Are timeshares really poor purchases/investments?

In My Humble Opinion
1

In the movies and TV, timeshares are always portrayed as being for ‘suckers’, bad investments, always giving away free vacations if you sit through a high pressure sales pitch, etc. In general, there seems to be an element of ‘sleazyness’ associated with them…

However, to me, the concept seems reasonable enough - you dont have enough money for your own vacation propterty, but by sharing ownership and restricting yourself to certain dates to use the property, you can.

So whats the story here? Are they really a poor investment and for suckers? Does anyone own one? Sat thru the sales pitch? What were your experiences?

2

My parents once went through that. They didn’t buy, but they said the shows and movies are pretty realistic. They basically either say they’ll give you something nice, or invite you to a “free vacation” and then make you feel guilty because they are being so nice to you and you won’t even sit through several hours of mind numbing talk. It’s even worse, if you depend on them for transport, because then you have no choice at all. You want to go home? then sit down and shut up.

3

DON"T DO IT

4

My question is purely hypothetical…but you reinforce my point. What is the scam here? Are they crappy, overpriced properties? Do you get crappy times to use it? Do you share it with a bunch of slobs who trash the place? Are they in terrible locations? Or is it even worse, just ‘fly-by-night artists’ who take your money and run?

I wouldn’t mine sharing a nice vacation home among 3 people and using it for a month each summer…but I guess these deals would have you sharing with as many people as possible, boiling it down to an overpriced hotel room…

5

I went to one of those sales pitch things, though I didn’t buy any. A lot of those properties seem to be located in prime vacations, and you can go to a number of places to boot.

6

I know a guy who owns one and he nearly talked me into getting one a few years ago. If you like to travel and holiday he says they are a great deal. He points out that like anything else there are good deals and bad deals…people actually manage to lose money buying property when prices are rising.

He says:

Don’t go to the free spiel, buy one off someone else (it’s like letting someone else buy the new car and you buy it off them one year later at a huge discount.)
Buy the best one you can afford(this relates to how they are used, which is very different to what I thought).

He is American and his time-share is somewhere over there (I think). He came into some money unexpectedly and bought his share cash. I think he has more than 1 share. He says he pays about $900 US per year for a two week holiday home for his family anywhere he wants to go.

Go here and read how time shares work. This is how it was described to me and this guy swears by it. The prices look pretty reasonable at this site and I can see how it would be an attractive deal.

Pay attention to some of the facts and figures quoted. My experience is obviously very limitted but the guy selling me on them had no vested interest in getting me involved. If the Aussie dollar had been worth more I may have done it because you can rent them out.

7

I meant to say that this guy is a businessman and an important thing in assessing the benefits is how many people will use it. He has a large family.

And playing devil’s advocate I read an article in a property investment magazine about a group who are making lots of money setting up quasi time sharing. You get a group of families to jointly buy a holiday home at an agreed spot. Each family gets an alloted holiday and the rest of the time it’s rented out. You miss out on the swapping aspects of a real timeshare but they end up owning it and can claim some tax relief as it is partly a rental property.

8

I’ve sat through one of those sleezy-type pitches you’re talking about and let me just say, if the place does a hard sell, it’s not worth looking into.

I am a timeshare owner, and love it. I have owned my villa for 15 years and have 15 more to go on my deed. My opinion is you really have to do your homework on the property being deeded out, the company representing it, the resort balance sheet, the actual contract, maintenance, and general property rules.

Balance your vacation habits, with the maintenance cost each year. Do they offset? Or would you be paying more than you would normally spend for a vacation. You also need to think about your intentions with the place. Is it to trade and go to other places or is it to use each year. I bought mine with the intention of trading, but love it so much I go every year.

The resort I am a member of is absolutely no pressure sales and has an outstanding reputation because of that. The week I bought was low season at the time, but within 5 years became peak demad season. Airfare has remained constant for that location so for me, it remains a bargain. I am guaranteed a nice vacation every year.

I have only traded my week to another location a couple of times, and found that to be a benefit as well.

When my deed is up, the resort will be sold. I will get back my original purchase price and the profit is divided among the iterval owners. 4 years ago I was given the going market rate on my unit and it had tripled. The same exact unit (location, size and week) is going for 4x’s as much at a new sister resort.

Know how much money you are willing to spend up front, and buy the best location you can for that price. (It will help should you ever decide to rent the place).

OTOH, I also know a few people who own timeshares that aren’t attached to any one property. They own weeks that they can use at any number of resorts, fairly unrestricted, through a timeshare trade company.

9

Three people I know who bought timeshares & three different experiences.

  1. Hardworking couple in northern US have a Hawaii timeshare that they use almost every January. They love it. They’ve traded locations a couple of times and been happy.

  2. Older northern US couple with timesare in Florida that they use or give time to their various kids. Makes a relatively cheap vacation for the young adult kids. Makes everyone in the family happy.

  3. Middle age northern US couple who bought because they couldn’t resist the pressure at the dog & pony show. Never used it. Regretted their decision. Sour on the whole idea.

Moral: research & think before you leap.

