Should you invest in a Timeshare?

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What is a Timeshare?

A timeshare is also known as a vacation ownership. It is a property with a divided form of ownership or use rights. In a timeshare, multiple parties hold rights to the same property, but for different periods of time. The minimum time of ownership is usually one week.

Timeshares have been in the United States since 1969 and have only increased since then. Today, it’s a $10 billion industry, as reported by the American Resort Development Association (ARDA).

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The average sales price for a one-week timeshare today can be approximated at around $20,000. This doesn’t include an average annual maintenance fee, which is another $800 but can even reach a staggering $3000 for higher end properties. The annual maintenance fee can go on for an indefinite period of time as most timeshares are indefinite contracts. This increases the financial costs.

Here are some pros and cons to consider before we tell you if it’s worth spending a fortune of your hard earned money on timeshare.

Pros

  • Save on travel expenses

Most of the times, the timeshares we get are fully furnished. They have all the required furniture, and sometimes even more than required. The decor is already there. Hence, a lot of money is saved as compared to buying a vacation property.

  • You’re guaranteed a vacation each year

Some people like to ski every year while and considering the rush, one worries if they will get in or not. With timeshares, you don’t have to worry about your bookings anymore.

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Cons

  • Timeshares are difficult to unload

Timeshares are difficult to sell. Try going to one of the online websites and see the prices of timeshares for yourself. You would be shocked to see that some even sell it for $1!

  • It’s a long-term financial commitment

You are required to pay the annual maintenance fee indefinitely. Whether your finances are intact or not, whether you have a job or not, you still have to pay for the exorbitant fees annually.

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Important things to remember

  • Timeshares aren’t a financial statement

The average cost of timeshares has risen. Salespeople will frequently tell you that timeshare you will buy will be many folds in the future. But, that’s not entirely true. In the resale market, the prices often plunge.

  • Don’t buy a timeshare on a vacation

Never ever buy a timeshare on a vacation. The salespeople are trained to deceive you into thinking that it is a great investment but it is not the case. They present you with the numbers and you start believing them. When on a vacation, you are in a relaxed mood and not in a state to think properly and adjudicate the matter properly. It is always advisable not to buy a timeshare on a vacation.

  • Don’t pay retail

It is always advisable not to buy a timeshare from a developer. They will offer you lucrative deals and incentives but it is not worth the thousands you’ll be spending extra on the timeshare. There are hundreds of people willing to sell off their timeshares, that too for pennies. One should always look up to the sites online before buying.

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  • Buy in attractive locations

Never buy a timeshare in an undesirable location. Buying in a less desirable location on the premise that you will trade it to stay in a more desirable location is not an advisable option. If you don’t wish to live in a vacation there, the less are the chances that any other potential exchange partner would like to live.

  • Enjoy research and planning

Every great thing comes with hard work. The same goes with timeshares. You need to put in efforts before buying a timeshare.

  • So, should you buy timeshares?

No!!

  • The Missing Investment Component

You never benefit from a timeshare. It’s the salespeople and the owners of the resort that benefit from the timeshares. It is because you don’t own anything. You only have a portion of a small slice with you which have no resale value.

  • Timeshares Don’t Generate Income

If you are spending money for the future, it should be considered an investment. If it’s not generating income, it’s an expense — plain and simple.

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Better Alternative to Timeshare

With the money that you would want to invest in a timeshare, it is suggested that you keep it in a bank, if not willing to invest in stocks or other options like real estate. Your money in the bank can generate an interest in 10 years as compared to the zero amount of money generated by the timeshare. In addition, you have to pay a huge amount of money upfront.

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With a timeshare, you have to remain at a single place for a vacation every year. Without a timeshare, you can try different hotels in different locations. You will be able to add variety the hotels you would be visiting. If compared, it would cost way too less to live in hotels than living in a timeshare. Additionally, there will be no further burden on your head to pay for the booking of the hotels at a single time as is the case with the timeshare.

 

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