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Why Timeshares Are Bad Investments

June 20, 2011 By Jamie Makar 8 Comments


At some point in time you could be faced with the decision of whether or not to purchase a timeshare.  Attendance at timeshare presentations is mandatory at many resorts now, and when they aren’t mandatory, there are often lots of bonus incentives, retail and spa discounts, or free gifts to cleverly lure you in.

It is at these crafty presentations that most people are persuaded into making the financial plunge into the timeshare kingdom.  I can tell you from my own experience that timeshare sales people are like TV infomercial hosts on crack.

LIGHTS CAMERA ACTION PRIZES

The extensive slideshows, voluminous prize games, and tours of the best suites on the property can easily eat up hours of your day if you’re not careful.  And the tenacious sales staff will stick to you like glue, saving all the incentives and freebies for the very end, and making it quite difficult for you to sneak out early.  They will talk and talk and talk until you just want to scream, “OK I’ll do it!” just to get them to stop their sales pitches.

However, these glossy displays and free perks are merely an opaque shroud to distract people from the truth behind the investment.  In reality, timeshares serve no real benefit to the customer; they can actually be rather damaging to one’s budget over a long period of time.

SNEAKY MARKETING TRICKS

For starters, the presented images or on site tour of a timeshare that is exhibited to you by a salesperson or brochure can often be misleading and inaccurate.  Many times customers are disappointed to find that the property they purchase is not nearly in as great a condition as the one advertised to them.  Same goes for the rest of the properties domestically and abroad that are pitched to you as part of the exchange program.

From this point the whole scheme begins to fall apart and owners start to search for ways to get rid of timeshare units. One infrequently observed fact about timeshares that buyers often overlook is the tourism peak/off peak time periods.  Most timeshares are only popular enough to pull in heavy traffic during certain seasons or time frames, thus seasonal competition isn’t very uncommon. This means that the buyer only has a chance of increasing their income within the allotted time that customers choose to visit, given that they happen to decide on residing there at all.

FEES FEES AND MORE FEES

Along with this, there are many fees that come with timeshares, which many people do not initially account for.  One of these is the yearly maintenance fee that the buyer has to pay, regardless of whether or not the property is in use.  Also, other ownership fees that tend to be overlooked are ones that an individual may think would be included in the maintenance fee.

These include the utility billing and taxes, which sales agents rarely ever include in their presentations as you could be charged nightly taxing of $20 or more.  In addition, people are usually unaware of the trading and exchange costs that take effect when the owner decides to make their stay at an alternate location than agreed upon.

JUST SAY NO

Retrospectively, these facts stand to make it apparent that a timeshare is much more of a negative investment than many people are led to believe.  Upon truly analyzing the details, costs, and hidden fee veiled by the coercive exhibitions put on by the timeshare company advertisers, it is not arduous to come to the conclusion that investing in timeshare property will likely lead to nothing more than an extra expenditure for the consumer.

If an individual has revenue to gamble with and discard at will, holding little hope of making financial growth, then perhaps a timeshare investment is worth the endeavor. But, if you intend to try and sell your timeshare once you have had enough, this simply is not a viable exit solution.

Don’t get suckered into spending an entire day of your vacation listening to a sales pitch.  Grab a towel, sunscreen, and your flip flops and head down to the beach.  If you see a sales rep approaching, run as fast as you can until they lose sight of you, then buy yourself a $12 margarita to celebrate.

Untemplaters, have you ever had to sit through a timeshare presentation?  Were you able to escape?

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Filed Under: Personal Finance

Comments

  1. griffin says

    June 26, 2011 at 4:24 am

    I know plenty of people that have timeshare units and love it. It takes away the option of going on vacation or not.. or helps dissolves that barrier in hard times because the major expense is already handled (the daily $100+/night). Plus the places aren’t usually THAT bad.

    I agree it’s not for everyone, but to say that they are a bad investment when the timeshare units don’t expire and can be handed down in a will is kind of over-extending – a touch.

    I, personally, would not invest in timeshare units, but I can go stay at a nice nice hotel where-ever I travel (thankfully) and don’t feel I _need_ or rather _want_ them. I don’t think they are a horrible investment for some others though. -griffin

    Reply
  2. Jamie says

    June 23, 2011 at 12:01 pm

    @moneycone I don’t know anyone who is 100% satisfied and happy after buying a timeshare. Personally I think they are too binding and the fees are a big turn off.

    @car negotiation coach I agree. Flexibility is what makes vacation fun – the freedom to go anywhere, anytime

    @sandy I don’t think I’d ever be comfortable doing a house swap unless I had a second property that I wasn’t living in and that had no valuables in it, or was doing it with a close friend or relative who lives long distance.

    Reply
  3. Sam says

    June 21, 2011 at 5:24 pm

    My old boss and friend has a timeshare in Malibu and he loves it. He goes once a year with his family. The cost as a percentage of his income is low. Maybe it’s a nostalgia, personal thing. If he c. Get in for $20,000 instead of $1.2 mil for a similar condo, so be it!

    I just want to keep things simple. One property to live in + one vacay property max and that’s good enough!

    Reply
  4. Sandy @ yesiamcheap says

    June 21, 2011 at 12:13 pm

    I never understood why people would buy a time share. It seems very, very expensive, but I guess if you have the money. I just discovered the house swap area of Craigslist and it’s looking interesting to me. Might be a decent replacement for a time share?

    Reply
    • Sydney says

      June 21, 2011 at 12:31 pm

      Another neat section on Craigslist is vacation rentals. A lot of condo and homeowners rent out their properties for parts of the year or even year round for great rates. You can save money and usually get a much bigger place than at a hotel or resort. Just be cautious of scammers as with everything else on Craigslist.

      Reply
  5. Car Negotiation Coach says

    June 21, 2011 at 9:39 am

    My parents are big into time shares and I’ve never understood the allure. I’d much rather have the flexibilty in choosing a location wherever I want at whatever hotel I want without having to try to “swap” locations and weeks and paying those silly annual fees you mention, which really add-up!

    The only upside I see for them (not for me) is that they are involved in Marriott properties which does give you a significant amount of points if you opt not to use your property for a year…..of course you’re still paying a hefty price for those points, but they can work out if used properly.

    Reply
  6. MoneyCone says

    June 21, 2011 at 7:50 am

    An eye-opening article on Timeshares! Everytime I see a timeshare commercial on TV I cringe!

    Are there any timeshares that are worth it? I’ve never heard of a true timeshare success story.

    Reply
    • Sydney says

      June 21, 2011 at 12:37 pm

      There are timeshare commercials on tv now?! Yikes. They must get a lot of victims that way. It’s easy to make things glamorous on tv and trick viewers into a false sense of the value and benefits of deals and commercials they see on tv. I myself have been suckered into some kitchen gadget infomercials but luckily nothing as expensive as a timeshare!

      Reply

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