Timeshares, a Good or Bad Investment?

From on February 20, 2009 in Locations

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Over the years timesharing has built up a negative reputation. The one hour presentation is often deceptive and the “hard-sell” technique leaves you dazed and confused. Not all timeshares share this reputation but, as in any decision concerning your pocketbook, you’ll need to perform due diligence. I have heard some success stories from people who absolutely love their timeshare experience. Though not considered to be a good investment if you’re looking to reap equitable returns upon selling your property, it can be a good investment of time and family memories.

Once you hop on board the timeshare train, you become part of a trading association. There are two major associations: RCI and Interval International. Depending on which association your timeshare is affiliated with, this is where you’d bank unused weeks to use at a later date should you decide not to use your detemined week.

Ownership weeks vary; however, the most common types are: fixed week, floating time, or points.

Fixed week. You own a specific unit in the resort for one week per year or you own one week in the resort in a non-specific unit that is comparable in size and quantity of bedrooms & baths.

Floating time. You own a floating week that guarantees a certain size during a particular time of the year.

Points. The most flexible of all ownership types is the point system in which you own the right to reserve time at a resort and are allotted a certain number of points each year. The unit size and time of year you travel will determine the amount of points needed. Reserving a room during low season will require fewer points, making this a nice investment for retired people who can travel whenever they choose. Any unused points can usually be rolled over to the next year; however, there are restrictions as to how long the points are good for. For example, RCI allows the points to be good for two years, so if you don’t use up those points within those two years you’ll lose the points forever.

Ownership, or “Right to Use?”

How long the unit is yours, whether or not you can pass it on to your children, and how much control you have over the property is determined by how you hold title.

If the property is deeded to you, then you own the unit in perpetuity. You can sell it, give it away, or, in the event of your death, you can pass it on to your children. With this type of ownership you have a say in matters of how the resort is run.

If the ownership type is “right to use” then the developer (or other property owner/investment group) retains the ownership of the property and all you own is the right to use it. With this type of ownership you usually own the right to use for a certain number of years and then it reverts back to the property owner. This type of ownership has no say in how the resort is run. All decisions are made through the owner of the property. If the property goes belly-up, then you lose your investment dollars.

What You’ll Spend

  • Initial upfront investment; varies depending on location, size, season, resort.
  • Maintenance fees
  • Membership & exchange fees; this applies if you’re a member of RCI or Interval International.
  • Assessment fees; these are fees for renovations such as new roofing and can be quite hefty.
  • Annual taxes

If you’re not a timeshare owner but are considering becoming one, check out ebay before you buy. Ebay is a great tool for researching prices and will help you figure out what your future timeshare is really worth (i.e., if you’re looking at a timeshare investment of xyz dollars via the sales presentation you just sat through then log onto ebay.com and see if you can find the same unit size at 80% off). In most cases, once you buy at full price, you’ll only recoup 10 to 30% of your investment upon selling.

If you own a timeshare and want to sell it with no upfront fees (you should never pay upfront fees; only pay fees once your timeshare sells) contact Timeshare Village: sales@timesharevillage.com

Links:

Getting out of your timeshare when nothing else works

Before you buy read this

Key timeshare concepts

Advice & news bits

About timeshare renovations and what your assessments might cost

Buy timeshares on ebay and save $$

Timeshare owner’s blog

Another timeshare owner’s blog

Timeshare tips