<< Back to all Blogs
Login or Create your own free blog
Layout:
Home > Are Timeshares a Bad Investment?
 

Are Timeshares a Bad Investment?

November 4th, 2010 at 01:32 am

I recently read an article about bad investments and was not surprised to see timeshares on the list. Timeshares frequently get a bum rap, although there is some truth to the notion that timeshares can be a bad investment. If you buy a timeshare as an investment, you will be disappointed if and when you go to sell and see how much it's depreciated. But it’s hard for me to wrap my head around the idea that people actually buy timeshares thinking they will resell them for profit.

Most timeshare owners I know bought for a variety reasons, but investing to make money is usually not one of them. However, I want to make a distinction here between making money and saving money. We think of our timeshare as "pre-paid" vacation time, and so far we are on track to save quite a bit. Read on and I will illustrate how, using our own timeshare as an example. But first let me share the "plan" we had in mind when we bought.

We intend to use our timeshare about 20 years (hopefully more) before we hand it over to an interested family member. Or, if no one in the family is interested, I can guarantee we will find someone willing to take it over. This means we would put the title in their name and they'd be responsible for the annual fee, currently about $400 a year. We're not interested in selling... we'll be happy to give it away when we've had enough. And yes, as the years go by, the fees will go up. No doubt about that, but so will the cost of hotel rooms. So here is how I break down the actual cost of owning our timeshare:

2003: Paid $10,300 (cash... no finance charges or loan fees to include)

Divide $10,300 by 20 years = $515 a year
Add $400 maintenance fees: $515 + $400 = $915
We use our timeshare an average of 10 days* per year: $915 divided by 10 = $92 per day
This is for accommodations that would normally run ~$250 to $300 a day or more. Not bad, even if you add ~$200 a year in lost interest on our original expenditure of $10,300.

*By leveraging our time and/or points, and traveling during off-peak times, we might stretch it to 14-21 days a year, greatly reducing the cost per day. We are also able to split weeks, convert to points, borrow from next year, and carry over for further flexibility. This will be an option now that we're retired and can travel during the off-peak months.

Our timeshare accommodations are typically a modern condo that sleeps 4-6 people. The unit will have a fully stocked kitchen, linens, washer and dryer, several bathrooms, and many other amenities such as swimming pools and workout rooms. We enjoy inviting friends and family to join us, and we can do this at no additional expense.

Some of the places we've been through our timeshare exchange network include:
Wolf Creek, Utah - 7 days
Sonora, Mexico - 7 days
Sedona, Arizona - 4 days
Carmel, California - 3 days
Bear Lake, Utah - 7 days
San Antonio, Texas - 7 days
Payette Lake, Idaho - 3 days
Las Vegas - 2 days
Orlando, Florida - 7 days
Mérida, Mexico - 7 days
Honolulu, Hawaii - 7 days
Brian’s Head, Utah - 7 days
Oregon Coast - 7 days (planned for 2011)

So, the bottom line is that we pay the equivalent of ~$92 per day for accommodations that would cost ~$250 per day minimum, and this approach supports our quest to save money while we enjoy traveling to different states and countries.

Sonora, Mexico:


Sedona, Arizona:


Carmel, California:


Bear Lake, Utah:


San Antonio, Texas:


Payette Lake at McCall, Idaho:


Orlando, Florida:


Merida, Mexico:


Honolulu, Hawaii:


Brian Head, Utah:

16 Responses to “Are Timeshares a Bad Investment?”

  1. Single Guy Says:

    If you would travel to expensive places anyway, and don't have any issues come up that would keep you from using what you have paid for ... then yeah, timeshares could work out well for you. There is just too much potential problems with timeshares that will come up for the majority of people that unless you REALLY know you will use it properly, you should stay away from timeshares. Think about it... why would they try to bribe people to come to presentations, and then strong arm them to buy in, unless there was a problem with the idea of them as "investments"? For some reason my mother bought into one years ago, and due to various issues she has only been able to use it a few times, leaving it as a severe money pit. What can ya do? People have to learn on their own.

  2. M E 2 Says:


    I can't say that I know alot about them but ALL the financial things I have ever read have always said timeshares are a "what NOT to do."

  3. SnoopyCool Says:

    I do not know if timeshares are a wise investment, but this I know:
    Clark Howard really does not like them.
    My parents have one and they use it every year, and have for the past 15 years. They enjoy it.

  4. MonkeyMama Says:

    The only people I know who like their timeshares, have them in Hawaii or have Disney timeshares. That said, they are going to spend a fortune on travel or Disney, regardless. 99%+ of people who own Timeshares will never use them enough to justify the cost. & if they bought their timeshare anywhere else, forget about it. (I can only presume your timeshare is in Hawaii? Or somehow set up that it is easily trade-able?)

    We always go to the timeshare presentations in Vegas because the rewards are very nice (last time was 3 nights stay at the Hilton, for a 1 hour presentation?). Last time, tried to sell us a $50k timeshare that was completely worthless. (You couldn't trade it anywhere, and when you go to Vegas you don't want to stay at a condo off the strip!) The price was insane, but people were buying them.

