Thunderhawk Aviation

Timeshare solicitations are commonplace these days. And if not, you can easily get on a call list by just inquiring about one online at a timeshare website. Many people attend these presentations to get the freebies and gift cards, but during these presentations people get some exposure to what a timeshare is and the financial considerations for timeshares. This inevitably results in a common question: does it make sense to buy a timeshare?

The main argument is that owning a timeshare means you now own your vacation property. This is a popular argument amongst many real estate investments which is: do you want to rent? Or do you want to own?

This is not an easy question no matter what type of real estate you are thinking of purchasing. For example: If you move every year, does it make sense to buy or rent? The timeshare industry grew because many people starting realizing that they vacation in the same spot in the same year very often and the demand came up to own rather than rent.

The math for real estate properties is the same math for timeshare properties. The arguments for real estate properties and timeshare properties are not much different. You pay to rent a hotel for a week versus you pay to own the vacation resort which you stay in every week. If you pay $1000 for a week stay in a hotel, you will continue to pay that every year for thirty years but the rate will increase with the price of living. If you pay $1000 a week in timeshare ownership loans (or you can pay it all off at one time) that payment will stay the same similar to a fixed mortgage. Maintenance fees (like condominium association payments) will be a subset of that which may increase and will also be paid after you own your unit, but this is a small percentage compared to the full price of a rental in a nice hotel. Taking in all the costs, you may find that the costs are comparable.

And now to compare the positives and negatives:

A benefit is that you only pay maintenance fees after you own. So if you had a loan payment for thirty years which was comparable to a hotel rate for thirty years, after thirty years you only pay the maintenance fee where if you rent you continue to pay the full rental fee for a hotel.

It doesn't stop there because a third benefit is that these properties can usually be passed down and inherited. You will need to check with your developer to find out if that's the case with your unit. A deeded timeshare property can be passed down so for years to come only a small maintenance fee need be paid to enjoy a full week of vacation in a nice room with amenities instead of paying the full rate for a hotel stay.

This definitely makes financial sense if you take a vacation every year. If you take a vacation in the same destination each year, it definitely makes sense. If you take a vacation every year but to different destinations, then exchange programs are helpful for this but it requires more time and possibly fees to be paid for administrative expensive. If you do not take a vacation every year, it still may make sense if you want to rent your vacation to someone else that year or even just give it as a gift to a relative or friend.

If you can think of real estate in terms of homes or condos which is something usually more familiar, then this comparison may be quite helpful:

To compare a home with a timeshare: it makes sense to buy it if you plan to use it for a long time. Buying a house and not using it would be a waste of money. The same can be said for a timeshare. However, one contrast is that it is common to buy a house and not use it if you plan to rent it. Many real estate owners will buy property with the intent to rent it. Renting is a bit easier of a proposition because people must live somewhere. And they will want to usually live somewhere for an extended amount of time. Vacationing on the other hand is not a requirement, so renting a timeshare means a smaller and more difficult prospect list to reach. Plus, this feat of renting needs to occur every year as vacationing is temporary versus living in a residence is more permanent. On the plus side for timeshares, vacationing can add variety as you can vacation in different destinations each year. The advantage of exchange programs is evident here versus living in a residence: it is hard to fathom doing an exchange for a few months with someone else just because you want to live somewhere else.

Still the bottom line is that if you don't vacation often, it is probably not worth it. If you really enjoy takings vacations, it is definitely worth looking into. If you take vacations in the same spot quite often, then it really is worth looking into. And finally, some timeshare developments now offer an every other year proposal instead of every year, so if you think you may travel to Hawaii every other year, it almost doesn't make sense not to own a timeshare in Hawaii. I use this last bit from personal experience as that was the logic we used when we purchased our Hawaii timeshare.

Hopefully this article has given you some great reasoning as far as why you would or would not own a timeshare. Feel free to contact me with any questions and good luck on your decision making!