Think you know everything about timeshares?
If your information comes from a developer's website or sales pitch, you're missing vital details.
Buying a timeshare unit only makes sense in certain situations.
It's a good way to co-own vacation property if your family always goes skiing in January, or has a reunion is in the same place at the same time every year.
But for most people timeshares aren't a dream investment. Many buyers find themselves in a regrettable situation after signing the contract.
This article explains seven things the timeshare industry doesn't want you to know.
Keep reading to learn if a timeshare makes financial sense for you.
What is the Timeshare Industry?
If you buy a vacation home on the beach it belongs to you. You can use it whenever you want. You can remodel or change it to suit your tastes.
The timeshare industry is different than regular real estate. Instead of full ownership, you buy a share of a property.
Your share gives you permission to use the property for a certain period of time each year. The rest of the year belongs to the other people who buy shares of the property.
This unique form of property ownership works best for a vacation property. That's why most timeshares are in vacation locations.
Most timeshare purchases are deeded, meaning the buyer owns an actual share of ownership in the resort.
Non-deeded timeshares are like club memberships. They provide a right-to-use the property without owning any real property.
The average share is 1/52, or one week per year. Larger and smaller shares are available, such as a week every other year, or a month-long share.
A Timeshare Isn't an Investment
An investment appreciates in value or provides income.
A timeshare isn't an investment at all. It doesn't appreciate in value, and there's no financial return on your purchase. In fact, the maintenance fees increase, and the value declines.
Since you don't own the property (you co-own it with lots of other people) you can't improve it to make it more valuable.
You can't rent it out all year like you can with a vacation home. And worst of all, when you sell it you won't be able to claim it on your taxes as a capital loss.
The Federal Trade Commission warns consumers not to think of a timeshare as an investment. The website states, "You should know that the value of timeshares is in their use as vacation destinations, not as investments."
You Have Purchase Options
You don't have to buy from the developer.
You'll get a better deal if you buy a timeshare on the secondary market.
Since a timeshare is hard to sell, it's a buyer's market. The timeshare industry has millions of shares for sale.
Anyone trying to sell a unit has to offer it at discount price to move it.
According to RedWeek , timeshare resale's sell 30-50% below original developer or resort price.
It's important to verify the seller or broker. There are timeshare scams .
The Real Cost of Ownership
The initial cost of a timeshare depends on the resort's popularity, share size, location, time of year, and condition of the property.
Don't fall for cheap timeshare deals . The sale price isn't your only expense.
All timeshare resorts charge an annual fee for maintenance, taxes, and utilities.
Fees vary depending on the share. A peak season or larger share may have higher fees. Resorts can increase the fee each year, and many do.
Check if the maintenance fee includes property taxes. If it doesn't that is another yearly expense.
Review the terms of your contract to see if an unexpected future assessment fee is possible. When a resort makes major improvements or repairs it may assess a large fee to the shareowners to cover the costs.
You must pay these fees whether you use the property or not.
You Can Rent A Timeshare
Sometimes people can't use their timeshares. Rather than leave the unit empty and lose all their money, they rent it.
Google "timeshare rentals" and you'll find plenty of choices around the world. You can rent from owners and resorts. You can rent a timeshare for less than it would cost to own. When you rent you don't have any maintenance or assessment fees.
Timeshare rentals are the best way to gain access to certain resorts and their amenities for a reasonable price.
When you rent from an owner you avoid the timeshare industry ritual of a prolonged tour and intense sales pitch.
The idea of a timeshare swap is simple.
If you want to vacation in a different location, you find someone with a share there who will trade places with you.
Finding the person who is willing to swap can be hard. You may incur extra fees for the trade.
Try an exchange service to arrange your trade. Put your share into the exchange pool and state what you want in return. If you're lucky, you find someone willing to swap timeshares with you.
Companies that own many resorts may offer an internal trade system. You can schedule flexible weeks, or use any resort in their system.
Use It or Lose Value
Timeshare sales representatives claim you'll save money on vacations when you own a timeshare.
Those statistics are based on using the timeshare every year for a very long time.
Let's say, for example, timeshare costs $1,600 a year. A stay at an equivalent hotel in the same location costs $200 more. You save $200 by owning the timeshare.
If the one year you can't use your timeshare, you lose $1,600. You may get some money by renting your unit, but you won't recoup the full amount.
But, if you always vacation at a hotel or rental accommodation you don't lose any money if you skip a year.
The timeshare is only cost effective if you never miss a year. If you miss one time, you lose money.
Pay in Full or It's a Bad Deal
If you finance your timeshare purchase, you're getting a bad deal.
A timeshare loses value in the same way a new car does when you drive it off the lot. The timeshare isn't an investment. It doesn't appreciate in value.
Banks know timeshares lose value, so financing one usually means a loan with a high-interest rate.
When you add the cost of financing to the sale, it only makes sense to buy a timeshare if you can pay in cash.
