Is It A Good Idea To Buy A Timeshare?

My wife and I just got back from a great long weekend getaway at a vacation resort in Kimberley, BC.  We stayed at a family members’ timeshare townhome, which was a spacious 3 bedroom condo with a private hot tub on the deck.  The resort was family friendly, with a heated outdoor pool and a ‘tot-lot’ playground for the kids.  It was just what we needed to relax and unwind for the weekend.

While we enjoyed our luxury accommodations, we were all discussing the same thing.  Is it a good idea to buy a timeshare to use for your vacations?

Why Buy a Timeshare?

If you are looking for a property to use as a regular vacation getaway or as a 2nd home for part of the year then you might be an ideal candidate to buy a timeshare.

At a timeshare resort you don’t have to spend your time mowing lawns or performing any myriad of tasks that go along with home ownership.  You can also build some equity with your investment, especially in a well established or fast growing resort destination.

The other benefit when you buy a timeshare is the flexibility to exchange your time to stay at one of thousands of other resorts around the world.  The two largest exchange agencies are RCI and Interval International, with a combined inventory of over 7,000 resorts.

Fractional Ownership

The cost of buying a home in Canada has surged in recent years, which has led to a slowdown in traditional timeshare sales.  Fractional ownership has now revolutionized the timeshare market.  More akin to a second home than to a timeshare, fractional ownership at most resorts grant buyers deeded title to their property every fourth week.  This allows investors to build equity in the growing recreational real estate market rather than simply buying vacation time.

Fractional ownership is not a new concept, as friends and family have long pooled their resources to share their vacation accommodations.  However, the fractional industry has added many features such as hot tubs, exercise facilities, professional landscaping and housekeeping to give the buyer a turn-key vacation destination.

Ways to use your Timeshare

If you choose to buy a timeshare you should try and get the most out of your investment.  If you can’t use all of your allotted time you can always rent out your time privately or have the resort rent it out for you.  In many resorts, you can give out your week as a gift to friends and family.

You can also exchange your time internally within the same resort or resort group, or exchange it externally through the larger timeshare networks.  Owners put their timeshare up for sale just like a regular property via private sale or through a real estate agent.

With most timeshare point systems, owners may also elect to:

  • Assign their usage time to the point system to be exchanged for airline tickets, hotels, travel packages, cruises, amusement park tickets;
  • Instead of renting all their actual usage time, rent part of their points without actually getting any usage time and use the rest of the points;
  • Rent more points from either the internal exchange entity or another owner to get a larger unit or more vacation time or at a better location;
  • Save or move points from one year to another.

Downside to Buying a Timeshare

Timeshares have a bad reputation for aggressive sales tactics after luring potential buyers with their so-called free seminars.  Timeshare owners also have to deal with ongoing costs of annual maintenance fees, which can increase over the years.  The monthly fees on the Kimberley condo were $400/month, but at least they re-stocked your toilet paper.

With new properties developing all the time, timeshares can be extremely difficult to sell on the open market.  Flipping your timeshare after a few years of ownership could take a long time and you may not recover your initial investment.

Is This a Good Investment?

As we relaxed in the hot tub and discussed the pros and cons of buying a timeshare, I determined that a timeshare is not something that should be purchased as an investment like you would purchase a rental property.  A timeshare is an investment in your leisure time and family.  It could be perfect for retiring boomers who have the time to get away every month and can use the property to host family gatherings.

I wouldn’t buy a timeshare to use solely for our own family vacations because I find the costs too high for the limited time we would be able to use the property.  I’m also at a stage in my life where I’m looking to maximize our savings and pay down our mortgage as quickly as possible.  Adding the burden of a second mortgage and recurring monthly expenses is not something I’m prepared to take on right now.

Down the road I would consider buying a timeshare if we find a place we can all enjoy and can start building some family traditions.

Do you think it’s a good idea to buy a timeshare?


25 Responses to Is It A Good Idea To Buy A Timeshare?

  1. I agree with David. You might find a place and fall in love with it and think ‘A timeshare would save us money’ and it just might, but then you’re cutting out the opportunity to fall in love with other places.