10

It’s not a ‘scam’, but usually it’s not a very good value, either.

The timeshare people really do give you 1/52 of the ownership of the condo, so you ‘own’ real property. And these places generally give what they advertise - they are very nice places to stay.

But here’s the ‘scam’. I went to a timeshare presentation in Orlando in order to score some free tickets to Disney World and Universal Studios. The timeshare we looked at was very nice - swimming pools outside, three levels inside, very nice. But they wanted $12,000 for a week. If they sell out all the weeks, they’re going to make $624,000 on that unit, which while being very nice would never sell for more than $200,000 on the open market as a straight condo.

Then there’s the condo fees - Everyone pays condo fees, they remind you, and theirs are a reasonable $200 per year or something like that. Pays for maintenance. Who could argue? Well again, what you’re paying is $200 a WEEK for maintenance, which is very, very high. Plus, the other fees get you - if you want to transfer to a different condo, you pay a transfer fee. And, the timeshare company often makes a killing by double-booking weeks. A lot of people don’t use their weeks some years, and the timeshare company will rent them out.

And here’s another important consideration if you’re looking at a vacation timeshare: Many places ofter ‘package’ travel plans in which the accomodation is almost free. For instance, a timeshare in Vegas would be useless to me, since I can get travel packages including accomodations in five-star hotels for less than I can buy the airline tickets by themselves. Other resort destinations will offer package deals as well, although not as good as Vegas.

A good test to see if the ‘value’ in a timeshare is real is to see how those weeks hold their value on the resale market. And the answer is, they don’t. It’s quite common to be able to buy a timeshare week for 1/10 of its original purchase price, and if you really want a timeshare that’s the way you should go. There’s plenty on the ‘used’ market at bargain prices, so don’t buy ‘new’.

11

Timeshares are a bad thing inherently.

Maybe the ones they want you to visit vacation style in florida to hear a sales pitch are.

You can get a nice timeshare in New Hampshire or Vermont for a good price. Then every year you trade it for an exotic locale of your choice. I know New Englanders who do this with great success.

The biggest downside to timeshares is that you need to plan much in advance. You trade the times a year or so ahead of time to get something good. It’s not for those who want to be spontanious with travels.

12

When evaluating these deals, you also have to consider the time value of money. You have to pay for a timeshare up front, remember, even though the ‘value’ you get from it won’t accrue for years.

Think of it this way: If you took $10,000, and instead of buying a timeshare you invested it at 10% per year, you would earn $1,000 per year on it.

So let’s look at two different people here. The first one buys a condo for $10,000, pays an average of $300/yr for condo fees and transfer fees, and at the end of 20 years sells it for $1,000.

Total cost for vacation accomodation for this person: $15,000.

The second person takes the $10,000 and puts it in investments which earn 10%. Each year, he takes the profit out and uses it to fund vacation accomodations for a week. If he can find a nice place for $1000/wk (and you sure can!), then the total cost of vacations for that person is ZERO.

The ‘value’ in a timeshare is convenience and routine. You don’t have to worry about finding accomodations, and you’ve always got a place ready for you, and it’s always the same place, so you get to know the area, etc. That has value. But you pay for it. You pay a LOT for it. For some people it’s worth it.

But don’t ever believe that buying a timeshare is a good way to fund inexpensive vacations. It’s not. Perhaps if you buy one used at 1/10 the price of a new one, but even so you have to figure in those condo fees, and calculate them based on the knowledge that there will be some years when you don’t go on a vacation but pay the fees anyway. Also, when thinking about the convenience factor, consider the hassle of trying to sell the thing or trade it. And, there’s the risk that the timeshare company will revert the condos to non-timeshares or go under, in which case you’re stuck with 1/52 of a property that’s impossible to sell that way, and you might as well just eat it and move on.

13

We have a timeshare at a swanky resort in Las Vegas and we love it. Is it a good investment? Uh, NO, it’s for people who like to spoil themselves once a year and have extra money lying around. I will say that having a full kitchen makes a world of difference in your vacation. We can eat a fancy dinner and bring back leftovers for later, eat breakfast in, and if we’re up for it make a simple meal and stay in and watch videos one night to rest up. You can load up the fridge with pop/beer/liquor or whatever and not have to bother with a cooler/running to the ice machine. We have a one-bedroom so someone can be sleeping/bathing/etc while the other person watches TV or whatever in the “living room” area and you don’t have that “on top of each other” feeling. There’s also a washer/dryer so we can travel lighter than you would on a usual week vacation, and sometimes they throw in coupons/deals for area attractions. Going back to a “regular” hotel room after seems like a horrible inconvenience, and almost like a punishment. Since our “home resort” is in Vegas we have no trouble exchanging for most anyplace else because Vegas is a desireable location 365 days a year; we’re not locked into a specific week either, we can go when it’s convenient for us and book as late as (I think) 30 days ahead. We don’t even have to take the whole week at once; we can split it up into two mini-vacations if we wanted. There are also “open season” specials where you can book individual nights that haven’t been reserved for as little as a regular hotel room, and we usually take a second (or third) trip during the year using that option.

