The following is a guest post from Jeffrey Strain, who is a digital nomad and personal finance writer. His main website is Saving Advice
There is a lot of misinformation flying around about timeshare that can get you into a lot of financial trouble if you believe it. Most of it comes from timeshare salespeople overstating the truth that get repeated when people explain why they purchased a timeshare. But just because something has been repeated many times doesn’t make it the truth. The following timeshare myths may help you avoid running into timeshare trouble in the future. Consider each one carefully before putting your hard earned money down to purchase a vacation property.
Timeshares pay for themselves: Timeshares do not typically pay for themselves, unless the currency you are talking about is memories. Even then, you can still get those memories at a fraction of the overall cost. While the sales agent may not want to divulge this information to you, timeshares are most definitely not just about property payments. They also come with plenty of other costs, hidden fees and taxes. No matter how little you use the timeshare, you are still responsible for its upkeep, sometimes including utility costs and maintenance. These extra fees can be hundreds of dollars per year.
Timeshares are smart investments: Those interested in timeshare as potential investment opportunities should think again. Timeshare owners make money on a sale rarely, if ever. Usually, timeshare purchases end up as money-wasters rather than money-savers because the value of the property depreciates drastically over time. In bad economic times, timeshares can be especially foolish investments since they can often be impossible to give away for free sticking the owner with all the yearly fees.
Timeshares are a good value: On the surface, a timeshare might look like an excellent value because one gets to share ownership of a property he or she might not otherwise have been able to afford alone. However, when all the payments, fees, and taxes are added up which must be paid toward their timeshares, they would have saved money by taking a traditional vacation instead.
Timeshares are a safe bet: There are risks associated with every vacation and all kinds of travel, and timeshares are no different. There are numerous ways that buying a timeshare can be a risky venture, so don’t assume that buying now will reserve your vacation spot for life. many timeshares are located in places where natural disasters occur or the timeshare management company could go bankrupt just to name a couple.
Timeshares are easy to swap: Plenty of families buy timeshares with the expectation that swapping properties with others will allow them to vacation all over the world. This is not often the case, and may be more trouble than it’s worth. Even if you do have a timeshare worth swapping into, it requires a lot of research into each possible swap location before finalizing your plans. You don’t want to end up swapping to a location that has poor maintenance records, few amenities, and a bad surrounding area. Unless you join a very active network that has dozens of interested swappers every day, you might find this swapping process difficult and a hassle.
Timeshares are easy to sell: As with almost all properties these days, timeshares are not easy to sell. There are few incentives for buyers and even less demand. With so many tens of thousands of timeshares available, it’s difficult to find someone willing to take on ownership. Most people looking at the timeshare resales market know the truth about timeshares being poor investments, having many fees and the difficulty in getting rid of them making it extremely difficult to sell even during good times.
Timeshares are always well-taken care of by their owners: Just because a timeshare has several stakeholders does not necessarily mean it is, or remain, in amazing condition. Timeshares often have rules that restrict the amount of decorating and personalization that can be applied to a property. Since owners each have such a small stake in the timeshare, the upkeep and pride that comes with owning a property often falls on the maintenance staff. This can sometimes mean an inconsistent, or even run-down, quality in a timeshare.
Timeshare gifts are amazing deals: As with many other aspects of timeshare ownership, amazing advertised freebies are not all what they’re cracked up to be. Some sales agents throw in special vacation certificates, but beware. Free vacations like these end up costing unsuspecting couples and families hundreds of dollars in hidden fees. Don’t assume that these freebie vacations include costs like transportation or other undisclosed fees.
Timeshares make great places to visit year after year: Some families do enjoy revisiting the same spot each year, reliving past moments and building new traditions. This isn’t right for everyone, however, and families change over time. Your family might enjoy trying a new vacation spot each year, and trying new things, rather than repeating old ones. Consider what you enjoy most about vacations. Is it getting to try new restaurants and activities every time? Is it discovering attractions you’ve never seen in your life? If so, the consistency of a timeshare might not be your style.
Timeshares are right for everyone: Timeshares are certainly not perfect for all types of people, and if anyone tells you this is true they are probably just trying to make a sale. Timeshares are not right for a wide range of people. For instance, young couples who might start a family soon, or who are very likely to move within a few years. Timeshares might also not be great choices for older couples whose mobility isn’t what it used to be. A particular timeshare might seem like a wonderful place now, but as years go by you might not think so as your lifestyle changes. Every potential buyer should evaluate what kind of person they are, how their family and lifestyle fits into the decision, and what kinds of vacations they enjoy the most.
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I’ve heard so many horror stories about timeshares. They are just way to expensive for what you get. And I personally wouldn’t want to visit the same place enough times to have the cost match the value. It just doesn’t add up for me.
me neither. I am 100 miles away from those pitches.
You’re right. It’s almost like buying a second house, except you don’t fully own it.
Only pay for the maintenance for a place where you don’t even go every year and can’t rent out either..Strange that people can be fooled.
[...] presents 10 Financial Myths About Timeshares posted at from One Cent At A Time, saying, “There is a lot of misinformation flying around [...]