  2. Yah I wonder about those exchange plans too echo. As a young guy a couple decades away from retirement I haven’t looked into it much, but it sounds appealing. I know some family friends of ours are members of an international one that gives them options literally all over the world. Seems like an ok deal to me, especially if you’re not a big fan of planning out hotels etc. My parents have decided that they like cruising better and so they are members of the “Crown and Anchor” society where they get little perks on cruises instead.

    • @My University Money – To me, it’s more appealing than owning a cabin or cottage. I don’t want to deal with the maintenance and upkeep that comes with a 2nd property. I’d have to look into the exchange program a bit further to see how easy it is to trade weeks.

      Cruises sound pretty appealing to me as well, I’ll have to check out Crown and Anchor.

  3. I’ve only been to one time-share presentation (nearly 20 years ago). Once I added up all the costs it was clear that buying one would be a financial disaster. The property taxes and a host of other fees added up to $800 each year for a one-week share! And those were 1992 dollars. The costs went even higher for the right to trade a week with some other time-share. They tried to sell me the time-share for $10,000, but I wouldn’t have taken the thing if it was free.

    For anyone considering buying a time-share, check out all the ongoing costs before you buy.

    • @Michael James – I think the industry has made significant strides since then, but I agree that the monthly (or annual) fees are a big turn off compared to just booking a holiday at a hotel or resort.

      As I mentioned, the monthly property expenses at this place in Kimberley were $400. That’s $4,800 per year!

      And what happens when the property manager decides they need to renovate the pool or upgrade some facilities? Do they tack on additional charges to your bill like they would at a golf & country club?

      • Are you absolutely sure about the 400 dollars per month and not per year. If one timeshare owner has one week and you assume that all weeks are sold, you multiply 400 x 12 x 52 which means the timeshare corp is getting 249,600 per year. Lets say you get it one week per month, 400 x 12 x 12 it still comes out to 57,600. A little rich.

        • Hi John, I think your math is a bit off here.

          They were 1/4 share owners and paid $400/month in property fees. If all 4 owners pay $400/month, that’s $1600/month. Multiply that by 12 months and it comes to $19,200. Still a little rich, but not unbelievable.

          • Sorry, I didn’t link the quarter share to the time share. In the quarter share scenario, would that not be a fractional ownership situation.

            As an aside, a loose rule of thumb for any vacation property ownership is to take the value of the property and multiply time 5.0 to 7.5% to get your annual expenses (tax, heat, etc). This does not include the cost of capital. The quarter share total of 19,200 is not out of line. Working backwards the property would list at around $250,000 to $375,000. Thanks

  4. If you scout around the internet you’ll find a lot of timeshare resell sites and associated stories of big headaches. They are almost impossible to get rid of when your life changes & they no longer work for you. On-the-other-hand, the points-based ones are very flexible- you can do the same vacation place every year, or stay within your club’s several-many different resorts, or you can exchange to a resort outside the club to anywhere in the world. It takes a lot of planning ahead, but can be very cost-effective. I thought a timeshare would be the ideal way to take great vacations as a single mom with pre-teens (it’s so easy to be as comfortable as at home, keep up with laundry, cook-in,etc.), but if I’d known my boys wouldn’t travel, I never would have bought in. Your greatest flexibility might be in having a special savings account for vacations with no strings attached.

    • @Molly – I have heard that the re-sale market can be very difficult. The point based systems sound a lot more flexible, but I agree with your last point about just having a savings account to fund your next vacation.

  5. Timeshares do not make any sense to me! It is making a commitment to spend money every year for vacation. In addition there are additional costs such as maintenance as well as the unlikely future sale at a profit. Too uncertain for my money.

    • @krantcents – some families put a lot of emphasis on vacations and experiences. It’s not for everyone with all of those recurring costs.

  6. I think Time shares would be good for people who are already retired and living on a nice pension :) I would feel too “forced” to use the time share all the time because of all the money I put into it.

    I guess it’s the same as having a cottage.

    I would rather use that money, have variety, and travel to different places.

