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Is a timeshare a good investment?

Dear Anita,

Can you tell me if purchasing a timeshare for vacationing is a good investment? I have always heard they were not, but in light of how they have gone to the point system for exchange of properties, and purchasing airline tickets and rental cars, I wonder if they are a good investment.

Thanks,

Jeannine B.
Hildebran, NC

Dear Jeannine,

Vacation timeshares give you the right to use a vacation home for a limited, pre-planned period. Many high-profile companies such as Hilton, Sheraton, Marriott, Thomas Cook, and Disney have timeshare operations. According to RCI, the world's largest vacation exchange company, timesharing is the fastest-growing segment of the global travel and tourism industry with annual sales topping $6 billion.

Nevertheless, in general, the cost of a timeshare versus hotel costs do not compare favorably. In addition to purchasing the unit, there will be additional yearly owners' fees for maintenance, which can add up to several hundred or even several thousand dollars. Keep in mind that these fees must be paid whether or not you use the unit. Furthermore, timeshares do not resell well, so more than likely, you will not get your money back.

That is not to say all timeshares are bad. Members of my family own a timeshare at an exclusive Lake Tahoe resort, which the family uses every year. If you like the resort and plan on utilizing the facilities, it very well can be a good choice.

There are two types of timesharing plans: (1) a deeded plan, where you buy an ownership interest in a piece of real estate; and (2) a non-deeded plan, where you buy a lease, license, or club membership that lets you use the property for a specific amount of time each year for a specific number of years. With both plans, the cost of your unit is related to the season and the length of time you want to buy. As an example, a winter week in a warm climate is worth more than a summer week in the same location.

The location of the timeshare is an important guide to its attractiveness in the exchange market. Most owners, at some point, want to swap their weeks for other locations worldwide. However, it can be difficult to trade for different timeshare locations even with a premium resort timeshare. Sales personnel will tout that trading is easy, when in fact it is very difficult and requires a lot of time and persistence—you need to keep checking to see if a resort is open in the time frame want.

If you are seriously thinking of buying a timeshare, compare the cost of renting one versus owning one. If you decide to buy, check out timeshare sales through a realtor. Timeshares can often be bought much cheaper through a realtor than through traditional sales presentations, which are often high-pressure presentations where sales personnel promise something free (such as casino chips, gifts, money, etc.) in exchange for your attendance.

In regards to points, a form of currency used for reserving timeshare vacation properties, the jury is still out on whether they are a good option for owners. Although the point system gives timeshare owners more resort options and flexibility when planning their vacations (as they can apply their points to various resorts rather than just one), the majority of point programs have heavy restrictions, making it difficult to use the timeshare you want when you want to vacation.

I hope I've been helpful. Happy travels!

Anita Dunham-Potter

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