These questions are hotly debated. Depending on who you ask, you’ll get an emphatic answers one way or the other. If you want my overall opinion, you can view it using this link.
However, for this post, I want to present the facts so that a person can make an educated decision for themselves.
Yes, a timeshare can really save you money. If you purchase a timeshare for $1 or even free, the only thing left to pay are maintenance fees. If the maintenance fees are manageable, you have enough people using the timeshare, and you use it frequently enough, having one could result in significant savings. Maintenance fees are paid annually. Therefore, if you wanted to take your family to the timeshare and it is paid off, it would literally cost you nothing out of pocket to stay on that timeshare property for that vacation.
I know. I know. That answer is going to trigger some. “How could you encourage someone to buy a timeshare! All they do is trick people into overpaying for ‘real estate’ that doesn’t appreciate in value!”
That last statement is true. And I’ll be discussing it below in the section – “Is a Timeshare a Good Investment”.
But we want to be rational and reasonable here. The question that was just answered was, “Can a timeshare really save you money?” And the answer is Yes. Depending on the circumstances.
For those that are vehemently opposed to timeshare ownership, go easy on them. They have those strong feelings for good reason.
Timeshare presentations are hard-sell sales pitches. They can make up any number they want in order to get you to agree to purchase a timeshare. And there is no regulation around purchasing a timeshare like there is traditional real estate.
But possession of a timeshare does not make it inherently bad.
Look at it this way.
If you purchase a brand-new car at $30,000, after driving it for one year the car will be worth maybe $20,000. With 12,000 to 15,000 miles on the vehicle, it’s not going to pose any major issues as far as maintenance is concerned.
Now, let’s assume you traded that car in and someone else purchased that very same vehicle for $20,000. They still get the balance of the manufacturer’s warranty. They still drive a smooth-running car in almost new condition. They just didn’t pay $30,000 to do it.
It’s the same when someone sells a timeshare. The person who sells the timeshare took the biggest hit. The individual that purchases that timeshare still gets all the benefits of staying on that property. Just without the extra money the original owner spent to obtain it.
The average cost of a timeshare is $22,000 and up. For a good timeshare in a desirable location, you can expect to pay $30,000 or more for the timeshare.
Most people don’t have that kind of money for impulse purchases. And most banks won’t finance a timeshare purchase.
For that reason, original timeshare owners will get financing through the lender that partners with the timeshare. The rates are typically not ideal. And on top of that, annual maintenance fees will be required.
Some who purchase timeshares are fine with the terms and the payment initially. But some time later, they may be in a different financial situation. As a result, owning the timeshare no longer appeals to them.
Now they need to get it off their hands. So they decide to sell their timeshare. If you wanted to buy their timeshare, you would then take over the payments and the maintenance fees. And you could start using the property.
For others, they’ve already paid off the timeshare. But they’ve moved on to a new phase in their life. Perhaps they want to try another form of vacationing, like going on more cruises.
Or it could be that the maintenance fees have gone up so much that it is no longer financially reasonable to keep paying them. This usually happens when the timeshare owner just isn’t interested in using the timeshare anymore.
In this scenario, the person who buys the timeshare gets to use it free and clear – as far as “owning” the timeshare is concerned. The new owner will still have to pay the inflated maintenance fees if they want to stay at the timeshare.
So, the reason people sell timeshares is because they either no longer want to use their timeshare or because they can no longer afford it.
All that we’ve just discussed is what a timeshare salesperson doesn’t want you to know. Although in a twist of irony, if you go to the presentation and don’t let on that you have this knowledge, they’ll tell you that if you buy their timeshare, it’s no risk. You can always sell it later, they’ll tell you.
They’ll try to pressure you by saying that, because this property is so hot, there’s a possibility that no one will ever want to sell. Or they’ll spin the story that, yes, someone might sell their unit. But will it be the one you really want?
Either way, if you let it be known during a timeshare presentation that you know you can buy a timeshare later for less than is being presented to you, those offers of complimentary bottles of water may start to dry up.
Whatever the case, remember this: timeshares can really save you money ONLY if you purchase it on the open market.
Now, let’s answer another question that is similar but not exactly the same as “do timeshares really save you money”.
Is It Beneficial to Have a Timeshare?
This sounds almost identical to the previous question. But I assure you, it is different.
Yes, it is beneficial to have a timeshare. Particularly if you are a large family or tend to vacation with more than 4 people. Timeshare rooms are larger than hotel rooms. Because the rooms are bigger, there is less chance of needing to book more than one unit as you would for a hotel. This can result in significant savings. And many units have more than one bedroom. They come equipped with a stove, refrigerator, dishes, glasses, dishwasher, silverware, and plates. This makes feeding a large group on a week-long vacation cheaper than going to a restaurant for every meal.
That one probably surprised you! But remember, we’re not talking about whether a timeshare is a good investment. Yet. That will be discussed in the next section.
Is my timeshare acting as a “base of operations” to visit nearby attractions or will all my time be spent on the property?
Knowing the answer to these questions is important. Because what makes something beneficial to one is completely useless to another.
Think about it like this.
Minivans are great if you haul lots of children around.
On the other hand, a pickup truck is great for hauling large items. But if you have 5 kids you need to transport to school and practices, it might not be the most beneficial vehicle.
That’s why the answer to these questions have to be tailored to the individual. There is no one size fits all answer to this question.
There is, however, a definitive answer to the next question.
Is a Timeshare a Good Investment?
No, a timeshare is NOT a good investment, financially speaking. In fact, timeshares are terrible as investments. A good real estate investment will go up in value over time. A timeshare actually loses value over time. You can sell your timeshare. But you will never, ever get the same amount of money you paid to obtain it. Additionally, even if you paid off the timeshare, the maintenance fees can get so high that you may be forced to sell it.
Now, there are some who will tell you that you can rent out your timeshare. This is true. But that depends on a couple of factors.
First, if you are in a timeshare exchange network, you may not be able to rent your weeks out. Specifically, if you are with RCI or Interval International, you cannot do this.
If, on the other hand, you have a deeded timeshare where you “own” a specific unit number, you might be able to rent that unit out.
But make no mistake. This is not like owning an apartment unit and renting it out. You are not going to make the money you would owning a unit in an apartment building.
How good is an “investment” if after laying down $20,000 to $30,000, the most you could get to entice someone to buy it off of you is $1?
Also recall our analogy to buying a new car vs a preowned car. If you buy the car brand new and keep it for many years past paying it off, one could call it a good investment.
If you sell it before then, that vehicle was either a bad investment or not really an investment at all.
That’s the same way you need to look at timeshares. If it’s something that you will get use out of every year even after paying it off, it could be right for you. If not, you should question the wisdom in buying it.
Either way, from a financial standpoint, a timeshare makes for a terrible investment.
What Have You Decided?
After hearing the arguments pro and con, what side do you land on? Has your position changed?
Remember, the goal of this website is to help you plan an awesome vacation. We are not like some well-known financial guidance sites that tell you the best way to spend your money.
Going on a vacation is not a necessary expense. So, far be it from us to tell you what you “should” do with your money. Our goal is to hopefully enlighten you on the facts surrounding timeshare ownership.
Then you make the decision that’s best for you to enjoy an awesome vacation!
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