Whether or not to own a timeshare is an interesting discussion. Timeshare solicitations are very common these days and so conversations about a timeshare are not out of the ordinary. Is it financially worthwhile? The answer really depends on the reason why you purchase it. I will discuss the reasons why it would make sense to own a timeshare, and you can see if this applies to you.
The main argument is that owning a timeshare means you now own your vacation property. This is a popular argument amongst many real estate investments which is: do you want to rent? Or do you want to own?
This is not an easy question no matter what type of real estate you are thinking of purchasing. For example: If you move every year, does it make sense to buy or rent? The timeshare industry grew because many people starting realizing that they vacation in the same spot in the same year very often and the demand came up to own rather than rent.
Timeshare math is like real estate math. Consider this fact you pay rent to stay in a hotel. You pay the rent for staying in a hotel for a week. Just to use a round number, suppose it is $1000 for a week. If you do this for thirty years that would be $30,000. Optionally, you could pay the entire $30,000 up front and have the hotel reserved for you every week for the rest of your life. The difference is in one example you rent, in the other you own. The math of course will be slightly different and one will end up costing more than the other, but when you compare possible ownership you have possible interest in loans if you finance plus maintenance fees which most likely will raise with inflation. On the other hand with hotels, during the course of thirty years the full rent to stay at a hotel for a week will raise with inflation. Taking into account all the math, you may find the costs are fairly close.
And now to look at some differences:
A benefit is that you only pay maintenance fees after you own. So if you had a loan payment for thirty years which was comparable to a hotel rate for thirty years, after thirty years you only pay the maintenance fee where if you rent you continue to pay the full rental fee for a hotel.
In addition, with the possibility of being able to pass down ownership to your heirs, a third benefit is that for many years to come only a small maintenance fee needs to be paid to enjoy the vacation rental for a week each year. This is much more cost effective than having to pay the increasing costs of a full hotel rental each week every year.
This definitely makes financial sense if you take a vacation every year. If you take a vacation in the same destination each year, it definitely makes sense. If you take a vacation every year but to different destinations, then exchange programs are helpful for this but it requires more time and possibly fees to be paid for administrative expensive. If you do not take a vacation every year, it still may make sense if you want to rent your vacation to someone else that year or even just give it as a gift to a relative or friend.
Most people are familiar with real estate in terms of houses. So this comparison may be quite helpful:
What is the purpose of buying a home if you do not use it? In the same vein, why buy a timeshare if you do not plan to use it? Moving on, with a home there is the option owning with the purpose of renting it. With a timeshare there is also an option of renting it though it may be more time consuming since you have to find new renters every year where as a normal home you can sign leases for a specific amount of time. Unlike a home, however, there is an advantage of exchange programs if you want to vacation elsewhere. Can you imagine doing that with your home? Deciding that for a month you want to live elsewhere? Probably won't happen, but with vacations that is a definite possibility.
The bottom financial line is this: if you do not vacation a lot, then it probably is not worth your investment money to buy a timeshare unless you really enjoy working to rent it every year. If you do take vacations often, then it is possible owning a timeshare makes perfect sense for you. Finally, if you find you take vacations often and you go to the same destination often, then it really might make a lot of sense to own a timeshare in that destination. That is the logic my wife and I used when we purchased our Hawaii timeshare. In fact, new developments in timeshare ownership include the possibility of just owning a week every other year. This involves less commitment on your part both financially and in having to take a vacation to the same spot every year. If that sounds desirable to you, then owning a timeshare is something you should seriously think about.
I hope this has been helpful and given you some good logical thought to whether or not buying a timeshare makes sense to you.
The main argument is that owning a timeshare means you now own your vacation property. This is a popular argument amongst many real estate investments which is: do you want to rent? Or do you want to own?
This is not an easy question no matter what type of real estate you are thinking of purchasing. For example: If you move every year, does it make sense to buy or rent? The timeshare industry grew because many people starting realizing that they vacation in the same spot in the same year very often and the demand came up to own rather than rent.
Timeshare math is like real estate math. Consider this fact you pay rent to stay in a hotel. You pay the rent for staying in a hotel for a week. Just to use a round number, suppose it is $1000 for a week. If you do this for thirty years that would be $30,000. Optionally, you could pay the entire $30,000 up front and have the hotel reserved for you every week for the rest of your life. The difference is in one example you rent, in the other you own. The math of course will be slightly different and one will end up costing more than the other, but when you compare possible ownership you have possible interest in loans if you finance plus maintenance fees which most likely will raise with inflation. On the other hand with hotels, during the course of thirty years the full rent to stay at a hotel for a week will raise with inflation. Taking into account all the math, you may find the costs are fairly close.
And now to look at some differences:
A benefit is that you only pay maintenance fees after you own. So if you had a loan payment for thirty years which was comparable to a hotel rate for thirty years, after thirty years you only pay the maintenance fee where if you rent you continue to pay the full rental fee for a hotel.
In addition, with the possibility of being able to pass down ownership to your heirs, a third benefit is that for many years to come only a small maintenance fee needs to be paid to enjoy the vacation rental for a week each year. This is much more cost effective than having to pay the increasing costs of a full hotel rental each week every year.
This definitely makes financial sense if you take a vacation every year. If you take a vacation in the same destination each year, it definitely makes sense. If you take a vacation every year but to different destinations, then exchange programs are helpful for this but it requires more time and possibly fees to be paid for administrative expensive. If you do not take a vacation every year, it still may make sense if you want to rent your vacation to someone else that year or even just give it as a gift to a relative or friend.
Most people are familiar with real estate in terms of houses. So this comparison may be quite helpful:
What is the purpose of buying a home if you do not use it? In the same vein, why buy a timeshare if you do not plan to use it? Moving on, with a home there is the option owning with the purpose of renting it. With a timeshare there is also an option of renting it though it may be more time consuming since you have to find new renters every year where as a normal home you can sign leases for a specific amount of time. Unlike a home, however, there is an advantage of exchange programs if you want to vacation elsewhere. Can you imagine doing that with your home? Deciding that for a month you want to live elsewhere? Probably won't happen, but with vacations that is a definite possibility.
The bottom financial line is this: if you do not vacation a lot, then it probably is not worth your investment money to buy a timeshare unless you really enjoy working to rent it every year. If you do take vacations often, then it is possible owning a timeshare makes perfect sense for you. Finally, if you find you take vacations often and you go to the same destination often, then it really might make a lot of sense to own a timeshare in that destination. That is the logic my wife and I used when we purchased our Hawaii timeshare. In fact, new developments in timeshare ownership include the possibility of just owning a week every other year. This involves less commitment on your part both financially and in having to take a vacation to the same spot every year. If that sounds desirable to you, then owning a timeshare is something you should seriously think about.
I hope this has been helpful and given you some good logical thought to whether or not buying a timeshare makes sense to you.
About the Author:
Learn more about all things related to a timeshare: Stop by Emil Yau's site where you can find out all about selling a timeshare and other useful timeshare information
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