week timeshares. 

Fixed week timeshares mean that you own the right to vacation during a specific week every year. So, if you own a timeshare, you can vacation at that same resort during that same week every year. 

Floating week timeshares mean that you can choose to vacation during any week of the year, giving you more flexibility in planning your yearly vacations. This means that you can take your vacations when it is most convenient for you, rather than being restricted to specific months or seasons.

How Much Do Timeshares Cost?

According to the American Resort Development Association (ARDA) and National Timeshare Owners Association, the average price for a one-week timeshare in the U.S. is $22,140 as of 2022. Buyers can pay that in full or over time through a loan with the resort company, which likely has unfavorable interest rates. With a monthly mortgage payment, paying off a timeshare is similar to that of a primary residence.

On top of that expense, a timeshare owner is also responsible for annual maintenance fees. According to ARDA, the average maintenance fee for a timeshare unit is $1,000 per year. Since a lot of timeshare agreements do not have expiration dates, these fees continue to rise over time without end. 

What Are the Different Types of Timeshares?

There are two types of timeshares - fixed and floating week timeshares. 

Fixed week timeshares mean that you own the right to vacation during a specific week every year. So, if you own a timeshare, you can vacation at that same resort during that same week every year. 

Floating week timeshares mean that you can choose to vacation during any week of the year, giving you more flexibility in planning your yearly vacations. This means that you can take your vacations when it is most convenient for you, rather than being restricted to specific months or seasons.

IS IT SMART TO BUY A TIMESHARE?

One thing on the minds of potential timeshare buyers is whether or not such a purchase is a wise investment. Ultimately, the answer varies for each consumer. Yet, timeshares have notoriously been deemed bad investments by the consensus. While some owners may enjoy the experience, there is often an overabundance of disservice that outweighs the good.

Folks looking to buy real estate as an investment are better suited to ignoring timeshare offerings. The value of these properties vanishes when the dotted line is signed, so seldom do they become anything but illiquid assets. However, it could be a good fit if you merely want a yearly vacation prebooked and have the financial means for support. Remember, buying a timeshare can lead to dream vacations, but there's also the risk of falling into a money pit. 

What Are the Benefits of Owning a Timeshare? 

There can be benefits to owning a timeshare. For one, owners can sometimes enjoy vacations at various locations without paying the price of a hotel room. Timeshares also offer flexibility in terms of when you can vacation. You can often choose your week, and sometimes even your specific unit, years in advance. That allows you to plan around work schedules, school schedules, and other potential conflicts. Alas, these seldom benefits often seem lackluster compared to the many drawbacks.

WHAT ARE THE DRAWBACKS OF OWNING A TIMESHARE?

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If you consider purchasing, it's crucial to take the proper time to weigh the pros and cons. While timeshare companies will do everything they can to steal this time from you and draw attention away from the disadvantages, we're here to do the opposite! 

Below is essential information, including several reasons to avoid buying a timeshare:

THE NOTORIOUS TIMESHARE COMPANY SALESMEN

Timeshare buyers sometimes have no idea what they're getting into when signing the dotted line. Many of them never intend to buy anything in the first place. So what changes their minds? The deceptive timeshare salespeople. 

Timeshares often get sold through aggressive and misleading sales tactics, which can pressure people into buying a timeshare they may not want or need. Salespeople sometimes lure in prospective buyers by promising extravagant gifts. These high-pressure sales presentations can last for hours. A timeshare purchase can happen simply by attempting to remove yourself from a sales environment. Signing on the dotted line sometimes feels like the only way out. 

If you were misled into timeshare ownership by a deceptive sales pitch, you might be able to cancel your agreement. Click here to learn more.

YOUR TRAVEL LOCATIONS BECOME LIMITED

A prominent selling point for timeshares is their wide variety of vacation club locations all across the world. Salespeople will list off names of exotic places and show dozens of resort pictures to encourage people to buy a timeshare. Yet, the truth is that many timeshare agreements are on a fixed week system restricted to the same location each year.

A timeshare may be ideal if you are only interested in revisiting the same place every year. However, owning a timeshare can be restrictive if you desire to explore a new area with each vacation. It's a lifetime agreement that can cause you to miss out on other opportunities.

SCHEDULING CONFLICTS ARE AN ISSUE

Prepaying for future vacations should make the entire scheduling process simpler. Unfortunately, that's not always the case. Sales representatives regularly brag about how easy it is to use their programs, but that's rarely true.

