Are Timeshares and Vacation Clubs A Good Deal?

timeshare ownership (Photo credit: GGtimeshares)

Dreams of warm beaches and bluer than blue ocean beaches pervade the mind every summer. Making plans for that ultimate vacation destination fills your thoughts and just has to be satisfied. You finally take that great trip and just fall in love with the place.

Maybe you think owning a bit of paradise would be the right thing to do. Your thinking of buying a timeshare.

Timeshares and vacation clubs allow you the opportunity to become a part-owner of a resort. The ability to return yearly comes with a certain sense of security; your next vacation is always just around the corner. Most timeshares allow you to trade your allotted time for points to use at other vacation destinations. You can enjoy luxury ski chalet holidays, travel to the Caribbean, or enjoy any city destination that is on your plans list.

What is a Timeshare?

Timeshare ownership has you pay an upfront fee plus a yearly maintenance fee. Depending on the timeshare arrangement, owners either own the rights to a specific, fixed week or a floating arrangement, where you can visit for a week within a period of time each year.

What is a Vacation Club?

Vacation clubs are a newer variation on the timeshare model. Instead of purchasing the rights to a specific unit, as with a timeshare, vacation club “members” pay an upfront sum to purchase a number of “points” which can be redeemed for different vacations each year. Yearly maintenance fees still apply.  

Is This a Money Saving Way to Vacation?

Both plans have different restrictions. Timeshares give you a specific week in a specific place from now on. Vacation Clubs have more flexibility with your choice of destinations but you have to deal with a fixed number of points. 

Both of these plans have large upfront costs with an expensive yearly maintenance fee. For example if you take vacation where you pay $200/ night for a week hotel stay over ten years you have shelled out $14,000. A timeshare at the same property might cost $8,000 upfront, with annual maintenance fees of $550. After ten years, you’d have paid $13,500—only $500 less than it would have cost you to pay for normal vacations. Over 30 years, however, the timeshare becomes a much better deal: At the end of that period, you’d have paid only $24,500 for your yearly vacations at a timeshare, as compared to $42,000 if staying at the hotel.

Are They a Good Investment?

For being real estate you would think there is an appreciation value. The value of your timeshare generally decreases sharply after purchasing.  The reason being the number of timeshares is always increasing. New timeshares have an attraction over an older one which people do not prefer. Add to that, it is really difficult to sell your timeshare if the need exists. If you did resell it, you could receive only half of what you paid for it. 

What to Do?

If you like a particular timeshare destination, rent do not buy. Many timeshare owners can't sell or go to their timeshare so they will offer you a great deal for renting them. 

A great place to look for timeshare rentals is Ebay. I personally had a great experience renting a timeshare in Orlando and everything went perfect. Because you’ll be dealing with an individual timeshare or vacation club owner rather than a hotel, be extra cautious to ensure that the deal is legitimate. Call up the hotel ahead of time to verify that the owner in question does, in fact, own a timeshare at the property. Additionally, ask the timeshare owner for references from previous satisfied renters.