Pros and Cons of Owning a Timeshare Instead of a Vacation Property

Singles, couples, or families who like taking multiple vacations a year might consider buying a second vacation home. Other people may think about purchasing a timeshare for vacation time. Which option is better? Well, it depends on your situation.

Purchasing a vacation home or a timeshare can be a costly decision. Just like any big purchase, it is prudent to review the pros and cons, and decide what is best for your situation.

For some investors, buying a vacation home or timeshare may only involve a small portion of their income. While for others, it may require a large chunk of their budget to purchase. While everyone’s financial situation and lifestyle is different, it is wise for anyone to do some research before investing his or her money. Here is a general list of pros and cons to owning a vacation timeshare versus a vacation property.

Costs. Timeshare properties are more economical compared to buying a vacation property that you may only visit once or twice a year. Compare a timeshare to buying real estate. A timeshare is a only a fraction of the real estate, including maintenance costs. For example purposes, let’s say you purchase property that costs $250,000. Compare this with a timeshare that costs about $10,000 (or less in the secondary market) plus the maintenance cost of $600 for the life of the timeshare.

If we assume the lifetime period of 30 years the calculation will be as follows:

$10,000+30 years x 600 = $28,000 for the lifetime (assuming the maintenance fees average $600 each year).

The property will cost much more than the $250,000 because of interest over a 30 year mortgage.

Convenience. When you compare a timeshare with owning property, the convenience factor is high. You don’t have to worry about the upkeep or any maintenance. Your maintenance fees take care of all the upkeep and repairs without you getting involved.

Timeshares are usually fully furnished, so you do not need to purchase additional furniture for your property.

Diversity. If you buy a timeshare or become a vacation owner, most have properties that are located all over the world. If you own property, you will feel obligated to go on vacation there each year – to the same place.

Most timeshare companies are associated with other timeshare companies to allow the exchange of a timeshare. This is one of the big benefits and why people prefer buying a timeshare to purchasing real estate.

Location and Amenities. You would probably spend more than $250,00 to purchase a two or three bedroom beachfront property. Many timeshares are located in primo locations and have a lot of amenities, including an indoor or outdoor pool, activities, and restaurants on the premises.

Misrepresentation. A big con is that not all timeshares are created equal. Some timeshare companies have properties that are not located in the best locations. There may be a lot of fine print that you may have skipped over when signing the contract. Check out the property locations before making a purchase.

Unfortunately, there are a lot of scammers and frauds out there. The timeshare industry has been plagued with variety of fraud related problems. Timeshares are not covered under the same laws are regular real estate.

High-pressure Sales. A common way to get involved in a timeshare is by attending a ninety-minute “no-strings-attached” presentation. The lure of the presentation is that it’s free and comes with other vacation deals or incentives to get you to attend. While you can always walk away, the pressurized sales tactics make it difficult and can be even considered unethical.

Do not fall prey to these tactics. If you are not interested, walk away and stand your ground. Always read the the fine print on any documents before signing any agreements. Research the timeshare company ahead of time and know their reputation.

Costs. While in the long run, a timeshare is cheaper than a vacation property, timeshares still require a large sum upfront. Compared to staying in a hotel, a timeshare requires annual or quarterly maintenance costs which can be a turn-off to some. These fees will be there for life, and will not be paid off like a real estate mortgage.

One of the major cons is the depreciation of the timeshare. Unlike, real estate, timeshares don’t appreciate, and you will most likely not regain what you spent if you need to resell. They are also much more difficult to resell compared to a real estate property.

Inflexible. Lastly, timeshares may not have the convenience of your own property, which allows you to come and go as you please. Your schedule may not be flexible enough for you to use the timeshare when your slot is available. Although many timeshare companies offer flexible timeslots, it be on a first come first serve basis and requires you to make the arrangements far in advance.

The peak season is when you may want to go on vacation, but that is also true for everyone else. Owning your own property means you can go in peak season without having to compete with anyone else.

As you can see, there are pros and cons to owning a timeshare.  The first step is to look at your situation and what makes the most sense to you as far as vacation lifestyle and plans. After that do your research and weigh the pros and cons.