Timeshares are a way to use vacation property, typically resort condominiums with bedrooms and kitchens, for a week each year. In addition to the upfront cost of buying, owners must pay annual maintenance fees, which currently average about $900 but can total $3,000 or more for higher-end properties.
Timeshares may be a specific week each year, or “floating weeks” that can change from year to year, or “points” that can converted into reservations for days or weeks at timeshare resorts. Most timeshares offer exchange opportunities that allow owners to stay at other resorts if they plan well in advance.
The details can vary quite a bit, but people who are satisfied with their timeshares tend to have several things in common, says Brian Rogers, owner of Timeshare Users Group, one of the oldest forums for timeshare owners.
What Exactly Is A Timeshare?
Under a timeshare, you purchase a small percentage of a vacation property the resort owns/operates. The program gives you the opportunity to use the property (or properties) a certain number of times a year (typically for a week).
Some of the newer time share programs are more advanced and confusing where you get a certain amount of points and can use them throughout the resort’s worldwide network of locations (i.e. a “vacation club”).
Timeshare properties are typically built like condos and are larger than traditional hotel rooms. They come with a full kitchen, dining area, and potentially separate living spaces.
The cost of a timeshare depends heavily on the location of the resort and which weeks you can use the property. Most resorts will “generously” provide high interest rate financing for many purchasers.
In addition to the upfront payment, you must pay for annual maintenance dues for as long as you own the timeshare—think of it like a HOA fee. The annual maintenance dues can go up over time and help the owner cover the cost of maintaining and operating the resort.
Also keep in mind that if you are not current on the timeshare loan or annual maintenance fees, you can be foreclosed on.
Understand that timeshares aren’t a financial investment
The average cost of timeshares sold by resort developers has risen over time and now tops $20,000, according to the American Resort Development Association, an industry trade group. Unethical salespeople use that fact to imply, or even assert, that the timeshare you buy will increase in value. That’s not true. On the resale market, the typical timeshare sells for 10% or less of what the original owner paid, Rogers says. TUG, eBay and other sites are full of “for sale” ads from owners willing to sell for just a penny.
Don’t buy a timeshare on vacation
Timeshare salespeople are often much better at selling than you are at resisting — especially when you’re relaxed and having a great time. That’s no state of mind to be in when you need to scan the details of a contract, assess potential exchange options and uncover things that can go wrong, such as rising annual maintenance fees or problems trading your share.
If you’re interested in a property, Rogers recommends renting from an existing timeshare owner to see how much you like it. But don’t sign up on the spot.
“I tell my friends, ‘Don’t ever go to a presentation.’ They’ve gotten very hard-sell,” Angie McCartney says.
The savings may not be as great as a hotel
Don’t be fooled into thinking that purchasing a timeshare is an easy way to purchase a piece of your dream vacation home at a fraction of the sticker price. Timeshares are still very pricey even if you’re buying the equivalent of just one or two weeks at a time. In fact, many timeshare programs are run by hotel chains with locations around the country, but owning a timeshare may cost you as much or more than renting a comparable hotel room.
Like chips in a casino, points often hide the true cost of what you’re spending, as it’s hard to equate them with actual dollar values. At one popular timeshare company in the US, you could use your yearly timeshare points to purchase a two week vacation in Hawaii in a one bedroom place for approximately 300, 000 points during the peak season.
To put the above in perspective, I have a friend who receives 89 k points/year, and he paid $10 k to receive those points. If you financed your timeshare using a ten year loan like he did, you would have purchased those 89, 000 points for about $1, 000 per year plus a ton of interest. That two week hotel stay in Hawaii ultimately could cost you approximately $3, 370 — again, ignoring the interest payments — once you convert your points into a dollar value. Could you have found a nice hotel for two weeks in Hawaii for less?