Whether or not to own a timeshare is an interesting discussion. Timeshare solicitations are very common these days and so conversations about a timeshare are not out of the ordinary. Is it financially worthwhile? The answer really depends on the reason why you purchase it. I will discuss the reasons why it would make sense to own a timeshare, and you can see if this applies to you.
Timeshare ownership basically means you own your vacation property. The question is then for you in your situation, would you rather rent or would you rather own?
Timeshare units became popular as vacationing and tourism became popular. Many people found that they would often go to the same or similar vacation spots with regularity. When this type of thing happens, it’s inevitable that demand for ownership opportunities would come up. This is why this industry has continued to grow with millions of Americans already owning a timeshare unit.
Timeshare math is like real estate math. Consider this fact you pay rent to stay in a hotel. You pay the rent for staying in a hotel for a week. Just to use a round number, suppose it is $1000 for a week. If you do this for thirty years that would be $30,000. Optionally, you could pay the entire $30,000 up front and have the hotel reserved for you every week for the rest of your life. The difference is in one example you rent, in the other you own. The math of course will be slightly different and one will end up costing more than the other, but when you compare possible ownership you have possible interest in loans if you finance plus maintenance fees which most likely will raise with inflation. On the other hand with hotels, during the course of thirty years the full rent to stay at a hotel for a week will raise with inflation. Taking into account all the math, you may find the costs are fairly close.
And now to compare the positives and negatives:
A major plus is that though ownership may be more expensive in the beginning, eventually it is more cost effective in that eventually your ownership payment or loan payment if applicable will end. After ownership you only need to pay the maintenance fee whereas with renting a hotel you continue to pay the full cost year after year.
In addition, with the possibility of being able to pass down ownership to your heirs, a third benefit is that for many years to come only a small maintenance fee needs to be paid to enjoy the vacation rental for a week each year. This is much more cost effective than having to pay the increasing costs of a full hotel rental each week every year.
I need to caution that this makes a lot of financial sense if you also know the limitations. The limitation is that you are vacationing in the same spot for a week every year. If you do not take a vacation in the same destination every year for a week, then other factors will come up. You will need to spend time to either rent your unit or exchange your unit to vacation somewhere else.
If you can easily think of real estate in terms of homes, this comparison may make things easier to understand:
To compare a home with a timeshare: it makes sense to buy it if you plan to use it for a long time. Buying a house and not using it would be a waste of money. The same can be said for a timeshare. However, one contrast is that it is common to buy a house and not use it if you plan to rent it. Many real estate owners will buy property with the intent to rent it. Renting is a bit easier of a proposition because people must live somewhere. And they will want to usually live somewhere for an extended amount of time. Vacationing on the other hand is not a requirement, so renting a timeshare means a smaller and more difficult prospect list to reach. Plus, this feat of renting needs to occur every year as vacationing is temporary versus living in a residence is more permanent. On the plus side for timeshares, vacationing can add variety as you can vacation in different destinations each year. The advantage of exchange programs is evident here versus living in a residence: it is hard to fathom doing an exchange for a few months with someone else just because you want to live somewhere else.
The bottom line of this article: if you do not vacation a lot, you can probably find better ways to spend your hard earned money. If you do take vacations a lot, buying a timeshare definitely worth looking into. If you find that you vacation in the same spot with some sort of regularity, then owning a timeshare definitely makes much more sense. Finally, some timeshare developments now even sell units that are a week every other year instead of every year, giving you the option to vacation elsewhere every other year. So in this bit of personal experience, my wife and I did find that we do vacation in Hawaii often and would like to return every other year which is why we bought a Hawaii timeshare for one week every other year.
I hope this article has provided you with some great food for thought on owning a timeshare. Best of luck in your timeshare endeavors.
Learn more about all things related to a timeshare: Stop by Emil Yau’s site where you can find out all about selling a timeshare and other useful timeshare information