We learned first hand how high pressured the time share “pitch” experience can be, but are time shares a good investment? If you’ve ever vacationed at a popular tourist attraction, you’ve almost certainly encountered these nice people attempting to hook you into sitting through their presentation. They make it sound painless and hassle free; all you have to do is sit through their presentation and you’ll get free food, tickets and more!
How do you know if a timeshare is actually worth it? I will run through the numbers and let you decide. These numbers are from a presentation I sat through in Las Vegas. According to their pitch, the following fees are associated with a timeshare that costs $46,000:
Annual fees: $685
Reservation fees: $50-$150 per reservation
Exchange fees: $175 to visit a property other than your own
Mortgage for $46,000 loan – $630/month for 8 years (at 8% interest)
The mortgage rate of 8% is actually a lot better than the rate of 17.9% that they initially created our quote on. If we estimate that we’ll use the timeshare for a total of 30 years, the total costs associated over that time will be $82,192!
If you average $82,192 out over thirty years, you get $2,740 per year… I don’t know about you, but I think I can get a pretty good vacation each year without a timeshare for that amount! We haven’t even factored in the time value of money which would make payment upfront even more costly.
If you took the money you would spend on a timeshare and put it into the stock market instead, your $42,000 would be worth $422,000 in 30 years!!! However, when you pre-pay all of this money on your timeshare, you get no return.
The worst part is that once you buy the timeshare, you’re pretty much stuck with it. Check out this Yahoo article that discusses how timeshares are pretty much worthless on the secondary market. Most people have to give them away to get rid of them. Even if someone tried to give me a timeshare, I still wouldn’t take it because of the annual fees. The Yahoo article mentioned these fees are also going up because fewer people are paying their annual timeshare fees!
Have you made your decision? I have better places to waste my money than on a timeshare!