Timeshares are vacation properties that several people share partial ownership of — usually over a time span of about 25 years. They’re typically located in exotic locations that are popular tourist destinations.
Starting in Europe in the 1960s, the concept of timeshares spread quickly to the United States. They became a huge trend with seasonal vacationers who liked the idea of “owning” property in an exotic area for a fraction of the price.
Today, timeshares are generally sold through high-pressure sales presentations that present them as a more financially responsible way to vacation.
In case you’re thinking about purchasing a timeshare, here are some things you should know before you sign.
4 Reasons You Shouldn’t Purchase a Timeshare
1. In addition to purchase price, timeshare ownership requires costly maintenance and other hidden fees.
During a timeshare presentation, the salesperson will show you comparison pricing between taking a traditional vacation versus owning a timeshare. Without taking into account yearly fees (which can usually be added without warning, per the purchase agreement), the numbers may seem to favor timeshare ownership.
But, just because you only use the property for a few weeks a year doesn’t mean you’re not jointly responsibly for the property’s maintenance, including any renovations, repairs, utilities and other hidden fees associated with property ownership. Timeshares are usually located in areas with high costs of living, so maintenance fees may run higher than average.
2. Transferring your timeshare to different properties isn’t always easy or cost-effective.
One selling point for timeshares is that if you get bored with vacationing in one spot every year, you can transfer your timeshare within the resort company’s network of other locations. This may seem appealing at first, but transferring to other locations isn’t as easy as it sounds.
You may have limited choices based on the times of year you want to vacation and the terms of your contract. It also may be difficult to find openings at your desired location, and, at the very least, it will be a greater hassle and expense than you’re prepared for.
3. Timeshares aren’t wise investments.
A good investment is one you can get more out of than you put in. The property values of timeshares decrease rapidly, and you’re seldom able to sell a timeshare for a profit. Contrary to the selling point that a timeshare will “pay for itself,” you can end up spending more in the long run than you would have by taking traditional vacations.
4. Timeshares are difficult, if not impossible, to sell.
The timeshare property market is highly saturated. Since they’re not in demand, timeshares are difficult to sell — unless you’re willing to take a loss. Enough people have had bad experiences with timeshare purchases that they’re not interested in ever purchasing one again.
While unable to sell, you’re still responsible for paying maintenance fees. Timeshare companies themselves are rarely willing to buy back your timeshare, since they’ll be losing income. If you’re stuck with a timeshare, your best option is to try to rent it out to cover your costs until you’re able to sell.
While appealing at first glance, timeshares aren’t a wise financial or lifestyle choice for most people. You’ll be better off carefully saving for and planning a vacation you can pay for outright. So, the next time you’re sucked into a timeshare presentation, remember these points and keep yourself from getting tied into a potential money pit.
What’s your experience with timeshares been like? Positive or negative?
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