    • @Y&T – I would like to use my vacation money to travel to different locations as well. The cabin/cottage doesn’t work for me, since I’m Canada’s worst handyman and don’t want to deal with any of the maintenance issues that will arise.

      Maybe when I retire I’ll want a place like that for big family vacations.

  7. For what you’ll pay for a timeshare, you can vacation in an awful lot of five-star resorts.

    BTW, there’s another downside to a timeshare: you can’t get rid of it. They’re very hard to unload.

  8. From a personal standpoint, a time share is not something of interest for my wife & I.

    When we went on vacation in Florida for our honeymoon, the hotel management convinced us for a sit in on an ‘investment opportunity’. Within 20 minutes of the presentation we respectfully checked out.

    From our standpoint, we don’t want to feel on ‘lock-down’ with any particular area when it comes to vacations. We like the idea of renting a condo or hotel resort type of arrangement whereby we know what our exact costs will be for our entire trip.

    I own a few investment/rental properties but a timeshare is not something that interests me.

    Nice post!

  9. I have probably been to 20 Time Share Presentation over the years mostly in Mexico. I went because I learned the front man on the street got $300 for every mark he could suck into to going. I would split his fee ($150.00 for me)also get some bullfight or dinner ticket my blanket and my bottle of tequila go have a nice breakfast or lunch put up with the opener and then closer and said I was a Cdn and would have to think about it. In other words I have never bought a time share and never will.

    I found the prices were outrageous($25,000+ for semi prime time) and you never got to use your unit in prime time. Plus the fees of $400-$700 per month. Conservatively that is $5000 per year. I can take nice vacation and have money left over for that kinda coin.

    Normally when folks buy timeshares they are already on holidays and do not do any due diligence. They are pressured instead of giving a sober second thought. On average 10% of the folks that go to a 2 hour time share presentations buy. They likely spend more time shopping around for a $3000 large screen or pair of shoes than they do for $25,000 Time share with monthly fees of $400.

    My advice never buy a time share in a pressure situation you will either lose your deposit on sober second thought and/or will almost never get a good bang for your vacation $$$$$.

  10. Look I sell timeshares and know how they work. Everything is based on supply and demand. You historic or an island. Why? Can’t build there so your room is in a low supply. The sales is like that cuz you have to forces working against each other. Customers wanting free gifts and reps wanting sales. I m the number one seller my resort because I just show and tell. It is cheaper in the long run. Buying off line is dumb because the room is only have of want you need. You always need a good company with to trade and maintain it. A big nice vacation like HI will run you 7000 to 12000 a years based on today’s money but in 10 years who knows. By something smart that you can pay off quick. It can be resold well just not to real people. It’s better sold to rental companies. But never give upfront money. If you add inflation renting from trump n Hilton will cost more. That’s why you don’t rent a car. I hope this helps.

  11. The first thing you need to watch out is the sales pitch. If the timeshare salespeople are overly aggressive, they are probably trying to scam you. They might also give you many promises, but without any written confirmation, therefore, do not believe everything you hear. Also, keep in mind that purchasing timeshares under construction might be a risky business. Before you buy, you need to be sure you are going to be able to use your timeshare every year. It is also very important that you take your time to do a thorough research on the company.

  12. There are good timeshares out there, as well as there are people who feel happy about their timeshare purchases, especially those who enjoy to vacation at the same place and are not spontaneous travelers. Unfortunately, due to the big number of timeshare scams being committed against many vacationers, the industry has gained a terrible reputation.

  13. There are good timeshares out there, as well as there are people who feel happy about their timeshare purchases, especially those who enjoy to vacation at the same place and are not spontaneous travelers. Unfortunately, due to the big number of timeshare scams being committed against many vacationers, the industry has gained a terrible reputation.

  14. Take into consideration that a timeshare is NOT a financial inversion, you can actually save more money planning your vacations by yourself, than purchasing a fractional ownership.

  15. We have learned that timeshares are not a purchase that anyone can handle. Many defrauded timeshare owners try to get rid of their properties by listing their units on several websites for a dollar, without having any success.

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