Don’t be fooled by supposedly good timeshare deals. The truth is, there’s no such thing.
Tempted to invest in a timeshare? The thought of owning a holiday home may seem appealing but it has its drawbacks.
Once you sign the contract, it’s hard to go back. Unless you keep up with the payments, you’ll face foreclosure.
For many customers, investing in timeshares is an impulsive decision. They’re blinded by the stunning landscapes and low costs. Unfortunately, these deals involve year-round responsibility and hidden fees.
The average sales price of timeshares in the U.S. was $22,240 in 2015. That’s considerably less than buying your own apartment or home. However, there are other fees you need to be aware of.
Considering that most Americans spend $250 to $271 per night when traveling abroad, timeshares look like a good investment. Yet, the risks remain high.
Let’s see how timeshare deals work and whether they’re right for you!
Timeshare Deals at a Glance
Timeshare programs have been around since 1969. They usually involve vacation properties ranging in size from studio units to villas.
Compared to hotel rooms, these properties are more luxurious and comfortable.
The most popular ones are located near beaches and theme park resorts. You can also purchase a timeshare close to ski or golf resorts.
This type of property is furnished and offers everything you need to feel like home. It’s no need to buy a TV, kitchen utensils, or appliances. The maintenance fees are split among owners.
When you sign up for a timeshare, you buy the rights to use the property. It’s not the same as fractional ownership. In this case, you actually own a fraction of the property’s title.
How Do Timeshares Work?
Most timeshare deals are now offered by reputable hospitality chains, such as Hyatt and Disney. This helped the industry become more transparent. In 2014, more than 9.1 million households in America owned a vacation property.
The cost of a timeshare is supported by multiple parties. Each owner can use the property for at least one week per year. Depending on your needs, you can opt for different types of timeshares:
Fixed week – This option allows you to use the property for the same week each year.
Right-To-Use – The parties can lease a property for several weeks each year for a set amount of years.
Floating – With this arrangement, you’re free to choose the time of the year when you’ll use the property.
Points Club – You can earn points and use them each year for booking timeshare properties.
Most timeshare deals give customers the flexibility to rent their part of the property.
For instance, if you’re not able to use the property in a given year, you can rent it to a friend.
How Much Does It Cost?
Contrary to popular belief, timeshares are not cheap.
The costs depend on the property size, location, and amenities. You can expect to pay more or less based on the time of the year when you’ll book the accommodation.
Fees are based on the type of timeshare and may include:
Timeshare maintenance fees (utilities, landscaping, upgrades, and more)
Exchange company fees
Each year, timeshare owners pay about $660 in maintenance fees .
The average price for one week can exceed $19,000. Even if you don’t use the property, you still need to pay for maintenance.
Additionally, it’s necessary to support your travel costs. Unless the property is nearby, you must pay for flight tickets. If you’re only allowed to use the timeshare in peak season, the costs add up.
The Cons of a Timeshare
Without a doubt, timeshares have their perks. Unfortunately, the risks outweigh the benefits.
First of all, you might need to get a mortgage to afford this kind of luxury. Timeshares are usually marketed to those who can’t afford them.
Secondly, the costs of timeshare ownership can easily exceed your budget. Besides maintenance fees, there are special taxes, assessment fees, and brokerage fees involved.
According to USA Today, maintenance fees can increase by as much as 12 percent each year. If you choose a more expensive location, such as New York, these annual costs can be as high as $1,200.
Another thing to consider is that sales people may not tell you the whole truth. They will emphasize the benefits and conceal the real costs. Most times, you sign the contract for life. Assuming that you’re able to sell your part, you’ll still lose money.
Just like cars, timeshares lose their value over time. Compared to traditional properties, they don’t increase in value.
It’s enough to do a quick search on eBay to find timeshares available for a few dollars. Many times, owners are willing to sell them for next to nothing just to get rid of monthly payments.
Think about what happens if you have a bad year and can’t go on a holiday. Like it or not, you still need to pay for the timeshare.
What if you opt for fixed ownership?
This means you must spend your vacation at the same time in the same place each year. No matter how much you love the place, you’ll get bored sooner or later.
A more flexible timeshare isn’t necessarily better. You might not be able to trade times and locations as you wish.
Moreover, buying this kind of property in a foreign country has its challenges. For instance, Mexico doesn’t allow foreigners to buy properties along the coast.
As you see, timeshare deals carry lots of risks. There are better ways to spend on travel and plan your dream holiday.
Alternatives to Timeshares
Nowadays, most hotels and holiday resorts offer fantastic deals. You can always check travel comparison sites for hidden gems. Additionally, most hotels offer discounts to those who book longer stays.
If you’re on a tight budget, opt for B&Bs or short-term apartment apartments. Don’t forget about credit card rewards and last-minute deals!
Another option is joining a vacation club. This type of membership provides access to properties worldwide. You’re not forced to pay maintenance fees or travel on specific dates.
Have you ever owned a timeshare? What was your experience like? Share your story below!