Are timeshares a good investment?

April 5, 2012 — 6 Comments

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!

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6 responses to Are timeshares a good investment?

  1. Importantly, these memberships are not an investment because they are not real estate; you are buying a service to enjoy leisure time with family and not to do business, and it is how it should be seen. In some countries, these types of memberships are for life (deeded) and can be inherited to the relatives of the owner of the membership.

  2. The truth is that Timeshare scams are increasing, and every day more victims fell for them. Fortunately, there are many solutions to get rid of an unwanted timeshare; however, the best way to dump a timeshare is by cancelling the contract. Timeshare cancellation has many advantages, but the most important is that once the contract is properly cancelled, there are no further responsibilities attached to the resort.

  3. There is lots of misinformation about time shares, yet appearances deceive. What appears to be a “good investment” can become in one of your worst financial enemies.

  4. Buying a timeshare under the impresion you will save money on the long run on travel expenses such as airfare or cruises equals to being a victim of timeshare fraud. Timeshares will barely provide you a small discount on accomodations and that´s it. Timeshares will not provide you, in most cases, any discounts on your vacation expenses.

  5. Timeshares need to be looked up as a purchase and not an investment. Regardless of how timeshares are presented, they don´t perform as well as a house or stock investment. If you look around the resale market for timeshares on websites like EBay, Redweek, or TUGBBS will find that you can buy a timeshare for far less money than what the first owner purchased it for.

  6. Timeshares have been a boom over the last twenty years, however it has changed and evolved to give a better service, as it has, the name of this type of memberships were changed for “Vacation Club”.
    Importantly, these memberships are not an investment because they are not real estate; you are buying a service to enjoy leisure time with family and not to do business, and it is how it should be seen. In some countries, these types of memberships are for life (deeded) and can be inherited to the relatives of the owner of the membership.

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