The Real Truths About Timeshare

A recent article found floating around the Internet lately, entitled, “The Top Five Reasons Why Timeshares Are A Bad Investment,” has me hopping mad. I am tired of listening to the same old stuff about how timeshares, whether tied to real estate or not, are a poor investment.
If you buy a timeshare, ANY timeshare, as a real estate investment, you do not understand what you are buying. And if you sell a timeshare, ANY timeshare, as a real estate investment, you do not understand what you are selling.

I won’t give the author of the article any more credit; he has done enough disservice as it is. However, I will rebut his points one by one.
1. TIME VALUE OF MONEY

If someone came up to you 10 years ago and offered you a deal whereby for $5,000 you could receive all the gasoline for all the cars you would ever drive, would you consider this a good deal? The answer for most of us would be a resounding “YES.” Back when I started driving, gas was $.74 a gallon. Today, I filled up for $2.65 a gallon.

Timeshare operates on the same premise. You are, in fact, pre-paying for tomorrow’s use at today’s price. If 10 years ago you were offered an opportunity to pay $5,000 for a one-week quality vacation every year forever, wouldn’t you have taken it? If vacations were important to you, then you would have been foolish not to take the offer.
2. MAINTENANCE FEES

Again the author makes these fees out to be specific to timeshare only. Let’s be serious. When you rent a hotel room for $142 a night (the US average according to AAA this year) you are also paying your maintenance fees, unless you are doing landscaping work, cleaning the pool or overhauling the roof. How much of what you are paying is for using the room, and how much is for the maintenance fee? They keep that information from you.

At least with a timeshare, you know upfront what the fees are. Again, shame on anyone who purchases a timeshare without knowing what the fees are, what they were last year, and the year before that and knowing what the cap, if any, is.

If you buy a car today for around $30,000 would you expect to not pay maintenance fees? When you buy a house, don’t you have to pay to keep the place up? Can you rent a hotel room for less than maintenance fees? Of course you can! The average annual timeshare maintenance fee last year was about $550. That comes to about $78 per night. And you’re going to find a hotel room for $78 a night where? Of course, if you are happy with a $78 hotel room, then by all means, stay away from timeshare.

3. A DEPRECIATNG ASSET

Yes, if you purchase from a developer and pay the current average of $15,000, you can turn around in two years and expect to get considerably less than that. But compare that with almost anything else you buy. A car, for instance, that you buy at $30,000 and finance. The second you drive it out of the dealer you take a $5,000 hit at least. Drive it for a year or two and you’re down $10,000. Drive it until you can’t anymore, say 15 years, sell it for $2,000 and then you have to start all over again.

It’s the same thing with furniture, computers, clothing, CDs, electronics and everything else.
Timeshares should NEVER be purchased with an eye for selling them. Timeshares should be purchased with an eye for using them. And unlike the car, the furniture, the computer, the clothing, the CDs, the electronics and everything else, they don’t have a shelf life, they don’t expire, they don’t have to be replaced . . . you just have to pay an annual fee to keep your home resort up to date.

Of course, if you buy a timeshare on the resale market from a reputable organization such as Holiday, you are going to pay considerably LESS than the $15,000 average, so the “depreciating asset” myth is just that, a myth.

4. LOW RENTAL RATES

Yes, you can stay in some timeshares for less than the cost of owning the same timeshare if you don’t purchase from the developer. When you purchase from a legitimate reseller, I can almost guarantee that you will save money over renting.

If you like to rent, then by all means continue to rent. That’s Basic Timeshare 101. But if you like to own your vacation, vacation in nicer places than before, have something to hand down to future generations, have more control over your vacations, timeshare is the way to go.

5. EXCHANGES

No one ever said that using a timeshare was going to be free, did they? While I happen to disagree with the rising exchange rates that both RCI and II charge for a transaction that most owners do themselves, in the long run, those fees don’t add up to that much. And any savvy timeshare owner had better be checking up on the many other timeshare exchange companies that are available. Just because the resort is affiliated with one of the 2 major exchange companies doesn’t mean you have to use them.

The author makes a point of saying that developers are not interested in updating and/or remodeling resorts. That is just not true. Of course, there will always be some unscrupulous developer out there, but it really is up to the consumer to ask questions beyond, “How much does it cost?” And with all the resources out there for consumers, it is a very simple thing to get other owners’ views on a particular resort.

As for the ridiculous statement, “Let’s just hope you don’t buy a timeshare in hurricane country,” again, consumers need to ask good questions about what type of insurance the resort has and the fees associated with it.

In closing, let me reiterate a few points:

• No timeshare, even real estate-based timeshare, should ever be purchased or sold as a real estate investment. As I said in my first book, Surviving A Timeshare Presentation . . . Confessions From The Sales Table: “Timeshare is not Donald Trump-type real estate.”
• It is imperative for consumers to ask a lot of questions before making any purchase. Questions about annual fees, exchange fees, insurance costs, etc. are basic.
• Understand the exchange or trading system, whichever one you are going to be using. An off-season week in Alabama is simply not going to trade for a high-season week in Hilton Head. No matter what the salesperson says, or no matter how much you want to believe it.

For more information, check back with Holiday and Timeshare Insights (www.timeshareinsights.com) frequently. You’re going to be seeing us everywhere in the coming months with our innovative ‘”Timeshare Bootcamps.”

Lisa Ann Schreier, a/k/a “The Timeshare Crusader,” is the founder of Timeshare Insights, a consumer consulting and education service. Ms. Schreier is the author of two best-selling books about timeshare and is a frequent guest and contributor to major media outlets. She was recently featured on Good Morning America and Kiplingers Personal Finance.

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