7 Reasons to Avoid Buying a Timeshare
It seems like virtually no vacation is complete with out the obligatory timeshare pitch. Offers of free food, lodging, and activities are always presented, simply for attending a short presentation about the incredible "vacation ownership" opportunities that are available. These deals can be fantastic, but usually just for the companies that are making the sale.
Here are 7 reasons why you should avoid buying a timeshare:
Timeshares Are A Poor Value.
Take rough guess as to how much the property would be worth if offered as a private sale. If you don't know, simply check some local real estate listings in the area for comparable properties. Then, extrapolate what the timeshare would cost on a yearly basis. For example, if they are trying to sell you a single week for $20,000, multiply that figure by the 52 weeks in year, and you will get $1,040,000. If a similar property is not selling for a substantial fraction on that number, this timeshare is a very poor investment. In addition, look at the resale market for your timeshare property. It is unlikely that it will be selling for more than these companies are asking, and people will probably be seeking to dump their shares for much less.
Who Wants To Vacation At The Same Place Every Year?
If you are having a great time on your trip, you are virtually assured not to enjoy it as much the next time. The excitement of visiting a new place will be gone, and the people, weather, and other things will inevitably change.
Swapping Weeks Can Be A Pain.
The salesperson's response to your concern about staying in the same place every year will be to inform you that you can swap your week with another resort somewhere else. This is technically true, just like it is possible that your family will be able redeem all their frequent flier miles for a free trip to wherever you want to go. Just like frequent flier programs, timeshares are capacity restricted and there is no doubt that units in Hawaii will be taken long before less desirable properties are reserved.
Maintenance Costs Will Eat You Alive.
Look closely at the monthly fees you will have to pay for maintenance, as well as any per stay fees. Even if you received the timeshare for free, it is possible that your annual expenses alone will be almost enough to pay for lodging at a nice destination, especially when you spot a good deal. Timeshares are not non-profit co-ops, and one of the ways they make a money is through the collection of these fees.
Your Are Pre-Commiting Your Time.
You might think that you will always be able to take your vacation on a particular week, but you really never know what will happen. People change jobs, move, or have health issues that they can never anticipate. Take your vacations each year when it is most convenient for you, and never count on being available on a certain week, many years into the future.
Your Are Pre-Commiting Your Money.
Again, you may be able to afford all of the payments now, but you never know what the future lies in store for you and your family. Each year, too many people loose jobs that they thought were secure, while others face mountains of unexpected expenses. Vacations are a luxury that you may be able to afford each year, and not an expense that you should have to carry at the worst possible times. It's always a good idea to reduce fixed monthly expenses whenever possible.
Your Points Will Go Down in Value.
Some timeshare plans provide you points that you can use at any of their facilities. This makes their program seem like a better deal because you won't be stuck at the same place every year. What they aren't telling you is your annual point accrual isn't fixed to "inflation". As the cost goes up to bring new timeshare "owners" into the plan, the point cost of renting out a unit increases. While the number of points needed to rent the same unit you rented the year before goes up, your points accrual each year doesn't. This means that over time you either need to buy again into the program or accept that your points are worth much less than they were in the past, all the while paying your same maintenance fee in your locked in contract.
Nothing is quite as fun as being on a really nice vacation, but don't fall for high pressure sales tactics blind you to the financial realities of timeshares. Your vacation will only last a week or two, while your financial commitments will follow you for many years.
Photo by Steve Snodgrass via Flickr