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The image vacation timeshare unit sellers promote is extremely appealing. You buy yourself a place for a week at your favorite vacation spot at your desired time which will be yours forever. No more hassles of trying to find hotel rooms or having to pay inflated peak season prices. Since you own it, you can sell it anytime you want, and everyone knows housing is a great investment. Your room will be there waiting for you each and every year. Even better, as the sales agent will undoubtedly stress to you, is that if you decide you want to vacation in another exotic spot one year, all you have to do is trade your timeshare spot with one of tens of thousands of other timeshare owners around the world. Now not only do you have housing guaranteed at your favorite destination, you can have accomodations anyplace around the entire world with a simple trade. This is the image that the sales agent will create, but the reality is quite a bit different.
Timeshare units are basically an extension of the condominium concept. Condos are buildings which have been divided into individual units which one purchases for a specific price plus a share of the maintenance and upkeep costs for the building's common areas which are jointly owned by all. Timeshare units work in a similar way, but the developer takes the individual units and further divides them into weekly time slots to be bought and sold. Thus, instead of one owner for each unit in the building year round as with a condo, timeshare units can theoretically have up to 52 owners (one for each week of the year) each with a right to a specific week in the unit.
The way the weekly time slots are allocated varies depending on the developer selling the timeshare units. In some timeshare buildings, you purchase a specific week in a specific unit within the building, while other timeshare buildings sell floating time slots which merely promise you an available unit in the building during your particular week. These differences have enormous implications when trying to sell and trade your timeshare unit, so it pays to understand exactly what you're purchasing if you decide to buy a timeshare unit.
As with all housing, and especially with timeshare units, location is everything. In addition, the time slot you purchase is of great importance. Owners quickly realize that only the timeshare units in the best locations and with time slots during peak tourist seasons can easily trade their timeshare units with others around the world. Anything less than a prime location and time is difficult, if not impossible, to trade for another location.This often leaves timeshare owners, who assumed they would easily be able to trade their timeshare unit for another location in some far off exotic place, forced to vacation at their purchased timeshare unit year after year.
Buyers often believe these problems will be worth the price due to the vacation lodging savings they'll receive each year, in addition to the resale profit they'll make when they decide to sell their timeshare unit. A quick calculation of the costs, however, shows that timeshare units aren't the wonderful deal the sellers would lead you to believe. Membership, maintenance, cleaning, upkeep and other miscellaneous fees can easily make the cost of your week of lodging $600 or more. Since most timeshare units don't qualify for regular housing loans, you must typically pay outrageously high interest rates (which the timeshare developer will gladly provide) which are usually in the 13% to 17% range on any amount you choose to fianance. This will cause your weekly cost to skyrocket to even further.
When A Timeshare May Make Sense
The news doesn't get any better when you want to sell your timeshare unit. Unlike regular housing, timeshare units are next to impossible to sell for a profit, let alone recover your initial investment. This is because if all the time slots in your building have not yet been sold (which is common), you'll be competing against the developer to sell your unit, virtually guaranteeing that you'll have to sell at a loss in order to get rid of it.
Even for those who give up on trying to recover their investment, they still must pay the maintenance and other upkeep costs until the timeshare is sold. Due to these costs, some timeshare owners with locations and times in less desirable places have problems even giving their timeshare slots away.
Timeshare units can be great for those who have unique situations where they travel to the same place every year no matter what and that situation will never change.Whether it's a specific destination you've grown to love or simply a family reunion that takes place at the same place and time each year, there are plenty of timeshare bargains out there. If despite all the minuses, you believe you're one of the unique people for whom a timeshare might be right for you, you should contact the Resort Property Owners Association (RPOA) at Box 2395 Northbrook, IL. 60062 USA. The RPOA conducts price trend analysis and does other timeshare studies which should help determine if the location where you're considering buying a unit makes sense. Membership is $20.00 a year.
For those still motivated after that, you'll have the opportunity of getting some great deals. It's best to simply bypass the timeshare developers since there are many more sellers than buyers for timeshare units. These sellers are often very motivated to sell which means you can drive a hard bargain. You can find these sellers simply by looking in the advertisement section of the local paper of any resort destination, or better yet visiting some of the timeshare buildings in the area you're considering during your next trip. Check the bulletin boards and talk with current owners to find out who is trying to sell. You can also go online to the auction sites to find low prices. Not only will you save a great deal over what the developer is charging, it may even be possible in some cases to get the unit you desire by simply taking over the long term maintenance fees.
The Timeshare Trap