Scheduling issues have become so common that several states passed laws against misleading scheduling statements during the sale. What's the point of prepaying for a vacation if it is impossible to schedule?

MORTGAGE PAYMENTS & UPFRONT COSTS

No matter what you hear in the sales presentation about how much you save with a timeshare, these things are not cheap. According to the National Timeshare Owners Association, the average purchase price of a timeshare in the U.S. is $22,990. That's a substantial upfront cost for a vacation home you can only use once a year.

According to the National Timeshare Owners Association, the average price of a timeshare in the U.S. is $22,990. Being so expensive, most buyers have to take out a loan to afford it. Due to the timeshare developer's typical terrible interest rates, ownership could cost a buyer twice as much as expected. On top of that, other hidden fees quickly creep in after the purchase.

YOU'LL PAY MAINTENANCE FEES, EVEN WHEN YOU'RE NOT USING THE TIMESHARE

Salespeople like to compare the cost of timeshares with the average price of hotel rooms. They're right that, over time, timeshares appear more cost-efficient. However, in this appeal, they conveniently disregard the annual maintenance fees.

Timeshares often have high maintenance fees that increase yearly, which are not tax-deductible. According to the National Timeshare Owners Association, the average maintenance fee for a single timeshare unit is $822 and rising annually. Furthermore, whether or not you use it each year, you can always expect to be billed for these yearly fees.

IS IT HARD TO SELL A TIMESHARE?

There are several points to keep in mind when selling a timeshare. Getting pulled into a timeshare scam can happen quickly. But getting yourself out of a timeshare is excruciating. Due to the unhappy nature of many timeshare owners, the resale market seems to get flooded with resellers constantly. With the supply of secondary timeshares exceeding the demand, reselling can often feel like an impossible task. Often, properties will list for as little as $1. 

Several factors play a role in a timeshare's resale value. From the week's season and resort's location to the remaining mortgage costs and maintenance fees, the difficulty of reselling is often out of the owner's control. Selling timeshares continually proves to be a long-drawn-out process with little financial upside. Timeshares are not viewed as investments because they do not appreciate in value and can be challenging to sell.

TIMESHARE RESALE SCAMS

The increasing number of timeshare owners looking for help in the secondary market has resulted in a rise in scam artists. So-called "resellers" defraud clients into paying fees and then conveniently disappear without selling the timeshare. When canceling a timeshare agreement, it's imperative to only work with a reputable service that has a trustworthy in-house staff specialized in this field. 

DEFAULTING ON A TIMESHARE AGREEMENT RESULTS IN FORECLOSURE

Timeshares usually come with strict rules and regulations that can be difficult to change or get out of. In fact, they are only treated as real property when it negatively impacts the buyer. Buyers risk foreclosure if they default on their timeshare mortgage payments, yearly maintenance fees, exchange fees, special assessments, or other related obligations.

A foreclosure can come with drastic setbacks financially, emotionally, and mentally. Not only can your credit score drop, but qualifying for loans becomes more challenging. Consider these long-term effects before getting a timeshare.

RENTING ACCOMMODATIONS MAY BE SIMILARLY PRICED IN A CHEAPER RESORT

In the end, timeshare company salespeople are most likely in it for the money. They talk about how much money you'll save but rarely mention all the additional expenses they tag along. Once you consider the total cost of the timeshare, you realize plenty of other rental options for vacation ownership are available at a much lower price.

ARE TIMESHARES WORTH IT?

So, are timeshares worth it? While they are helpful to some, they appear worthless, if not worse, to the average person. You can easily find affordable alternatives that save money and don't tie your income down to a lifetime deal. It's sometimes better to rent out a unit from another owner instead of working directly with the timeshare industry.

ARE TIMESHARES A GOOD INVESTMENT?

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Businesses are always looking for new ways to make money, and timeshare ownership is one way that resorts have found to do that. However, the timeshare business seldom plays out the way people expect. Obstacles often prevent people from fully utilizing their property.

While a timeshare can serve a particular purpose when reasonably priced, it is not a good investment. Timeshare owners typically pay more than they expect to use their units. When they finally decide to sell it, they often lose thousands of dollars. There is rarely a positive return on profit from this investment.

If you are a timeshare owner who has further concerns or questions, contact a representative at Wesley Financial Group, LLC, today. Our team of experienced professionals can help you navigate the often confusing and complicated process of timeshare cancellation services. We have helped thousands of people, and we may be able to help you too. Give us a call today for a free consultation.

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 and not intended to substitute for professional advice, legal or otherwise.


*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.

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