So, it really comes down to how you like to spend your vacation: If you’re the sort that spends every waking minute out and about and cramming in as much a possible, only returning to the room to sleep 5 or 6 hours, then a timeshare is NOT for you. If you like to REST on your vacation and be a little pampered and can afford it, it’s worth looking into, but stick with known names and companies. Ours is through Hilton, and we’ve been to a presentation from Marriot that was fantastic (in Lake Tahoe, where we also vacation frequently) but it was far more luxurious than we were willing to splurge on (fireplaces, marble counter kitchens, front door opens to the Heavenly ski resort gondola, lol). (Interesting tidbit: our salesman was Tim Caviezel, brother of the actor Jim Caviezel. He was a hoot!) There are good and bad salespeople for everything though. We occasionally attend Hilton salespitches trying to get us to “upgrade” to a newer resort or fancier room and while most of them have been fine, there was one or two that were as offensive as any used-car salesman-type. (We went to one presentation by some unknown outfit in Tahoe where they wouldn’t show us a room. ARE YOU KIDDING ME!!! We’re supposed to hand over $8,000 or whatever it was sight unseen? Do people actually DO THAT?!) They are all pretty good at what they do, though, so if you can’t afford it and have no intention of buying – don’t go! You may end up on at the exit door with your free $50 in casino chips and a timeshare deed thinking “what just happened?”

14

We own Disney Vacation Club and love it.

Is it a good investment. No. But we go to Disney often enough that it will end up saving us money over on site hotel rooms. Plus, when we go now, the kids sleep in a different room, which makes Mr. Rosa happy with every penny we spent. We happened to have the money available to do it, the dues aren’t significant to us…And I could currently sell it for about $3k over what I bought it for. (Most timeshares don’t keep their resale value like that, but a few do).

(The jewelry I own is in a similar category, but I doubt that’s kept its resale value).

Disney works a little different in that you buy “points” to spend at a Disney Vacation Club resort. So you don’t have a fixed week or a certain unit.

But a timeshare is NOT an investment, its a way to prepay some of your vacation costs. Worthwhile if you are going to the same place every year anyway (Hawaii, Mexico, Vail, DisneyWorld), or want to go through the bother of trading.

(Sam, you make 10% on your investments the past three years? Cause I sure didn’t. My portfolio is worth about 75% of what it was in 1999. My timeshare on the other hand…and if you factor time value of money one direction, you’ve got to figure that the $1000 vacation will cost you quite a bit more than $1000 in 20 years - but historically, you won’t get more than about 8% safely on your money.)

15

I was going by historical average, which I believe is close to 10%.

I’ve got nothing against buying a timeshare, for exactly the reason you suggest: for some people, the conveniences of a timeshare are worth the cost. But people should be aware that there is an extra cost - it’s not a bargain way to vacation.

16

For us, the only way timeshares are a good deal is that we’ve gotten several free vacations out of them in return for listening to their spiel. They call us up all the time, offer us a couple of free nights in a hotel, maybe a free meal or something. Usually, I tell them that what they’re offering isn’t enough, and ask for more. More often than not, I can get more. Once, we got 2 free nights in Williamsburg, VA (one of our fave vacation spots), $50.00 cash, free dinner for two, free breakfast for two, and $40.00 in gift certificates for the local outlet malls. So, if the offer is good enough, we go, we take what they have to give us, we listen to their spiel, and we turn them down. My husband is very good at this. Usually, we’ll look on ebay first for timeshares in that area. There have always been ones available on ebay for far less than what the salesman is asking. Then, when the spiel is done (including the part about how we can resell, and all the benefits transfer), we tell them that if we were going to buy a timeshare, we’d buy it off of ebay. Once, the timeshare we looked at was $15,000 for 1 week a year. Hubby told the guy “That sounds reasonable, but when you sell the other 51 weeks, that makes the property a quarter million dollars, and nothing about that condo was worth a quarter of a million dollars”. The salesman said that the money also goes to pay for promotions, like the one we were enjoying. Hubby responded that their promotional costs should not, in any way, be our problem! These salesmen are trained to be very high-pressure, but these are objections to which they have no come-back.

17

I have a timeshare, but I don’t think the deal that I have is available anymore. The week I get every anniversary is good for 3 years; there are six locations, four in the US (two in Hawaii), one in Mexico, and one in Spain. And the week can be used anytime, not just one particular week. One negative is that when I bought it originally there was no annual fee, but the original president embezzed money and to keep it going, a fee, which goes up every year (now $450/00/week) was instituted. In Tahoe we used to have a fabulous view from the top of the mountain but another timeshare built there and now blocks it (we use Tahoe the most). BUT, like VogueVixen, I love having a kitchen, washer and dryer, fireplace, dining room. Plus I just like the familiarily of using the same company for so many years. For a fee I can also trade weeks with two other international companies. Whether or not it’s worth 450/week really depends on what you could get locally for the same price. We’re going to Spain (Costa del Sol) for two weeks in July.

18

NORINEW
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