Does It Make Financial Sense to Purchase a Timeshare?

Do the Math . . . Only You Can Decide

By Jerry Nisker, Orange, CA

[This article previously appeared in TimeSharing Today magazine.]

Because I own eight timeshares, I am frequently asked by friends, and business associates if it makes financial sense for them to buy a timeshare. I never give them a yes or no answer. I tell them to do the math. I was on a airplane a couple of years ago, when the man I was traveling with asked me that question. I told him to take out a piece of paper; and then I asked him this question. “When you and your family travel, how much do you spend on a hotel room in a nice resort.” He told me that because he has two teenagers, he actually has to get two rooms, usually averaging about $200 per night, a total of $400. In other words, a seven day vacation will cost him about $2800 for the week. I then asked him exactly what he gets for his $400 per night. He admitted that this was for a nice standard hotel room, with no kitchen or living room. He also went on to tell me that he spends quite a lot of money on food since they have breakfast, lunch and dinner in restaurants each day.

I then told him to consider the following cost to own and trade a timeshare:

*Annual membership in exchange company: $100
*Exchange fee (assuming a trade each year) $139
*Annual maintenance fee & property tax (depending on location) $500
*Lost interest (at 3.25%) on investment for timeshare (based on $6,000 purchase price): $200
*Total annual cost: $939

After we finished working out these numbers, he pointed out that he would save at least another $100 per day if he they could have some of their meals in the condo rather than eating out. For him, this represented another $700 saving.

As a result of this little exercise, he has purchased a timeshare, and has made his first trade to Williamsburg, Virginia in a two-bedroom, two-bath unit.

Here are a few other items that I considered when purchasing timeshares:

1. Hotel rooms do not work well for me and my wife. I like to read at night, and she wants to stay up all hours watching television. A separate bedroom is essential in keeping our marriage together.

2. Some of the timeshares that I have purchased were for trading purposes ONLY because I have no intention of going to those areas. I was able to purchase them for as little at $1500. Those are considerably less in maintenance fees and less in lost interest on my investment. Instead of $939 annual cost, I’m closer to $750, but get the same benefit.

3. Other timeshares that I own, I never trade. For example, I own three weeks in Del Mar, California during the summer, and horse racing season. Since I don’t trade, I save $139 for each week, bringing that unit to about $800.

4. There are times when we want to take other couples with us on vacation such as we did in 2004. I traded for two separate resorts in England, each with 2 bedroom, 2 baths.

The only way to determine if timesharing is right for you, is to determine your own needs and run your own numbers. If for example, there are just two of you, and a hotel room is all you want, there may be no need to purchase a timeshare. On the other hand, if you want a separate bedroom and living room with a kitchen when you travel or to take other couples, a timeshare may be right, but only if you can make the numbers work for you.

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