Despite the negatives I outlined above, I own a timeshare and I am one of those who "love it" and intend to buy more. It has everything to do with the fact that I purchased my timeshare without a huge mortgage and I own a timeshare that fits my family's lifestyle and provides me the type of flexibility I desire. I purchased my timeshare after conducting a lot of research and in the peace and quiet of my own home, and not at a resort. I purchased my timeshare on the secondary market.
In this blog I am going to explain the pros and cons of a timeshare and, for those who wish to dare, how to purchase a timeshare so that you will (hopefully) not regret your purchase.
The Pros
Timeshares are usually condominiums. They have kitchen and laundry allowing vacationers to save money on incidentals that really drive up the cost of a vacation. In our recent vacation to Depoe Bay, Oregon, we ate all of our breakfasts and dinners at the condominium. Our eggs, steaks, bratwursts, claims, crab, and wine were all locally harvested giving us a taste of the region. It worked out perfectly because we have 3 young children, with the youngest being 4, making dining out in the evening extremely challenging. We were also able to pack light (saving our back and on airline baggage fees) knowing that we had access to a washer and dryer in our unit.
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| This was the view from the timeshare! |
The timeshares are usually located in popular tourist areas. Also, the annual maintenance fee is cheaper than what it would cost to stay at a hotel that is comparable in amenities, features, quality, and room occupancy. Moreover, the cost to stay at the resort is definite and will not fluctuate with the market.
The costs for the timeshare, however, is not just the annual maintenance fee. If that was the starting point in terms of calculating the cost to own a timeshare, I think most everyone would 'love' the timeshare. That is where I will begin listing the "cons" for the timeshare.
The Cons
There are only 2 ways to acquire a timeshare. You have to buy it or receive it as a gift. When people buy their timeshare, they usually make this decision during a timeshare presentation where they have been specifically assigned one sales representative whose job is to break down all objections to purchase and weave lofty dreams of vacationing in paradise. Their job, apparently, is to thwart all of the customer's efforts to leave the timeshare presentation until the customer buys something. I have heard of people who have been promised vacations as an incentive to purchase a timeshare and never given the vacation. I have personally been lied to and induced to open a credit card (which the timeshare company was hoping to finance their "special timeshare offer"). Additionally, the timeshare sales representatives pitch that "the timeshare can be left to your heirs" but fail to mention that even if your heirs did not want the timeshare, your estate/trust will be responsible for the timeshare maintenance fee.
Despite the negatives, I still think timeshares are good if you buy the timeshare resale.
Step One:
You need to really analyze what you want. Do you want a place you can return to year after year, almost like a second home; or, do you want a hotel alternative. Will most of your travels be by car or by plane. Are you looking for posh luxury or bare necessity? Finally, how much do you usually pay for a room when you vacation. The more stock you take of your preferences, need, and lifestyle, the better equipped you will be for the next step.
Step Two:
Research your timeshare options. When I purchased the timeshare for our household, I used TUG (which I believe stands for "Timeshare User's Guide" www.tugbbs.com) to find out what owners were saying about the particular timeshare AND what the timeshare's reputation was among those who knew timeshares best. There are various types of timeshares. Some timeshares are "deeded" meaning that you get a particular week in that one particular property and that is the only time your account is eligible to use that property. There are other timeshares that are based on points and you do not own a property interest in any of the property. Rather, you have a membership interest and you can allocate your points on any of the properties owned by the timeshare corporation.
When I was researching our timeshare, I was particularly interested in learning about special assessments. A Special assessment is an irregular fee that the corporate board of the timeshare decides to impose on the owners to fund special projects or maintenance that need to be done that cannot be covered by the regular maintenance fees. From what I researched, timeshares for a specific property where the owners are given a real property deed for a particular week are more likely to have a special assessment.
Step Three:
Once you have identified the timeshare(s) you would like to purchase, figure out the market price. The best indicator of market price is to look at the sold price. For this, you can go to ebay and configure the setting to recently sold. Then, do a search of the timeshare you are looking into to determine the selling price. For the points based timeshare, remember to take into consideration that there is also a premium for unused banked points.
For example, if a Worldmark timeshare of 6000 recurring annual points with 9000 unused, banked points sold for $1,200. You can break down the market value for the recurring annual points by first discounting the sold price by a premium for the unused banked points. In 2017, the maintenance fee for 6000 points is $640.68. So, if a 6000 account has 9000 unused, banked points, I would subtract around $640.68 x 1.5 (to account for 1.5 years - 6000 + 3000 points) then divide the amount by half (because these points will expire) to come up with an amount to cover the bonus 9000 points. So, in the present hypothetical, I would reduce the sales price of $1,200 by $480.51 to come up with $719.49, which I would then divide by 6000 points (the annual recurring points) to derive the market rate of 12 cents per point. The formula presented here for the unused, banked points is my own just to illustrate my point. What I would do if I was ready to purchase another timeshare is check a few of the sold listings to come up with a good working rate for the unused, banked points.
Deriving your "buy" price based on the sold timeshare prices is critical so that you are not left with "an albatross around your neck." You want to make sure that when the time comes to sell the timeshare, you can get back as much of the money you used to purchase the timeshare. The price I paid for my timeshare was slightly higher than what the timeshare is going for today. However, even if I had to sell in the present market, I will not mind that I will have paid a few thousand dollars more than my selling price because I have used our timeshare (and benefited from the positives) for over eight years.
Step Four:
Once you determine the "buy" price, look through ebay, craigslist, TUG, classifieds, and resale timeshare agents to see if you can find a timeshare for sale that fits your requirements. Also, you can be proactive and post your own want ad.
Step Five
Given that most timeshares supposedly last in perpetuity, you want to make sure you have prepared an estate plan giving your loved ones the legal authority over the timeshare in the event of your incapacity or death so as to avoid court. Ideally, the timeshare owner will have a trust and the timeshare will be in the trust.
Go back to the timeshare members group such as TUG to learn the strategies other owners use to best work the system.
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