Are Timeshares Worth the Investment?

If you consider it an investment = No. If you consider it simply a vacation home = Maybe/Yes.

According to The Timeshare Consumer Guide, at least 20 million households around the world own at least one timeshare. Approximately 60% of timeshare owners have a four-year college degree or higher. Their median household income is slightly more than $81,000 annually.

Data from The American Resort Development Association  and The Timeshare Authority confirm that approximately 53% of timeshare owners spend more than $10,000 on their timeshare purchase each year.

Last week, I had the esteemed pleasure of celebrating a friend’s birthday—on Halloween, mind you!—in New Orleans, Louisiana.

While on the trip, we were offered discounted tickets to attend two or more local tours if we were willing to sit through a presentation at a nearby hotel. Advertised at more than $125 per person, per tour—we could pay a mere $25 each if we were willing to exchange less than 90 minutes of our time.

A few signatures later, we were escorted to a luxury hotel with superhuman air conditioning where we waited curiously for the conference room to open up for us.

When it did, we found ourselves chaperoned and held captive in a—wait for it—timeshare sales pitch! Noooooooo! Nooooo!!!

(In hindsight, the discounted tours afterwards were the best tours of my life. If you’re visiting New Orleans, check out the Ghost Tour with Todd from Gray Line and the Swamp Tour with a very spirited fellow whose name has escaped me!).

Although I knew little about timeshare ownership prior to the presentation, I wanted to do a little more investigation now, now that I’ve gotten the hard sell.

(Full disclosure: This isn’t something I can afford right now, even if it’s worth it. For the record though, I don’t think it’s worth it.)

If you’re still on the fence about it, please don’t take my word for it. Do your own investigation, of course. Here’s a good post to start that was shared on Out of Your Rut. Make sure you check out the comments at the end of the article!

If you’re short on time, just read the infographic. 🙂

What does it mean to own a timeshare?

Timeshare ownership comes in two types of arrangements: deeded or non-deeded.

In deeded agreements, you buy interest in real property. Deeded ownership is usually referred to as a “timeshare estate.”

Non-deeded arrangements are typically called “timeshare uses,” “timeshare licenses,” or “memberships.”

If you’re new to the concept of timeshares (or just the details, as I was), you can think of a timeshare as a kind of vacation ownership. Although you don’t actually purchase a hotel or rental property, you buy the right to vacation at that specific timeshare resort for a certain number of days each year.

Additionally, you can think of it as joint ownership in a specific vacation property in which you have access to your resort for whatever vacations you may take throughout the year.

Timeshares offer a few different purchasing options. With some, you purchase a set number of points each year. With others, you buy a set number of weeks. There are even plans that offer a combination of weeks and points. The four primary types are: fixed week, floating, right-to-use, and points club.

You can learn more about timeshare ownership here.

How much does it cost?

The short answer: Since 53% of timeshare owners spend more than $10,000 on their timeshare annually, if you purchase a timeshare, you have at least a 1 in 2 chance that you will spend at least $833 per month.

The longer answer: Pricing varies by location, the size of the unit, the amenities that are offered, and perhaps even your credit score.

Fees typically include:

(1) the purchase price of the vacation property
(2) annual maintenance fees to cover the resort costs (these average at approximately $800 per year for most owners)
(3) a percentage of the annual real estate property taxes
(4) various additional fees based on which timeshare option and type you purchase.

What are the pros?

  1. You have a guaranteed vacation destination each year (if you typically visit the same place annually).
  2. If you’re able to trade locations and times with other timeshare owners, you can travel more affordably to a wider variety of destinations, both domestically and abroad.
  3. You may enjoy letting friends or family use it (for free or for a price). You also may be able to auction it off for a limited time at specific events.
  4. Amenities may include hot tubs, pools, tennis courts, spas, and even cruises.
  5. Using today’s prices, you’re able to lock in rates before future inflation. In the long-run, this could be a huge savings.

What are the cons?

  1. You may get bored visiting the same destination each year, or staying at the same resort from year to year.
  2. They’re incredibly hard to sell, and because there are so many used timeshares on the market, most are sold at a pretty steep discount.
  3. It’s hard to buy a timeshare in another country, which perhaps seems to indicate that they’re a better deal for domestic travel only.
  4. If you sell at a loss, the IRS won’t let you claim it as a capital loss, which is the case with other kinds of property.
  5. You have to pay all associated fees each year, regardless whether you travel that year or not.

For additional information, visit NOLOBuyatimeshare.com, or The Timeshare Guru.

Current timeshare owners: would you recommend timeshare ownership to others?

Author: Anj.

Hi! I'm Anj. Thanks for visiting my page. I'm an aspiring writer, former teacher, and Houston native. I've worked in education for more than 15 years. This blog was inspired by (1) my first year teaching experiences and (2) my lovely student loan debt. Feel free to connect if you'd like to guest post about personal finance.

2 thoughts on “Are Timeshares Worth the Investment?”

  1. As a timeshare owner I would like anyone reading this to know that buying a timeshare was the biggest financial mistake I ever made. Even after paying it off I’m on the hook for maintenance fees every year that DO go up! My fees are $800/yr now. I could probably get a hotel for a week anywhere for that. If I chose to use the points instead of the timeshare itself, that’s an additional yearly fee on top of fees for exchanging my timeshare for another one. My recommendation: Just save money and vacation within your budget.

    Good luck to anyone thinking about this trap.

    1. I’m so sorry to hear about your experience! I definitely appreciate your insight for anyone who’s considering this expense.

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