What is a timeshare and how does it work?

Published Date: November 13, 2023

Pool Resort with rec room
What is a timeshare? A timeshare is a type of vacation property ownership where multiple individuals collectively invest in and share the use of a property, often situated within hotels or resorts. Each co-owner is allocated a specific number of days or weeks each year to use the property. Timeshares vary in format, ranging from fixed-week to floating-week systems, the costs associated with them can differ significantly based on the contract terms and the nature of ownership.

Understanding timeshares

There are a lot of timeshares out there, and not all timeshares or vacation ownership opportunities are structured the same. Overall, timeshares are a shared ownership model that guarantees members a certain amount of time each year to stay in the property. 

An overview

Buying a timeshare means that you’ve purchased time at a property shared by many other people, most often a condo or a room at a resort or hotel. In some timeshares, you earn points each year that can be applied to a wide range of properties. Ownership is divided into smaller parts; a timeshare split into week-long stays would have 52 simultaneous owners. The timing and length of your visits depend on your contract type. Timeshares cost about $22,000 on average, and that’s just the cost to stay — you still have to factor in annual maintenance fees and any other expenses. 

A timeshare example

Let’s say your family buys a timeshare in Cozumel, Mexico, for an initial cost of $23,000 and an annual maintenance fee of $800. You’re allocated two non-consecutive weeks per year. If you vacation there for 20 years straight, you’ll spend $39,000 plus any additional maintenance fees. Divided across 240 nights (12 per year), that adds up to $162.50 per night, which may be cheaper than the cost of the room were you to book on the resort’s website. 

A mixed reputation 

Many people love timeshares because they allow access to a more expensive property than you could afford on your own while ensuring you only pay for the time you use. Some timeshares allow you to trade locations with other owners, use some of your nights to explore somewhere new or allow your friends and family members to use your nights. Unfortunately, timeshares also have quite a few detractors. Annual fees and special assessments can be expensive, and if you decide it’s no longer the right choice for you, timeshares can be hard to sell on the secondary market. The timeshare industry also gets a bad rap for pushy sales tactics and deceptive practices.


Most timeshares have these things in common:

  • Visits average 1-2 weeks per year
  • Limited control over when you stay, either because of restrictions in the program or having to compete with a large group of other owners
  • High costs, including upfront expenses and yearly fees
  • The timeshare company or resort owns the underlying real estate, not you

In more detail

What kinds of timeshares are there?

At the most basic level, there are two kinds of timeshares: those with deeds, and those without.Shared deed timesharesShared deeds divide ownership up into smaller parts that reflect how much time you can stay. A timeshare that’s divided into two-week stays would have 26 simultaneous owners, and it’s not uncommon for deeds to be split into 52 parts, one for each week of the year. Shared deeds lock you in for lif,  and they can be passed on to family or sold. The majority of timeshares are deeded. Shared lease timesharesShared leases are like an apartment you’re paying to stay in a few weeks out of the year, but you commit to a decade or more in advance. The kicker here is that you don’t get a deed because you’re only leasing a period of time at a property. You’ll still be sharing with lots of other people — typically 52 families. 

When do you get to stay at your timeshare?

Not all timeshares are created equal. Here are the four main ways that time can be divided up at timeshare properties. Be sure to read the entire contract for a timeshare your considering: Fixed weeksFixed weeks mean that you’re locked into the same week every year (say, the third week in April). Changing your fixed week typically comes with a hefty price tag in the form of an upgrade fee. Floating weeksFloating weeks let you choose your week seasonally. Floating week systems are very competitive among timeshare owners, and the best slots during high season get snapped up quickly.Points systemSome timeshares operate with a points system, similar to an airline. You “pay” for your stay with points, which gives you greater flexibility in how you travel. Choosing an off-season, weekday stay or downgrading to a smaller room may cost less points overall. By contrast, you can also use points to upgrade components of your vacation or enjoy another property via a timeshare exchange program.Right-to-useRight-to-use timeshares are a mix of the fixed weeks, floating weeks and point systems. You’re paying for the right to use the property during a period of time in a shared lease, so you’re locked in for a decade or more. There is bo deed, but there’s usually more flexibility in your stays overall.

How much do timeshares cost?

A host of factors go into the cost of a timeshare: the market, and the property’s location, age and type. Your initial cost will likely be more than $22,000. After that, you’ll owe annual maintenance costs and any other fees stipulated in your contract throughout the life of your timeshare.

How much are the fees for a timeshare?

In addition to the upfront purchase, there are fees associated with timeshare ownership. For example, you’ll pay annual fees that cover maintenance, utilities and taxes. These fees can range from $300 to over $1,000 per year, and are due whether or not you use your allocated days in the property each year. Be sure to check the terms of your timeshare contract before signing. This document should outline all of the one-time and ongoing costs. 

Do you own anything when you have a timeshare?

A deeded timeshare does mean you own something — a fraction of the property (1/26, 1/52) as part of the timeshare agreement. That said, being a timeshare owner is not like owning regular real estate. Properties are almost always a condo, apartment or room at a resort that you’re sharing with dozens of other owners. Not only are you limited in what you control within the property itself, but it can also be a struggle to book time when competing with so many other families. 

Can you finance a timeshare?

You can finance a timeshare, and it’s a major way that timeshare companies make money. Banks usually won’t loan money for timeshares, so buyers have few options other than the timeshare company itself. Little competition means 14-20% interest rates — way higher than most loans you’ll find on the open market.

How is Pacaso different from a timeshare?

Simply put, you own your Pacaso. Unlike a timeshare, a Pacaso is a second home that belongs to a small group of two to eight co-owners who vote on all the major decisions about the property through a professionally managed LLC. Should you decide to sell, you can — your Pacaso is real estate ownership that can be sold at any time, at a price you set. Costs flow through the LLC too, so you’re not subject to hidden fees. Here’s one last major difference: You’re guaranteed far more than a week’s stay — on average, Pacaso owners stay at their homes six or seven times a year for about a week at a time. Learn more about how co-ownership of a second home works and how it differs from a timeshare, then find your dream second home in your favorite vacation destination.

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Kayla Moses

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