It’s probably happened to us all. We’re on vacation at a popular destination and suddenly we are approached by someone asking if we’d like to attend a meeting to learn more about timeshares. During these meetings you can really be put on the spot to invest, so before attending, it’s a good idea to weigh your options.
This article will explain what a timeshare is and give you some insight so you can decide if it is the right investment for you.
What is a Timeshare?
If you are looking for a timeshare definition, here is a bit about how timeshares work.
A timeshare is a property with a divided form of ownership or use rights. They are typically resort condominium units in which multiple parties hold the right to use the property and each owner is allotted their period of time.
Types of Timeshares and Locations
There are various types of timeshares available. These include the following:
Fixed Week: In this type of contact, the buyer owns the rights to a specific unit the same week each year. The owner may or may not appreciate the predictability of this arrangement but if they are unable to attend at their set time, they can rent the timeshare to someone else for that week.
Floating: With this type of timeshare, you can choose the week you want to spend in the vacation property. However, it may be difficult if you are looking to book during a high travel season as other owners may scoop those up.
Right to Use: In this situation, the buyer leases the property for a set amount of years. The owner still owns the property.
Points Cub: In this type of contract, buyers accumulate a certain amount of points from buying a specific property or purchasing points from the club. These points can be used to help them get into preferred properties at various times of the year.
Some popular timeshare locations include the following:
- Las Vegas
- Myrtle Beach
- Orlando, FL
Fractional Ownership vs. Timeshare
It is easy to confuse fractional ownership with timeshares. However, there is a difference.
A fractional ownership is a property purchase involving several buyers, usually 6-12. Each is a part owner of the title and each has a stake in the asset, but they get to split expenses including mortgage, maintenance and taxes.
While a timeshare limits property access to one or two weeks a year, with fractional ownership, an owner will typically have access to the property for five weeks a year or more.
Why Do People Buy Timeshares?
There are several reasons people buy timeshares. For one, they make a great vacation home for the buyer and their families and friends.
And if your wondering ‘are timeshares time shares a good investment?’ and ‘are timeshares worth it over the long term?’ the answer is yes, they can be. That’s because there are a few different ways you can make money with your times share.
For one, you can rent it out to friends, family or anyone else that is looking for a vacation home in the area.
It is also possible to sell a timeshare for a profit. Read on to find out more about how this process works.
How to Sell A Timeshare
Selling a timeshare can be profitable but there are some extra steps required that makes the process a bit more complicated than it would be if you were selling a home.
You will want to start by revisiting the contract. This will give you all the details a buyer will need including the amenities, the size of the property and the name of the developer. You will also need to get a physical copy of the deed which may be held by the resort or a trust company.
Next you will have to think about how you can get potential buyers in to the property. If you have limited access, this may be easier said than done. Check with the resort to find out the easiest way to make this work.
Before moving on, find out if your timeshare is paid off. If you still have a mortgage or maintenance fees to pay off, it may be impossible to sell your property.
If all is good with your payments, it’s time to figure out what you want to charge for your timeshare. Compare it with other timeshares on the market to come up with a price you think is fair.
It is a good idea to work with a real estate agent to sell your timeshare, and specifically, you want one who is experienced in timeshares. Timeshare listing companies are another option but if you choose to go this route, make sure you are working with a company that is reliable.
If you are having difficulty trying to sell your timeshare, you can also talk to the resort to see if they are willing to take it back.
A final option is to connect with a timeshare exit team. They will find legal loopholes that will help you get out of your timeshare. Again, it is important to make sure the exit team you work with is reliable, so you don’t end up caught in the middle of a scam.
Where Can Someone Find a Timeshare Lawyer?
A timeshare lawyer may also help you get out your timeshare. They can help draft timeshare cancellation letters and they can litigate a breach of contract situation.
A timeshare lawyer can be found online or through word of mouth. It’s advisable to look for a lawyer with experience in timeshare law and a great reputation.
Timeshare Pros and Cons
From here we can see that there are many reasons that constitute why are timeshares good or bad, but here are some pros and cons to sum it all up.
- Unlike a vacation home which you will have to rent full time but only use part time, with a timeshare, you only pay for what you use. You also don’t have to worry about year-round maintenance.
- If you like predictability, you have a guaranteed vacation destination.
- You can trade your timeshare with other timeshare owners giving you the opportunity to check out new destinations.
- You can rent out your timeshare to generate income.
- You can let others use your timeshare for free or donate your vacation time to a charity auction.
- Even though you don’t have to do maintenance on a timeshare, you do have to pay maintenance fees. These can be quite costly, and you will have to pay them whether you use the timeshare or not.
- Timeshares are difficult to sell, and you may not always make a profit. If you lose money, the IRS will not let you claim this as a capital loss.
- Buying timeshares in a foreign country may be problematic as some timeshare holders will not be able to hold the title in countries that are a certain distance from their home. They also may be limited in their right to use. These terms may change depending on the country your timeshare is located in.
How Much is the Average Cost of a Timeshare?
The cost of a timeshare will vary depending on the type of timeshare it is, whether its being purchased through a resort, the timeshare’s size, it’s location and whether or not its being resold. However, according to 2015 statistics, the average cost of a timeshare is around $20,040.
Why Do So Many People Call Timeshares a Scam?
Timeshares don’t always make great investments. However, if you think of them more as a vacation home, they can be quite beneficial.
However, most timeshares are sold to vacationers who have their guard down and they are sold by people with a slick sales pitch. Potential buyers are dazzled by free gifts and dinners and feel like they are on the spot to accept what they are being sold.
Then reality sets in and they are left with a condo that is difficult to schedule and may have less then stellar facilities. They also may end up losing money on their investment.
Although these types of sales tactics have given the industry a bad name, if someone does their research and knows exactly what they are getting into, they will get the most out of their timeshare experience.
At timeshare can make a great vacation home for some and it can be a bad investment for others. If you do your homework beforehand, you will be able to make your timeshare work for you. We wish you luck in getting into a situation you are happy with.