I knew something was wrong the second I met the timeshare saleswoman. A friend of mine was considering buying one. He owns several properties and accepted an all-day resort experience offered by a company that sells timeshares. I didn’t hesitate when he asked me to accompany him. Timeshares always mystified me, and I wanted to learn about them. However, when we met the timeshare saleswoman, I understood why he asked me to come along.
We got a short tour of the resort and were then escorted into a fancy conference room. All the donuts and coffee we could consume. Beyond that, it was a very stressful experience. The saleswoman presented a power point slideshow about the benefits of timeshare ownership. She didn’t assume that were considering buying one. Throughout her presentation, she acted as though we were going to buy one.
We endured a three-hour presentation before we got up to leave. The saleswoman actually tried to stop us from leaving! She had the perseverance of used car salesperson whose lot was full of broken cars. My friend didn’t buy one. Afterwards, I did some research to see why timeshares are sold in such a manner.
What is a Timeshare?
A timeshare is a recreational rental property, like a beachfront condo or upscale condominium, that is shared by multiple owners. Think of it as a crowdfunded real estate property that is used by the investors individually for recreational purposes during contractually specific times of the year. In the most basic sense, you are paying to access and enjoy the property for one week a year, every year, unto perpetuity.
Unless specifically stated in a contract, most timeshare owners are locked into their contracts forever. The average cost of a timeshare is about $19,000. An annual timeshare maintenance fee is usually about $600. The annual special assessment fee covers any needed repairs and renovation costs throughout the year. here are also taxes and various other fees that must be paid every year as well.
Such associated fees and taxes must be paid whether you use the timeshare or not. Also, timeshare fees and taxes can incrementally increase without any prior notification.
How Do You Purchase a Timeshare?
Timeshares are usually sold by agents or representatives of real estate, resorts, and recreational properties. They are usually directly marketed and persuasively sold to wealthy people who buy real estate. Usually, such people are offered a, “free resort weekend,” where they are persuasively harassed by salespeople to sign a contract to buy a timeshare. Almost like an overzealous car salesperson.
Timeshare Pros
You never have to worry about where to go for vacation for one week out of every year. This means that you can save a lot of money on travel expenses every year. The average four-person family spends about $4,800 to go on vacation every year. Also, you can allow relatives or friends to use it if you don’t use it. You may be able to exchange timeshare use with other timeshare owners if you get bored.
Timeshare Cons
If you ever want to sell your timeshare, you are guaranteed to take a significant financial loss against your initial payment. The timeshare market is flooded with regretful buyers. There are too many on the market and not enough buyers. That is why a timeshare is not considered a good investment. It rapidly depreciates right after you buy it.
Unless you enjoy going to the same spot every year for vacation, this may not be the best option.
If you vacation somewhere else, then you essentially bought a timeshare so as not to use it. Or, to allow others to use it once you get bored with it. Depending on your contract, you may not be able to rent it out to others.
Do You Need a Timeshare?
Ask yourself why you need a timeshare. How much will you use it? Consider that if you rent a luxury hotel room for two weeks at $200-a-night, it would cost $2,800. Without any special assessment or late fees. If you’re in the market for a timeshare, make sure that you understand what you are getting yourself into.
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Allen Francis was an academic advisor, librarian, and college adjunct for many years with no money, no financial literacy, and no responsibility when he had money. To him, the phrase “personal finance,” contains the power that anyone has to grow their own wealth. Allen is an advocate of best personal financial practices including focusing on your needs instead of your wants, asking for help when you need it, saving and investing in your own small business.