What Is A Timeshare The Good And Bad


Purchasing a timeshare is a great way for avid vacationers (or hopeful avid vacationers) to save money on vacations for many, many years to come.

It is a way to structure vacations as much as you would like or as little as you would like, depending on the type of property and timeshare you wish to purchase or lease.

There is so much that goes into understanding timeshares, the implications, and the pros and cons.

What does a timeshare mean?

A timeshare is a piece of real estate that one purchases or leases for a certain duration that is also owned/leased by other people.

It is a real estate endeavor, and contracts and down payments play a large role in the acquisition of a timeshare.

Typically, the timeshare is sold on a time basis, with one week being the most common timeframe. 

You, the owner, have title to a piece of property alongside other owners who share in the costs associated with the real estate ownership.

There is an initial cost to timeshares that an owner must pay to acquire the property. Then there are other fees such as maintenance fees that are shared amongst the other owners that cover things such as amenities’ maintenance and updates, landscaping, and other resort-related costs. 

The opportunities are vast for ownership and leasing. Large resort chains can offer timeshare programs, and one of the most commonly known would be the Disney Vacation Club. There are also companies that specifically sell timeshares through a myriad of resorts. 

How do timeshares work?

Let’s break down the ins and outs of how a timeshare works.

Deeded vs. Non-deeded

First, let’s discuss deeded and non-deeded.

Deeded Timeshare

A deeded timeshare is similar to buying a home. This contract provides a buyer with the opportunity to own a piece of the timeshare.

Since you own the piece of property, you can choose to sell whenever you wish, or you can pass it down to a family member when you are ready. It is yours for the duration in which you choose to own it.

Non-deeded Timeshare

Non-deeded or right-to-use contracts can be viewed as a lease. You are renting the piece of property from a developer/resort, but you do not own it.

You typically lease the property for a certain number of years before ownership returns back to the original titleholder.

4 Types of Timeshares

Next, there are four different types of timeshares available to prospective purchasers. These are fixed-time, floating-time, points-based, and right-to-use structures.

Fixed-time Timeshare

A fixed-time timeshare offers the owner a specific timeframe each year to visit the property. Typically, these are sold in one-week blocks, but shorter or longer can sometimes be purchased.

Floating Timeshare

A floating timeshare provides the owners the flexibility to choose any time during the year to utilize the property.

The downside to this type is that there will be a lot of competition for popular weeks during the year, and some owners might not get to exercise their timeshare on their first-choice week.

Points-based Timeshare

A points-based timeshare allows the buyer to purchase as many or as little points each year as they wish. These points can then be redeemed for reservations at their timeshare property. These points can also be banked for future use.

This option has some flexibility but also some conditions associated. The amount of points used will depend on the length and location of the stay.

In addition, popular timeframes will likely cost more points. You will also run into competition just like with the floating timeshare.

Right-to-use Timeshare

The last type is the right-to-use structure. You have a lease for your property (unit or week) and a set duration that you will lease for, typically 20 or 99 years. 

Why would anyone buy a timeshare?

When considering the purchase of a timeshare, it should be viewed as an investment.

Now, the deeded option is going to be more of an investment then the non-deeded option, but nonetheless, they are both still investments. Overtime, they pay for themselves and can even save vacationers in the long run.

Timeshares are a great option for those who plan to take at least one vacation every single year in the same place. These owners appreciate knowing that they have a place to stay year after year, maybe even forcing them to take a vacation when they might not have otherwise. 

When it comes to the floating or points-based timeshare systems, there’s a lot more flexibility. Floating timeshares allow you to choose your week, so it doesn’t remain the same every single year.

A points-based timeshare provides even more flexibility. In addition to choosing your reservation timeframe, you will also have the option to choose the duration of your visit. You can use however many points you wish and bank what you do not use for next year. 

Some timeshares even come with the option for an exchange program where you can use your points or your week with another company.

Generally, they don’t carry the same weight as they would at your “home” property, but this does provide an extra layer of flexibility. However, this must be an option offered by the timeshare company you are purchasing from.

An example of flexible timeshare ownership would be the Disney Vacation Club where buyers purchase a specific number of points. A representative works with you on determining the optimal number for your needs. Whether you are a family of four, a family of seven, or a couple, there is an option for everyone.

The points are then redeemed for stays at Disney resorts or can be used through an exchange program (at a lesser value) to stay at non-Disney resorts. You can stay any time throughout the year as long as there is availability at the resort of your choosing. 

If you plan to travel for at least one week every year, then a timeshare is a good option for you. Timeshares are becoming more flexible with the points-based systems and exchange programs. 

What is a timeshare resort?

Oftentimes, resorts are designated as timeshare resorts. This means that priority in booking goes to those who have a timeshare with them or to those who have rented the week or points from the owner to be able to stay there. 