Get Expert Help to End Your Timeshare Contract
Timeshare contracts are easy to sign, but hard to exit.
Primo Management Group can help you legally end the ongoing burden of timeshare fees and payments.
Our experts know and understand timeshare contract practices and consumer protection laws.
Contact Primo Management Group if you're trapped in a contract and need exit assistance.
When you're at a timeshare meeting, the host will make it sound like you're entering into a dream contract . Visions will fill your head of days spent at the beach.
Or being able to ski right onto the mountain without having to travel. It's enticing.
What they won't tell you at that sales meeting are the downsides to owning a timeshare. Like the hidden fees.
Before you enter into a contract that's often difficult to get out of, here's what you need to know about those hidden fees.
The Initial Investment Isn't Set in Stone
The average timeshare usually sells for $16,000 . While it's true that over a 20-year period a family of four could easily spend over $25,000 for hotels, that doesn't mean the price is set in stone.
It doesn't account for maintenance fees. It also doesn't take into account the fact that you may not want to visit the same place every year.
If you have a bad year financially, you may not even be able to take your vacation. And if you try to rent it out, you might not be successful at finding a renter.
Also, timeshare sellers spend a lot of money on marketing these spaces to prospective buyers. Between the high marketing costs and the fierce competition, they can spend as much as 55% on a sales meeting.
So they add their costs to the sales price. Since they're so desperate to make a sale, you have the advantage. So don't be afraid to negotiate a lower price if you do decide a timeshare is for you.
It's Not the Investment They Tell You It Is
Timeshares are similar to cars. Once you buy the car and drive it off the lot, it begins to lose its value.
The same is true for a timeshare. Especially if you took out a loan from the timeshare company to purchase it. They will charge you a high-interest rate.
Also, unlike buying a home, if you miss a payment, the timeshare company can foreclose on you.
Even if you rent out your timeshare, you probably won't make a ton of money on it. In most cases, you'll be lucky to break even with your yearly maintenance costs.
It will also take time to recoup your money from the initial investment you may.
Don't forget that even though you are paying money for your timeshare, and you might even have ownership of the deed, you don't actually own it outright.
It Could End Up Costing Your Kids a Lot of Money
Don't forget to read the fine print before you sign on the dotted line. There are hidden fees that can cost your kids a lot of money.
That's because they include the words, "Contract in Perpetuity." It's a little like selling your soul to the devil. Once you sign on the dotted line, these timeshare companies can grab a hold of you forever.
A Contract in Perpetuity means you're stuck with your timeshare for even longer than you're expected to live. Which means your kids will take over your ownership after you pass.
Whether they want to or not. And they'll be expected to pay any and all fees associated with the timeshare.
Not a great legacy to leave to your kids unless they too love your timeshare.
There's Also Maintenance Fees to Pay For
Yearly maintenance fees are expected. Of course, you'll want to invest in a place that is well maintained.
But there are hidden fees within those maintenance costs. They don't tell you that maintenance fees can, and usually will, increase.
Some of that depends on where in the world your timeshare is at. Fees can range anywhere from $300 to over $1,000 .
If you choose to stop paying them, the timeshare company can come after you. They can take you to court or foreclose on your timeshare.
Doing this can even affect your credit score.
There Can Be Unexpected Hidden Fees if a Disaster Strikes
Say you purchased your timeshare at Snowbird, Utah. It's a great place to go skiing. Every year you look forward to traveling there for vacation.
Until the year that the resort gets hit by an avalanche. Suddenly, half the hotel is ruined. That means costly repairs.
Costly repairs that you, as a timeshare holder will be expected to incur.
But hidden fees don't always have to come in the form of a natural disaster. If the roof needs to be replaced, that too will be charged to the timeshare holders.
Or if the pool needs fixing. Even minor things like a new paint job will be the financial responsibility of the shareholders.
It's Often Difficult and Expensive to Try to Sell Your Timeshare
If you decide to sell your timeshare, it can end up costing you. The hidden fees here are based on supply and demand.
There are also rules about how you can legally sell your timeshare . It's not as easy as you think.
It can be especially difficult if your timeshare is located somewhere like Puerto Rico. Unfortunately, Puerto Rico just got destroyed by a deadly hurricane.
So right now, there isn't much demand for people wanting to spend time there. Not unless they plan on helping the country rebuild.
Trying to sell your timeshare in an area where the demand is greater than the supply will also affect your ability to sell without taking a huge hit.
Before you buy, make sure that the area in question has had a long history of being a popular vacation site. Then make sure the property is built well.
Even if you do manage to sell it, you won't even be able to claim it as a capital loss on your taxes.
We Can Help You Cancel Your Timeshare
If your timeshare has turned out to be a nightmare rather than a goldmine, there are steps you can take. You don't have to be stuck with it forever.
Plenty of people have gotten out of their timeshares without having there saving their life savings drained.
