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:
Are Timeshares a Bad Investment?
November 4th, 2010 at 01:32 am
November 4th, 2010 at 02:44 am 1288838665
November 4th, 2010 at 03:03 am 1288839792
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."
November 4th, 2010 at 01:39 pm 1288877951
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.
November 4th, 2010 at 01:51 pm 1288878707
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.
November 4th, 2010 at 03:35 pm 1288884900
November 14th, 2010 at 07:09 pm 1289761776
August 13th, 2013 at 10:48 pm 1376430536
October 7th, 2013 at 08:40 pm 1381174837
"...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."
January 7th, 2014 at 06:03 pm 1389117823
January 29th, 2014 at 10:39 pm 1391035150
March 13th, 2014 at 07:43 pm 1394739824
April 15th, 2014 at 11:44 pm 1397601865
May 22nd, 2014 at 11:39 pm 1400798361
June 5th, 2014 at 06:27 pm 1401989247
September 17th, 2014 at 10:30 pm 1410989425