Investing in a timeshare can work for many people, but it is important to understand exactly what you are investing in, and how timeshares work. There are no federal regulations governing time-share companies, and so some of the offers out there are less than ideal: Before you take the plunge, consider this advice on buying a timeshare.

Understand What You Are Buying

Buying a timeshare is not a real estate investment, despite the fact that many of them are marketed as such; rather, you are essentially investing in a vacation. You are buying access to vacation accommodations for a specific period of time, sometimes at a specific time of year; in other words, your investment may earn you the right to book a week at the property on a first-come, first-served basis, or you may purchase the right to use the property for the last two weeks in June, for example.

Note that because this is not a real estate investment, your timeshare investment will not appreciate. In fact, unless the demand for vacations in the area of your timeshare increases significantly, your timeshare investment is likely to depreciate.

Location, Location, Location

When you understand that you are investing in a vacation rather than a property, it becomes easier to understand the most important factor in investing is location. Your timeshare should be somewhere you want to vacation every year. There is no reason to invest in a timeshare in a place you have no interest in spending your time; You have nothing to gain by “investing” in a timeshare you won’t want to use.

Some timeshare companies may allow you to swap locations with other timeshare owners, if you want to try out a new place, but you need to confirm this when you are negotiating your timeshare contract.

Avoid the Freebies

Timeshare companies are well known for luring in people with free hotel stays and other special bonuses, as long as they are willing to sit through a presentation on the company’s timeshares. These events might be no- obligation, but they are certainly filled with high-pressure sales techniques. The best deals on timeshares are usually found outside of these intense environments: If you are interested in a timeshare, skip the free steak dinner, and contact companies on your own time. You will be in a better position to negotiate, and you won’t have to sit through the presentation.

Ask About Fees and Perks

When you are negotiating your timeshare contract, be sure to ask about both the associated fees of ownership and the perks. On the fee side, ask about yearly maintenance fees, insurance, and how repair costs for damages are shared among the owners, plus how and when the company can raise fees or add new fees. As for the perks; ask about your access to the company’s other locations, plus any amenities of the timeshare you are considering, such as a private beach or maid service.

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