Accommodations are also set up different than traditional hotels. The accommodations for timeshare owners are set up like apartments with studio, one-bedroom, two-bedroom, etc., units.

These units come outfitted with a kitchen (with dishwasher), dining area, and laundry (most of the time).

Since timeshares are lifelong—or at least long-term—investments, the accommodations are set up for families and/or larger groups.

What is a timeshare presentation?

A timeshare presentation is a sales pitch to entice potential buyers to purchase a timeshare. They often include food, drinks, the promise of a free stay or even vacation. These presentations involve a lot of coaxing along with the pressure to sign right then and there. 

However, if you are interested in a timeshare, a presentation is a great way to learn all about the property, what it has to offer, and what that timeshare entails.

The sales pitch will be about 90-minutes and often a tour takes place after the presentation. 

Beware of the pressure at the end of the presentation, and do not impulsively purchase a timeshare if you are not ready.

Remember, this is a real estate investment, and no large investment such as this one should be purchased without taking the time to review the contract in its entirety and make an educated decision. 

Pros and Cons of Timeshares 

Pros

Guaranteed Vacation Every Year

As discussed throughout the article, a timeshare provides you, the owner, the option of at least one vacation a year.

The resort stay is already paid for, and there’s no real planning that has to take place. You set up your transportation and pack your bags, and you’ll be on your way to a week of blissful sunshine and relaxation. 

Option for Exchange

Purchasing a timeshare with an exchange program option is beneficial for the avid travel who wishes to see the world. You are not forced to use your timeshare in the same place each year, giving you the flexibility to visit new places.

Companies like RCI have resorts all over the world that you can visit if your timeshare is through them or if your timeshare has an exchange program with them. 

Buying a Used Timeshare

When it comes to purchasing a timeshare, you can purchase a brand-new package or a used one. A new package will be through the retailer or developer. This will normally cost you more money upfront.

The other option is to buy a used timeshare package. This means you buy from the current owner. However, scams run amuck, so be sure to purchase through a reputable reseller company. 

Cons

Travel and Food Expenses

Although the resort stay is paid for through the cost of the timeshare. Your transportation is not. This means that you must factor the cost of whatever means of transportation you’ll have to take to arrive at your destination when deciding if that timeshare is for you.

If you must fly, then you will need to ensure that in addition to the costs of the timeshare, you can also afford to fly to get there each year. If you can’t, then that timeshare is not for you.

In addition, most timeshares do not cover the costs associated with food either. Therefore, this additional cost will also need to be assed and budgeted for. 

High Initial Cost

The purchase price of a timeshare will vary, but that initial cost will be substantial. It’s important to do your research and speak with a timeshare representative about this cost to ensure you can afford it.

A loan could be taken out to pay for the initial cost, but it is not advised. You will then be paying interest on this amount, increasing your timeshare cost overtime, which makes it less beneficial to you in the long run. 

Maintenance Fees and Taxes

With a timeshare comes maintenance fees that are either paid monthly or quarterly, depending on your contract. These maintenance fees will increase each year and can become burdensome.

In addition, you will have to pay real estate taxes on any deeded property. 

How to get out of a timeshare

If a contract for a timeshare was signed and the new owners are weary of the decision and feeling some buyer’s remorse, they may decide that they do not wish to continue with this purchase.

They do have three days to cancel the contract. Some states do offer a longer period of time to make this decision. Currently, Florida has a ten-day timeframe to cancel the purchase of a new timeshare. 

For a deeded timeshare, there is only one way to get out of your timeshare contract, and that is selling. However, selling timeshares is not an easy feat.

If the developer will purchase the timeshare back, then you will have an easier time selling your share of the property.

However, the developer may require that you continue to pay the maintenance fees until the timeshare is purchased by a new owner. Be sure to review your initial contract to determine if this is part of your agreement.

The other option is to resell the timeshare to new buyers. There are many reseller sites that work with existing owners to get their property sold. 

It is important to know that selling your timeshare is not a simple process. Although it is a booming industry, there are only so many buyers out there interested in the purchase of a timeshare. Therefore, it may take some time to get it sold. 

A timeshare isn’t for everyone. It is for those travelers who will be taking a vacation every year. This is one of the only ways that it will pay off for the owners.

The decision to purchase a timeshare is significant and should be met with caution and deliberation, weighing the pros and cons carefully and fully understanding their financial outlook.

This is a real estate transaction and should be treated as such, even if you only see the property and benefits once a year. 

Dustin Heiner

Dustin Heiner is the founder of Successfully Unemployed and the host of the Successfully Unemployed Show. Dustinquit his J.O.B. by investing in real estate and has a passion to teach others to quit their J.O.B. at Master Passive Income.

Recent Posts