You've probably heard of timeshares — a type of investment that allows you to "buy" a portion of a condo or vacation home. The sales pitch for a timeshare is usually something along the lines of "you can own a piece of paradise and enjoy vacationing there every year." The salespeople behind this messaging can be very persuasive, and they'll lure you in with discounts and other incentives. But is a timeshare really a good investment? Not necessarily.
Unfortunately, anyone who's ever taken the plunge and purchased a timeshare has usually ended up disappointed — or downright scammed.
The timeshare industry is currently worth around $100 billion, and there's a reason for that: It's profitable for the companies behind them.
The idea behind timeshares is simple. You buy a portion of a vacation property that you can use for a set number of days each year. Usually, you'll get the same unit each year and will be able to use it for that designated amount of time. You'll make an upfront lump sum payment in exchange for a lifelong share of the property, and then you'll be responsible for annual fees that cover maintenance, taxes, and other costs.
The amount of time you can spend at your timeshare each year varies depending on the type of agreement you have. The most common agreement is a week-long stay, but there are other options available, such as a biennial or triennial agreement. Some timeshare resorts are now using a points-based system that gives owners a set amount of annual points to use as they please, which can be exchanged for stays at other resorts, upgrades, or unrelated goods and services, such as airfare.
When you're not using the property, renters and other timeshare owners are using the same room. This constant turnover of guests gives the timeshare company a steady stream of income, even when you're not there. The company turns a profit by maximizing its revenue for a single unit and ensuring that fluctuations in occupancy don't affect its revenue.
By purchasing a timeshare, you're entering a contract. The terms of the contract vary from company to company, but generally speaking, you're committing to paying annual fees for the life of the agreement. This is a legally binding agreement that is difficult to exit, and if you fail to make your annual payments or violate the terms of the contract in any way, you could face hefty penalties.
Presentations for timeshare arrangements are often misleading, and the salespeople behind them will do whatever it takes to get you to sign on the dotted line. While the idea sounds mutually beneficial in theory, the reality of owning a timeshare rarely lives up to the hype.
There's one thing you can count on with timeshare agreements — the fees. These are mandatory expenses that come out of your pocket every year, and they can be quite costly. Maintenance fees, which are supposed to cover the upkeep of the property, sit at an average of $1,000 a year. But some companies will throw in additional fees for things like security, pool maintenance, and other services that you may not even need. Timeshare owners are also usually responsible for their own taxes and insurance, which can add up quickly for a property you'll only use for a few days a year.
On top of that, the fees tend to increase from year to year. Most timeshare contracts don't limit how much the company can charge you in fees, so they can continue raising them until your payments become unmanageable. The nature of the contract essentially allows the timeshare company to gouge you for more money than what the unit is actually worth, and there's little you can do about it.
To put it simply, there's little predictability or transparency when it comes to timeshare fees, so planning for them isn't an option. For most people, the risk of an indefinite commitment to these exorbitant and arbitrary fees isn't worth the alleged reward.
Even after you've realized that owning a timeshare isn't in your best financial interest, getting out of the contract can be extremely difficult. Companies will often make timeshare cancellations seem nearly impossible, and they may even try to strong-arm you into staying by threatening legal action. In short, you could end up being stuck with a unit that you can't unload — and still have to pay fees on.
If you do manage to get out of a timeshare, you may end up losing a lot of money in the process. Many timeshare contracts do allow owners to sell their units, but the vast majority of owners end up selling their timeshares for much less than they initially paid. Other timeshare agreements don't involve any type of real ownership at all and prohibit owners from selling or transferring the property.
Timeshare units usually depreciate over time due to the number of sellers competing in the marketplace compared to the number of prospective buyers. Additionally, the ongoing financial burden of timeshare ownership means sellers are often eager to unload their units, and they're willing to do so at a steep discount. In some cases, timeshare owners may have to pay someone to take the unit off their hands — a definite sign that a timeshare unit is not a good investment.
Timeshare arrangements are often touted as an opportunity to have partial ownership of a vacation property. But unlike traditional real estate investments, timeshare owners don't actually have any control over their purchases.
Owners are usually only allowed to use their unit during a specific time period. If they want to stay at the property outside of that window, they're usually asked to pay an additional fee. Life is unpredictable, and travel plans can be easily derailed by illness, work obligations, or other unforeseen circumstances. Timeshare agreements fail to acknowledge that, and when you're tied to a unit, you won't be able to easily adjust your plans. This essentially hinders you from taking full advantage of your timeshare investment.
Additionally, timeshare owners are usually not allowed to rent out their units, meaning they can't make any money from them. If rentals are allowed, it's merely an exchange of your timeshare weeks or points for the money you already paid, rather than a true investment opportunity. This is in stark contrast to traditional real estate investments, where owners are free to use the property however they choose and reap the rewards of renting out their units year-round.
At the end of the day, timeshare investments simply don't make financial sense. When broken down, the cost of a timeshare purchase is often equivalent to, or greater than, that of renting a similar unit on an as-needed basis.
In most cases, you'd be better off vacationing at a hotel or rental home that you can book at will when you're ready for your next adventure. This will give you much more flexibility when it comes to travel plans and won't require a long-term financial commitment. And if you're drawn to the alleged investment potential rather than the vacation opportunities, just about any other form of investment will yield better results.
Timeshare salespeople use high-pressure tactics or even outright deception to get consumers to make snap decisions. This means that many buyers end up regretting their purchases and trying to back out of the arrangement. Unfortunately, the strategically rigid nature of timeshare contracts means that it can be tricky to do so — but it's not impossible. If you've purchased a timeshare and now feel trapped in your agreement, Exit Timeshares can help.
At Exit Timeshares, we help timeshare owners break free of their contracts. Our team of timeshare exit experts has a deep understanding of the nuances of these agreements and the different methods that buyers can use to legally get out of them. We approach each case with the unique insight it deserves and work tirelessly to help relieve our clients of the legal, financial, and emotional burden of owning a timeshare. With a 100% success rate and over 20,000 satisfied customers, you can trust us to help you get the timeshare exit assistance you need.
If you're ready to take back control of your vacation plans and finances, contact us today to schedule a free consultation. We'll review your case and provide you with an honest assessment of your timeshare exit options. Get started now to experience the peace of mind that comes with freeing yourself from a timeshare agreement.