Whether you are considering purchasing a timeshare, or you already own one, you may have heard along the way that timeshares are typically a bad investment. But why would that be? Real estate is typically considered to be one of the better investment options available, so why would timeshares be so different? On the surface, it seems like this might be a good place to put some of your money.
This article will dive into the issues with timeshares as an investment and why you should proceed with caution. There is never anything certain in the world of investments, of course, but there are enough red flags here for most people to decide that other options are a better way to see their money grow over the coming years.
Of course, if you are already a timeshare owner and you are feeling the reality of how this “investment” hasn’t panned out for you, the only remaining option may be to simply exit as soon as possible. To help with that, we have a list of the best timeshare exit companies that you are welcome to explore.
The Problems Start Early
If you want to gain a clear understanding of why timeshares are usually a bad investment, you can start where the experience starts for most owners – in a sales presentation. These are the sessions that are booked by salespeople looking to secure a commission by getting you to sign on the dotted line. Just to get you into the session, you might have been offered some kind of free bonus, like a short trip or giveaway item.
It’s common for people attending these presentations to find themselves regretting that decision soon after. What starts as a friendly, relaxed presentation, that is billed to only last an hour, quickly picks up in intensity and often drags on for far longer. Soon enough, aggressive sales tactics are used as a variety of offers are presented in the hopes of making a sale.
Along the way, you may notice that the price of what you are being offered keeps changing. The asking price early in the session will likely drop later on, if you stick around and keep saying no. While you might be tempted to think that you are getting a great deal at a lower price, that moving target should actually tell you something more concerning about the underlying value of what you are being sold. More specifically, it should tell you that the underlying offer has no real value at all.
The salespeople who work these presentations are often given latitude by their bosses to offer a range of prices because there is no firm, clear-cut value for the timeshare. It’s worth only what you are willing to pay, in other words. When you buy traditional real estate, you’ll wind up paying close to the known market value, in part because the property will go through an inspection and appraisal process to make sure the price is reasonable. That doesn’t happen with a timeshare, so there is no way to know if the price you pay has anything at all to do with what it would be worth on the open market.
Costs Keep Coming
As mentioned above, the upfront cost of purchasing your timeshare is going to vary from one person to the next. In fact, two people buying the same thing on the same day could wind up paying wildly different prices. If you agree to make the purchase, you will effectively invest whatever amount you agree to on the date that you sign the papers.
However, your investment will not be done there. There are other costs that are going to come up that will almost certainly add to what you have to spend, and in turn, change the math on how this investment works out over the long run. For one thing, there are the maintenance fees that all timeshare owners are required to pay. These fees will keep going for as long as you own the timeshare, and they will increase over time. At first, these fees might not seem like a big deal, but they could prove to be a significant drain on your budget as the years go by.
Maintenance fees aren’t the only issue to consider. Another problem can come in the form of financing costs for the purchase of the timeshare. If you don’t have enough cash available to make the purchase outright, you’ll need to finance the purchase – meaning interest costs are going to come into the equation. Those interest costs add to what you’ll have to spend and will significantly increase the total amount of your investment when all is said and done.
The Value of Your Experiences
Let’s take a moment to put the idea of an investment into context and get a handle on what that means with regard to timeshares. Some investments are purely financial, and you can evaluate them only in terms of what they return to your bank account. Buying a stock is a good example of such an investment. If you buy shares of a given stock and then sell those shares one year later, your investment will be evaluated on whether you gained or lost money. There is no other metric to consider – it’s all about making money.
With a timeshare, things are a little cloudier. The idea of a timeshare isn’t primarily focused on the investment side of the ledger, as there is also the matter of the trips and experiences you get to enjoy along the way. If you are able to have tons of fun with family and friends through your timeshare, and then eventually sell it for a decent return, you might view that overall investment as having been well worth it.
Unfortunately, even when viewed through this type of investment lens, timeshares still fall flat. The attractive images of people relaxing on beaches at beautiful resorts in the middle of summer rarely become your reality, as availability may be limited and reservations at the top properties hard to come by during the peak season. So, many people wind up paying ongoing maintenance fees, in addition to their initial investment, to own a timeshare that they either don’t use often or aren’t able to use when they want. Without a strong return in the way of great experiences, the financial picture is even bleaker.
Simply Put, Timeshares Are Hard to Sell
The end of an investment occurs when the owner of that investment sells it to another party. It could be a physical real estate property, a stock like we discussed earlier, or just about anything else. The purchase date marks the start of the investment, and the sale date marks the end. For timeshare owners, however, that sale date can be surprisingly hard to reach.
If you decide to sell a timeshare that you own, you can put it up for sale in any of a number of different places. The problem is finding a buyer. You may not know how much to ask, since timeshares don’t really have a firm value, and no matter what you ask, interest is likely to be minimal. In fact, it’s common to find timeshares listed for sale for a single dollar, as the owners are just hoping to get someone to take ownership and responsibility for the ongoing maintenance fees.
Obviously, none of this sounds good for your investment. If you can’t sell the timeshare, or you can only sell it for a nominal amount as a way to get rid of it, there won’t be a positive return on your investment in the end. Even if you feel like you got a good deal initially on the purchase price, the realities of the market for selling an existing timeshare can be a harsh reality check.
So Many Other Options
Beyond the many points that we’ve highlighted above, there is also the reality that there are just so many other ways to invest your money in the modern economy. While no investment is guaranteed to bring a positive return, there are countless options with a solid track record where you have a reasonable expectation of seeing your money grow over time. Timeshares are not a proven vehicle for investment success, so it only makes sense to look elsewhere when you want to create or expand an investment portfolio.
Get Started Today
Tired of making maintenance fee payments on your account without getting much value in return? Don’t wait any longer to look for a way out of your timeshare. It all starts with a phone call to us at 833-416-8796. You can also use our form or live chat feature to get in touch. If you’ve been putting off this task for too long, today is the day to get started!