CN 2019Mar18 Financial Facts of Timeshare

Get the financial facts about timeshares

March 18, 2019

Here is an interesting, relatively unbiased article about timeshare ownership. This is a good read when you are considering whether or not to buy. Enjoy:

Get the financial facts about timeshares

Mar 13, 2019 Updated Mar 13, 2019

Source: The Press

Many people turn to timeshares as a way to enjoy annual vacations. But is investing in a timeshare a financially sound decision? That depends on whom you ask.

Getting the facts about how timeshares work and learning a few tricks can help anyone make an educated decision about them. In a timeshare, individuals purchase a property to use for vacations. Typically, they’ll use this property and the surrounding amenities once per year, and often must travel to the same location time and again.

Timeshares have long held appeal because they are marketed toward people who may not be able to buy a vacation home, but still want to vacation each year. [We would also add - Those who DO NOT WANT the responisbility of owning a vacation home - B&MA]

There are some advantages to timeshares. They provide a guaranteed vacation destination each year in a familiar place. This is great for people who value familiarity. Timeshares also make it possible to afford a vacation at an expensive resort. Sometimes a person can trade times or locations with other timeshare owners, enabling more versatility and new destination experiences. For those who have to skip a year, it may be possible to sublet the timeshare or let family and friends use it, if the agreement allows.

Timeshares have some notable drawbacks as well. Cost-efficiency is one notable shortcoming. The American Resort Development Association, a trade group for timeshare companies, suggests that the average cost of a timeshare is around $20,000, with an annual maintenance fee of $660. Those fees are paid even if the resort isn’t used that year. Chances are a person can get a comparable vacation elsewhere for a lower cost, especially with the abundance of vacation property rentals available from traditional hotels, as well as sites such as AirBnB.

A timeshare is not like a traditional real estate investment. According to Investopedia, it is an illiquid asset that is likely to lose value over time. Those who decide to sell their timeshares often find they must do so at a deep discount. Furthermore, those who sell a timeshare at a loss may find the Internal Revenue Service doesn’t let them claim a capital loss, which is often the case with other investments and property.

To make timeshares work better financially, individuals can opt to buy used, which is often at a fraction of the cost offered by resort developers for new units. Also, realize that a timeshare is a lifestyle purchase, not exactly a real estate investment. They are not a way to turn a profit. Try to purchase in desirable locations as well. Doing so increases the likelihood of resale in the future.

Our reasons for buying at the Grand Luxxe Residence Club include 1) Familiarity, 2) Beach front facilities that are beautiful. 3) Spacious accommodations. 4) Golf. 5) Great location - our only experience has been with Nuevo Vallarta. 6) Sister Resort relationships. 7) Future venues. 8) Favorable financial terms. 9) Don't want the hassel and responsibility of owning a second home. 10) There is no way we could afford to buy a property on the beach that comes close to what we can access through our timeshare ownership.
What about you? Leave your comments below if you would like to share your thoughts.
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