Understanding timesharesThere 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 overviewBuying 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 exampleLet’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 reputationMany 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