We own with a timeshare company, and while I agree it’s not for everyone, it can be fabulous. This article deals only with the traditional “I buy a portion of a single property” timeshare. Most of the newer timeshares are more like investing in a company and I have options to spend my time at locations owned by my company all over the world, whenever I want, as long as I have the shares to cover it, and all properties are maintained to the same high standard.
I will honestly say it was not the smartest money C and I ever spent, but it’s also a purchase that I do not regret, not even a little bit.
Timeshares rarely make sense purely from a financial standpoint mainly because you can rent timeshares at the same resorts for about what they cost to own without any of the risks. Some people like timeshares because they live busy lives and the timeshare forces them to take a vacation — this is a quality of life decision over a financial one — nothing wrong with that if they know exactly what they are getting into and why they are.
I suspect a lot of people end up buying time shares not because they want them, but because they’re persuaded by the hard sell pitches that accompany many of the “free gift, just listen to our presentation” type offers.
You are right, one of my colleagues has a timeshare in Orlando. He got it on one of the trips to theme parks. He gave in for a pair of free park admission tickets.
Gave in and actually committed financially to a time share, just based on getting the free park tickets? Wow, that’s not a whole lot of willpower that colleague has!
I have zero desire to get a timeshare. Don’t see how it’s worth the committment or hassles.
Yeah, he took advantage of the timeshare for first couple of years going to same set of parks again and again. Then onward trying to sell it off. And not sold in last 3 years. He’s has made a huge blunder.
They are very hard sell — if you ever happen to find yourself in such a situation, an easy way out is simply to say, “I love the timeshare — I just need my lawyer to look at the contract.” If the try to persuade, all you have to ask is, “is there something in the contract that my lawyer wouldn’t approve of?” This puts them on the defensive and allows you to make an easy escape.
That’s a very neat tip
Thanks for spelling out the costs and risks of a timeshare. I’ve always heard they are bad investments, but never really the details of them.
The credit goes to Jeffrey, my new found blogging buddy
We inhereted the timeshare. For free. We do need to pay an annual cost but other than that it seems to be a good deal for us. We pick and choose time of the year we want to go. We can exchange it and go to a different place, we can rent it out. No complains so far. BUT I would never bought one. Ever.
Good to hear a different perspective, perhaps you are happy because you didn’t pay for it. What about annual maintenance, are you not paying for it every year?
My friend got married in Maui and got talked into a timeshare on their honeymoon. They thought it would be cool to relive memories of their wedding. Now, they have been divorced for years and still can’t get rid of the timeshare. So, they have to split the costs and take the vacations on alternate years. Plus, the airfare to Hawaii every year is expensive, so they often trade it for one closer to home.
At least they worked it out someway. Often people just don’t get any work around. Thanks for the comment Bret
[...] thought about it even more when reading about 10 Financial Myths About Timeshares over at One Cent At A Time. (This was a guest post written by Jeffrey of Saving [...]
I do not want to take away from your article as these 10 myths are relevant, accurate, and good points to think about for prospective timeshare buyers. I think it is worth highlighting the myth that they are easy to sell. I would go as far as to say they are nearly impossible to get rid of. You may be on the hook for life once you sign a timeshare contract. It is not a decision that should be taken lightly.
And what do you think is the reason behind this? Why one can’t re sell the shares?
GREAT ARTICLE!
To reply to both of you:
a) its also a myth that you are “…hooked for life… “. Resorts want people to think that, as they get the overpriced fees for life, but its not true. There are 2 ways to get out: cancel it or transfer it.
b) the reason you can’t sell a timeshare (or in some cases, only a few resort units actually do have value) is because: who in their right mind would buy a liability, that cost more and more every year!
A timeshare is not an asset.
The resorts are selling timeshares to unknowing vacationers who believe the lies that the resort told. Once the owners find out or figure out, they lied, they can’t sell it — no one wants it.
And for once, the law is on the owners side — BECAUSE the resorts lied and it has been proven over and over — a contract signed based on lies is invalid.
So the owner can cancel at anytime.
The resorts have a team of lawyers, but they do not want a class action suit — as they know they would loose.
Now granted, it does cost money to get out of your timeshare, but the amount “saved” vs. paying a lifetime of fees is far greater than keeping the timeshare.
http://www.timesharescam.org
Get Out Of Your Financial Burden!
I have done some research and come up with one question. Why are timeshares allowed to operate the way they do. Its ridiculous. What do you do if you can’t afford to use it or afford the HOA fees because of the downturn of the economy. You’re just screwed I guess and none of the politicians give a crap. They don’t care that many people are completely deceived, as I was, by the timeshare people saying “Its an investment” and “You can sell it”. Check on line, some people are trying to give them away with no luck. So, I guess you are stuck even though you can’t afford the up keep. Only in America, right?
[...] Cent At A Time actually has a guest post that I wrote on his blog describing 10 Financial Myths About Timeshares which details many of the myths about timeshares that the timeshare resorts like to promote, but [...]
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