    Anyway, I am glad it works for you, but I wouldn't encourage timeshares to the general public.

  5. Broken Arrow Says:

    This is a good post! I agree the bottom line is that it's a good deal if you plan on using it as it was originally intended, and using it to its fullest. Otherwise, it may be a bad "investment".

  6. carla Says:

    I recently bought a timeshare and was a bit spectacle at first , but then I realized that buying this would save me money in the long run especially when utilizing the wonderful art of what they call 'getaways' these are apart of buying timeshares out side of your granted week there are always specials going on for their owners (I.e. the cost of staying in Hawaii would only cost me 49 dollars rather then 1200 for a week of stay) , they also have 'guest certificates' where you are able to call the 800 number and let them know that you have Mr. And Mrs. John Doe coming to check in at the Hawaii resort thus allowing you to save them money and make you a little bit of cash , yeah I see that people find that if you are not going to use it what's the point, well there is always the ability to trade it and RENT it while you are not occupying it. I have no intentions of selling mine as it is located in Orlando , selling it would be difficult for some but the fact is that some people either love it or hate it but that all depends on how you use it and utilize the owner advantages, you have to be smart about it.

  7. Jerry Says:

    I think it all comes down to whether or not you actually use the timeshare, and it leads to you getting the worth out of it that you desire. It appears that you definitely are using yours, so it is not a bad thing... others who view them as an investment are not thinking clearly or are duped. There is no insurance that a time share will make money in the long (or short) haul!
    Jerry

  8. Kriz Carcamo Says:

    Well, the first thing we have to understand is that timeshares are not investments, but a purchase that requires lots of expenses a year. The thing is that the timeshares salespeople use rhetoric as a massive weapon, bombarding the potential victims with lies and practically pushing them into getting a property.

  9. Sasha Collins Says:

    You are a victim of timeshare scam if you were told these statements at a sales presentation:

    "...our timeshare is a good financial investment."
    "...you can rent your timeshare weeks and make a profit."
    "...you can sell your timeshare anytime and make a profit."
    "...XYC company will buy your old timeshare for a considerable amount of money."
    "...our timeshare offers you exceptional benefits and discounts for airfare, car rental, cruises, hotels or tours."
    "...our timeshare offers tax advantages."
    "...our timeshare is a deeded or like a deeded property (perpetuity)."
    "...please, sign this waiver rescinding your right to cancel your timeshare within the 5 day recsission period as we are activating your timeshare today."

  10. Lindsay Stewart Says:

    The timeshare industry has been into the lion’s mouth for the last couple of years, and it has generated lots of controversy and discussions in many forums and blogs on the web. However, since we’re living an economic downturn, anyone would expect that the timeshare sales collapse, but instead of that the sales seem to be increasing… but this comes with a trap: timeshare scams are increasing too. That leads us to the question: then, why keep people investing on timeshares?

  11. Liliana Wong Says:

    Timeshares can be a terrific purchase for some families, as they also can be a giant rip off for others. 50 years ago, also known as Holiday Home Sharing or timeshare travel, timeshares were created with the idea of offering fully furnished accommodations for a lower price than a full-time ownership. Nowadays, timeshares have become a very popular vacation option, yet lots of people do not completely understand how timeshares operate.

  12. Linda Rogers Says:

    Timeshares need to be looked up as a purchase and not an investment. Regardless of how timeshares are presented, they don´t perform as well as a house or stock investment. If you look around the resale market for timeshares on websites like EBay, Redweek, or TUGBBS will find that you can buy a timeshare for far less money than what the first owner purchased it for.

  13. Jennifer Williams Says:

    Timeshares can be a terrific purchase for some families, as they also can be a giant rip off for others. 50 years ago, also known as Holiday Home Sharing or timeshare travel timeshares were created with the idea of offering fully furnished accommodations for a lower price than a full-time ownership.

  14. Beth Green Says:

    Timeshares need to be looked up as a purchase and not an investment. Regardless of how timeshares are presented, they don´t perform as well as a house or stock investment. If you look around the resale market for timeshares on websites like EBay, Redweek, or TUGBBS will find that you can buy a timeshare for far less money than what the first owner purchased it for.

  15. Yaneli Roberts Says:

    Thousands of International travelers, particularly from the US and Canada, have fallen victims oftimeshare fraud while vacationing in Mexico. Resort developers hire skilled salesmen to represent their timeshares as many different attractive packages, such as financial investments, deeded properties, or vacation clubs, just to increase their sales.

  16. Denisse Smith Says:

    Timeshares have always been a bad buy. But for those who really feel they need one I make one recommendation: Never buy from the developer. Always wait for timeshares to appear on the secondary market, usually at half-price. People like you get excited at the new developments and jump right in, only to become disillusioned later and dump the property onto the secondary market, at a loss, for a patient, informed buyer to take advantage of.

Leave a Reply

(Note: If you were logged in, we could automatically fill in these fields for you.)
*
Will not be published.
   

* Please spell out the number 9.  [ Why? ]

vB Code: You can use these tags: [b] [i] [u] [url] [email]