Fred liked the sea bass. Helen loved the sound of the ocean. They came to the coast once a year starting back when the kids gave them a trip for an anniversary present. Now Fred was about to retire and here they were again. They just loved to vacation here. Now they were faced with a decision. Should they keep renting this little beach house or do what their neighbors, Ed and Francine finally did and buy a timeshare. It was a tough decision.
There are some things to consider. Timeshares were started by a French real estate developer in the 1970’s when he decided to sell off different shares of his condos instead of try to get rent for them. The idea hit is big and was a raging success in the 1980’s. The simple version of this idea is that people pay an upfront fee, and own a piece of the property. For this upfront fee, of maybe 10,000, people have a guaranteed place to land at their favorite resort destination.
Buying a timeshare typically works for people who have either one location they know they frequent for travel- like their favorite ski-resort in the winter, or who are retired and spend the bulk of their time traveling around.
The original idea of a timeshare was that you perhaps bought 1/52 of the purchase price of the facility, and so you were given a deed for that fractional amount of the property. Those still exist. There are also clubs now that run multiple timeshares and so the up front fee gives you access to the club’s multiple properties. Some of these clubs even have point incentive programs, much like frequent flyer mile programs we have seen in the past. This appeals to some people because some of the clubs even allows participants to exchange timeslots or properties with other participants. When that works out everyone wins.
The challenge to owning a timeshare can be if you don’t fit the classic model of the person always going to one place or the jet setting retiree with a wide open calendar. Timeshare properties charge maintenance fees to all their participants. Depending on the club someone is using, there may be a fee to exchange either properties or time slots. So if you don’t fit that classic model and you don’t visit one place every year, then the timeshare just ends up costing you the various fees without you getting the benefit of the vacation. Likewise, if you stop using the club’s services to visit various locations, you have the fees on your hands without the benefits.
Use caution when considering buying a timeshare. Even though high pressured salesman may try to liken timeshares to other real-estate investments, they just aren’t an investment opportunity. A timeshare is strictly a more convenient way to travel if you like having full facilities and the predictability of your favorite tourist destination being open. The chief complaint of people is that once they stop using the unit, they have a very difficult time selling it on a market that is flooded with timeshares. You also have to read the fine print on some of the club set ups, because even though they have increased flexibility, many times they have fees that increase as the years go buy.
So, if you’re like Fred and you love the sea bass at one particular tourist destination year after year, it may be a good choice, since Fred doesn’t want to buy an entire house there just to enjoy a couple of weeks. But even with Fred and Helen, they need to consider if the 10,000 they pay up front for a timeshare will outweigh all the hotel accommodations they will pay for the next few years, knowing that they may be stuck with the timeshare, or maintenance fees. For many people it works out because they can afford the fees, and they can offer the timeshare as a gift to relatives and friends. You just need to look at your own travel needs and figure out what is best for your life.
What do you think about timeshare? Would you get one?