Advantages of Timeshares
- Unlike a vacation home which may be vacant part of the year, you only pay for what you use. Thus, the use of a very expensive property could be more affordable; for one thing you don’t need to worry about year-round maintenance.
- You get what you pay for, with less hassle.
Most timeshares seem financially attractive to those who want to have access to a condo in a popular vacation spot, but don’t have the resources to purchase one. This allows you to live in the condo for the time frame that you have said condo reserved.
Also, by not owning the condo, you don’t have to deal with upkeep (maintenance fees take care of that), nor do you have to worry about security when you aren’t present at the property. Of course, this doesn’t take into account any major damage that could leave you on the hook to pay for a special assessment fee.
- Subletting the unit.
Some view timeshares as an investment, with an opportunity to sublet the unit to others. They buy your week of vacation and as long as your maintenance fees, special assessments, and monthly mortgage payment don’t add up to more than what you can sublet it for, you could make a profit.
- Convenient for large families.
Larger families can take advantage of a spacious 2 or 3+ bedroom condo with multiple bathrooms, a kitchen, and a common area. This allows families the ability to enjoy meals and social time together as a unit, rather than having to rent several rooms and go out for every meal.
- You may be able to trade times and locations with other owners, allowing you to travel to new places.
- Your vacation is all set.
If you are one that enjoys visiting the same place each year, a timeshare ensures that you can stay at this resort, during the same time frame you first chose. You don’t have to mess with availability and booking, but instead your space is already reserved and waiting for you.
- You may be able to rent out your block of time if you can’t use it, although some timeshare contracts may not permit this and website exchange services may charge you to play matchmaker.
- You might enjoy letting your friends or family use their timeshare for free or offer it at a charity auction.
Drawbacks of Timeshares
1. While you don’t need to worry about maintenance, you will need to worry about the annual fees and your lack of control over their annual increases. The average annual maintenance fee for a timeshare is $660, according to Howard Nusbaum, CEO and president of the American Resort Development Association. You pay that fee whether you use the property or not. In addition, you could be liable for special assessments. If you don’t pay up, the developer can foreclose on your timeshare.
2. Timeshares are hard to sell, and used timeshare units are sold at a steep discount because there are so many on the market. Thus, it might be a better deal to buy a used timeshare on the secondary market. Bear in mind that the Better Business Bureau has been warning about timeshare reselling schemes that defrauded victims out of thousands of dollars.
3. If you sell your timeshare at a loss, the Internal Revenue Service doesn’t let you claim a capital loss as you would with other investments and real property.
4. Buying a timeshare in a foreign country presents special challenges. In Mexico, for example, foreigners are not allowed to hold the direct title to property within 30 miles of the coast and 60 miles of international borders. They are limited to “right to use” timeshares. (There is pending legislation in the Mexican Congress that may change that in the near future.) Also, consumer protection laws in some countries are more lax and lack enforcement.
5.Timeshares are difficult to sell –Tired of using your timeshare? Unfortunately, you may have trouble selling your share of the property. In fact, as Learn Vest points out, “the Federal Trade Commission warns against buying timeshares as financial investments.” Unlike typical real estate investment properties, you are almost guaranteed to lose money when selling your part of the timeshare. This is because there simply aren’t enough buyers out there to purchase all of the timeshare properties listed for sale. Learn Vest also claims that while many timeshare hotels and resorts tend to be popular when they first open, they eventually lose that shiny, brand new appeal over time. Of course, there are many long-time owners who will tell you that, regardless of resale value, their timeshare property was well worth the money.