But don't take our word for it, read our customer's testimonials and see for yourself.
We're both advocates and real estate experts. We can help you get out of your timeshare.
Don't wait, contact us today.
Have you ever had someone try to sell you something solely on the basis of how cheap it was? A lot of folks have.
Maybe you've walked down the street in your city and noticed sellers hawking $5.00 watches. Would you buy a knockoff item simply because it was inexpensive?
Probably not, right?
You should treat the idea of cheap timeshares the same way. Frankly, inexpensive timeshares don't exist.
If you believe you've happened to stumble onto one, beware. It's quite likely the quality of the property and service (or both) will be like the knockoff watch you walked right by.
Read on, and we'll investigate exactly why you shouldn't fall for the prospect of cheap timeshares.
What is a Timeshare?
For the unacquainted, a timeshare is a way of owning a vacation or piece of property. It's a form of fractional ownership in which, much like it sounds, you own a fraction of the piece of property or vacation time.
There are two primary types of timeshare options for purchase. These are right-to-use and deeded timeshares.
In a right-to-use (RTU) timeshare, you are purchasing (quite literally) the right to use the timeshare for a specified period of time each year during the length of your contract. Whether you purchase enough time for one or two weeks a year, you're always guaranteed the same amount of time per year in your timeshare.
Deeded timeshares, however, are a different beast entirely. When you purchase a deeded timeshare, it's essentially the same thing as purchasing any other piece of legally bound real estate property .
For a quick example, it's like purchasing a house. The contracts for deeded timeshares are almost always lifelong. Unless you are okay with owning to your timeshare for life, opting for an RTU is the lesser of two evils.
How Do Timeshares Work?
As mentioned above, you can buy a single week per year, or many weeks, depending upon what the timeshare company allows. With your purchase, you're entitled to stay in your timeshare for the amount of time you're allocated every year.
If the idea of staying at the same place for vacation each year sounds like it might get old in no time, we understand. There are other options. For instance, if you are not using your timeshare one year, you could rent it out, or exchange it for a vacation in a different destination.
Yet, as nice as a guaranteed vacation might sound, there are many drawbacks of purchasing a timeshare. Continue reading, and we'll go into a bit more detail on some of them.
A Long List of Cons
While timeshares do have some benefits, we're quite certain that in this instance, the cons outweigh the pros.
Sure, you'll get a guaranteed vacation to the destination you chose. (No one coerced you into purchasing a timeshare, after all.) Your timeshare is probably nicer and features more amenities than the average hotel room.
What's also important to bear in mind, though, is how difficult it can be to get out of a lifelong timeshare contract. Many people consider this to be the primary con of timeshare ownership. If you own a deeded timeshare, even death will not relieve you of the financial burden or contract.
Instead, the deed will transfer to someone else in your family, leaving them with the burden, and no one wants that.
Another huge con of owning a timeshare is the fact that you have no control over who uses it when you're not there. You won't get any say in who else owns the timeshare. You usually don't even have the option of choosing exactly what week or weeks you'll get to stay in it.
Don't Fall for Cheap Timeshares
Sure, if you look around online, you can find timeshares which are selling for as little as $1. Seriously, only $1! But, even at this supposed "cheap" price, your timeshare is still going to cost you. As such, finding truly cheap timeshares is highly improbable.
You see, there are many different types of fees associated specifically with timeshares.
The first of these are maintenance fees. The maintenance fees on your timeshare are mandatory. You'll need to pay them regardless of whether you are staying in your timeshare on any given year or not. Take a look at this post on our blog for more information on the many fees associated with owning a timeshare.
Other fees you'll owe if you buy a timeshare are mortgage fees and any applicable brokerage fees. These, in addition to costly (and most likely, continuously rising) maintenance fees, are sure to throw any vision of cheap timeshares you may have right out the window.
If you come across a supposedly inexpensive timeshare option, whether new or used, don't fall for it. Be aware that there are often hidden fees, and that you'll need to be accountable for them no matter what. This means whether you actually use the timeshare, or not.
No one wants to pay for something they're not even using. Understand this, and you'll be much more likely to avoid falling into what could be a lifelong trap which could be very hard to move on from.
If You Must, Consider a Timeshare Rental
If you're still drawn to the idea of a timeshare, we would recommend looking into renting a timeshare as opposed to purchasing either a new or used one.
If you rent, you'll only need to pay the maintenance fees you would pay every year if you owned the timeshare. You're also not locked into a lifelong contract, so there is a lesser amount of risk involved, and you'll still get to enjoy what few benefits of a timeshare there are.
As we've learned, there are many different options when it comes to purchasing, renting, or exchanging timeshares.
If for whatever reason, you have found yourself tied to a deeded timeshare with a contract you're unable to extricate yourself from, we're here for you. Please don't hesitate to contact us to schedule a free timeshare exit consultation. We're here to help you get out of it -- alive!