What is a timeshare?

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Kayla Moses

Pool Resort with rec room
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A timeshare is a vacation property, most commonly in a hotel or resort, shared with dozens of people who get access to the property one week per year. There are different types of timeshares and costs vary widely depending on your contract and ownership type. 

Understanding timeshares

Talk about a reputation! Aggressive sales tactics, tropical destinations and a lot of hidden fees add up to a dangerous combination. They’re popular, but what is a timeshare, really?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. 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. Example: Let’s say your family buys into 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.

Takeaway

Timeshares have these things in common:

  • Visits average 1-2 weeks per year
  • Limited control over when you stay
  • High costs, especially with added fees
  • The 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 deeds divide ownership up into smaller parts that reflect how much time you can stay. A timeshare that’s divided into 2-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 life and they can be passed on to family or sold. The majority of timeshares are deeded. 
  • Shared 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 is divided up at timeshare properties: 
  • Fixed weeks mean that you’re locked in to 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 weeks let you choose your week seasonally. Fixed weeks systems are very competitive, and the best slots during high season get snapped up quickly.
  • Some 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-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. No 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.

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). 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, it can 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 these 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.

How is Pacaso different from a timeshare?

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 true real estate that can be sold using an agent of your choice 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 — six weeks minimum per share every year. Learn more about how co-ownership of a second home works and how it differs from a timeshare.

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