Posted on March 27, 2023
The concept of timeshares has been around for several decades, and it has become a very popular choice for vacationers. A timeshare is a shared ownership system in a property that allows multiple individuals to co-own a unit in the property, with each owner able to vacation for a specific time period each year. Many people believe that buying a timeshare is a good investment, while others believe that it is a waste of money. In this article, we will explore the pros and cons of timeshares and whether they are a good investment.
One of the most significant benefits of buying a timeshare is that it can be a cost-effective way to vacation. Timeshare owners typically pay an upfront cost to purchase the timeshare, and then they pay annual maintenance fees. However, these fees are often less expensive than the cost of renting a hotel room or vacation home for the same amount of time. Additionally, because timeshares are typically located in popular vacation destinations, owners can save money by buying into a timeshare property without the cost of full ownership of a vacation home.
Owning a timeshare can be convenient because it eliminates the need to search for and book vacation accommodations each year. Timeshare owners typically reserve their week(s) in advance and can be assured that their accommodations are guaranteed. Additionally, many timeshare properties offer amenities such as swimming pools, tennis courts, golf, children’s activity programs and other recreational activities, which can save owners money on entertainment costs.
In some rare instances, timeshare properties may appreciate in value over time, allowing owners to sell their share for a profit. However, it is important to note that the vast majority of timeshares do not financially appreciate in value, which is why timeshares are often promoted for the lifestyle and health benefits connected with annual vacations.
Additionally, timeshare owners should be prepared to hold onto their property for several years to receive the full benefit of ownership, as the prorated annual costs of a timeshare drop compared to annual vacations in a rented accommodation.
While timeshares can be cost-effective in the long run, the upfront costs can be significant if purchased through a resort or timeshare company. This is why buying timeshare resales is so important, as saving can be as high as 60-70 percent compared to resort prices.
Resort timeshare prices now average $24,000 for a week of timeshare according to the American Resort Development Association, so timeshare resales can save a buyer thousands of dollars in upfront costs.
Nearly all timeshare properties require owners to pay annual maintenance fees, which can add up over time. However, when buying at a discounted resale rate, prorating the overall costs over the ownership lifecycle of timeshare ownership can see substantial savings compared to hotel stays or unit rentals every year.
One drawback of owning a timeshare week is the limited flexibility. Timeshare owners typically have a specific week(s) each year when they can use their unit at their resort property. This can also be a real benefit - locking in a popular week at a specific destination such as a July week on Cape Cod.
However, owners looking for more destinations should make use of their exchange provider such as RCI, Interval International or 7Across. While this can incur an additional exchange fee, it is a good way to expand the use of a timeshare while keeping the benefits of a guaranteed vacation spot every year with your fixed week.
Most single site timeshare resorts also offer floating or flex weeks, which allows an owner to use their week during a broader timeframe such as a season of the year. This would benefit, for example, an owner in a ski destination like Park City or Breckenridge who may want to use their week during the ski season but not necessarily during the same week every year.
When most people hear the term investment, they automatically think of making money off a financial investment, especially when the term is used in relation to real estate. However, timeshare is not traditional real estate, despite what you may have been told at the resort sales table.
So even though timeshare may not be a financial investment, as mentioned earlier, timeshare is certainly a lifestyle investment in a number of areas:
How you measure investment is the key to answering this question, especially since timeshares are a vacation product whose value is ultimately measured by the quality of the vacation.
Whether or not timeshares are a good investment depends on the person’s financial situation and vacation preferences. While timeshares can be a cost-effective way to vacation, they require an upfront investment, and owners may have limited flexibility in terms of when and where they can vacation.
Timeshare is a use product, so the more the timeshare is used, the better the view of the timeshare in the mind of the owner. It is similar to the automobile industry, where cars are purchased to drive and not just sit in a garage the entire time. This is why it is very important for owners to find out exactly how to use their timeshare.
One of the primary criticisms of the timeshare industry is the lack of follow up and customer service from resorts to their owners, frustrating owners into thinking they either cannot use or exchange their timeshare. They can be used and enjoyed, especially for fixed week deeded ownership which is guaranteed by the resort. For more flexible options, exchange companies can expand vacation options to as many as 4,000 resorts throughout the world during any time of the year.
Owning timeshare with a branded hospitality company is also a great way to expand choices. One example is Hilton Grand Vacations, which manages timeshare ownership as deeded interests in a particular Hilton timeshare resort. Points are allocated to the owner to use at their home resort or for exchanges withing the Hilton timeshare network, but owners can also use their ownership in the Hilton Honors loyalty rewards program to expand vacation choices into the Hilton hotel network.
Whatever you decide, remember to think about timeshares in a broader sense when it comes to investment potential, not just in a financial sense.
If you have any questions or need more information, our customer service team can take your questions and help you navigate through the world of timeshare resales. Click here to contact us or give us a call on 800-640-6886 and we’ll be happy to help.
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