Why Timeshares Are a Bad Investment
A timeshare is a form of property contract. There are several types of timeshares. With some timeshares, you partially own the property. With other types of timeshares, you just have the right to use it for a certain amount of time during year. Most timeshare properties are resorts or vacation condominiums in resort locations. Some value timeshare ownership as a good investment while others consider timeshares a terrible investment.
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Buying a Timeshare
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Timeshare sellers often accost vacationers and convince them to attend a sales presentation based on a free gift or promotion. Most timeshare salespersons are extremely persuasive and pushy and will emphasize the benefits of buying a timeshare. However, salespersons will often neglect to mention some of the obligations associated with timeshare ownership. These obligations include paying taxes and maintenance fees on the timeshare, which can add up to thousands of dollars per year.
Timeshare as an Investment
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You typically make an investment by utilizing a certain amount of money with the expectation of receiving a return on your investment. Timeshares purport to offer the promotional benefit of having the opportunity to enjoy a comfortable vacation destination. The timeshare sales pitch will tell you that the cost of owning a timeshare is less than the cost of paying for a comparable hotel. A timeshare buyer must pay and initial amount, the purchase price, at the time of sale. However, you must continue to pay the taxes and maintenance fees as long as you own the timeshare. In many cases, it actually ends up costing you more to own a timeshare than it would to simply pay for a hotel.
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Timeshare Buyers
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Timeshare sellers typically target middle class buyers. The idea is that this demographic can't afford to purchase a vacation home outright, but can afford to purchase a timeshare. Many middle class purchasers of timeshares don't understand the continuing financial obligations associated with timeshare ownership. Therefore, they often end up purchasing a timeshare they can't afford and the timeshare ends up in foreclosure or sold for pennies on the dollar in the secondary timeshare resale market.
Timeshare Use
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When you purchase a timeshare, you typically acquire the rights to use the timeshare during a specific week of the year. Holiday weeks such as Christmas or spring break are typically more expensive. Timeshares do sometimes allow you to trade your weeks or even your location. However, your desired week or location may not have availability at the time you want to take your vacation. Additionally, renting out or selling your timeshare is not easy. There is a lot of competition and you may end up getting stuck with vacation weeks you can't use.
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