Timeshare Donation: The Good, The Bad and the Ugly
Guides, Tips, and Hacks
3 min read
Think you know everything about timeshares?
If your information comes from a developer’s website or sales pitch, you’re missing vital details.
Buying a timeshare unit only makes sense in certain situations.
It’s a good way to co-own vacation property if your family always goes skiing in January, or has a reunion is in the same place at the same time every year.
But for most people timeshares aren’t a dream investment. Many buyers find themselves in a regrettable situation after signing the contract.
This article explains seven things the timeshare industry doesn’t want you to know.
Keep reading to learn if a timeshare makes financial sense for you.
What is the Timeshare Industry?
If you buy a vacation home on the beach it belongs to you. You can use it whenever you want. You can remodel or change it to suit your tastes.
The timeshare industry is different than regular real estate. Instead of full ownership, you buy a share of a property.
Your share gives you permission to use the property for a certain period of time each year. The rest of the year belongs to the other people who buy shares of the property.
This unique form of property ownership works best for a vacation property. That’s why most timeshares are in vacation locations.
Most timeshare purchases are deeded, meaning the buyer owns an actual share of ownership in the resort.
Non-deeded timeshares are like club memberships. They provide a right-to-use the property without owning any real property.
The average share is 1/52, or one week per year. Larger and smaller shares are available, such as a week every other year, or a month-long share.
A Timeshare Isn’t an Investment
An investment appreciates in value or provides income.
A timeshare isn’t an investment at all. It doesn’t appreciate in value, and there’s no financial return on your purchase. In fact, the maintenance fees increase, and the value declines.
Since you don’t own the property (you co-own it with lots of other people) you can’t improve it to make it more valuable.
You can’t rent it out all year like you can with a vacation home. And worst of all, when you sell it you won’t be able to claim it on your taxes as a capital loss.
The Federal Trade Commission warns consumers not to think of a timeshare as an investment. The website states, “You should know that the value of timeshares is in their use as vacation destinations, not as investments.”
You Have Purchase Options
You don’t have to buy from the developer.
You’ll get a better deal if you buy a timeshare on the secondary market.
Since a timeshare is hard to sell, it’s a buyer’s market. The timeshare industry has millions of shares for sale.
Anyone trying to sell a unit has to offer it at discount price to move it.
According to RedWeek , timeshare resale’s sell 30-50% below original developer or resort price.
It’s important to verify the seller or broker. There are timeshare scams .
The Real Cost of Ownership
The initial cost of a timeshare depends on the resort’s popularity, share size, location, time of year, and condition of the property.
Don’t fall for cheap timeshare deals . The sale price isn’t your only expense.
All timeshare resorts charge an annual fee for maintenance, taxes, and utilities.
Fees vary depending on the share. A peak season or larger share may have higher fees. Resorts can increase the fee each year, and many do.
Check if the maintenance fee includes property taxes. If it doesn’t that is another yearly expense.
Review the terms of your contract to see if an unexpected future assessment fee is possible. When a resort makes major improvements or repairs it may assess a large fee to the shareowners to cover the costs.
You must pay these fees whether you use the property or not.
You Can Rent A Timeshare
Sometimes people can’t use their timeshares. Rather than leave the unit empty and lose all their money, they rent it.
Google “timeshare rentals” and you’ll find plenty of choices around the world. You can rent from owners and resorts. You can rent a timeshare for less than it would cost to own. When you rent you don’t have any maintenance or assessment fees.
Timeshare rentals are the best way to gain access to certain resorts and their amenities for a reasonable price.
When you rent from an owner you avoid the timeshare industry ritual of a prolonged tour and intense sales pitch.
The idea of a timeshare swap is simple.
If you want to vacation in a different location, you find someone with a share there who will trade places with you.
Finding the person who is willing to swap can be hard. You may incur extra fees for the trade.
Try an exchange service to arrange your trade. Put your share into the exchange pool and state what you want in return. If you’re lucky, you find someone willing to swap timeshares with you.
Companies that own many resorts may offer an internal trade system. You can schedule flexible weeks, or use any resort in their system.
Use It or Lose Value
Timeshare sales representatives claim you’ll save money on vacations when you own a timeshare.
Those statistics are based on using the timeshare every year for a very long time.
Let’s say, for example, timeshare costs $1,600 a year. A stay at an equivalent hotel in the same location costs $200 more. You save $200 by owning the timeshare.
If the one year you can’t use your timeshare, you lose $1,600. You may get some money by renting your unit, but you won’t recoup the full amount.
But, if you always vacation at a hotel or rental accommodation you don’t lose any money if you skip a year.
The timeshare is only cost effective if you never miss a year. If you miss one time, you lose money.
Pay in Full or It’s a Bad Deal
If you finance your timeshare purchase, you’re getting a bad deal.
A timeshare loses value in the same way a new car does when you drive it off the lot. The timeshare isn’t an investment. It doesn’t appreciate in value.
Banks know timeshares lose value, so financing one usually means a loan with a high-interest rate.
When you add the cost of financing to the sale, it only makes sense to buy a timeshare if you can pay in cash.
Get Expert Help to End Your Timeshare Contract
Timeshare contracts are easy to sign, but hard to exit.
Primo Management Group can help you to end the ongoing burden of timeshare fees and payments.
Our experts know and understand timeshare selling practices.
Contact Primo Management Group if you’re trapped in a contract and need exit assistance.
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