Timeshares CAN be one of the best lodging deals available but only for the right people.
Timeshares are unique in that if you maximize them they can be an amazing asset and if you make a poor purchase or don’t work at making them a good asset they are a horrible investment.
To start with if you don’t already have a timeshare take the quick test below:
- Do you buy lodging more then 14 days a year?
- Do you want to usually stay in one area for a week?
- Are you willing to search for the best deals on the internet?
- Are you willing to make a lifetime commitment to travel?
- Will you be traveling for the next 20 years?
- Will your children be travelers?
If the answer to all these questions is a firm YES then a timeshare may work for you. If you say NO to just one of these questions you probably don’t want the obligation of a timeshare
In order to explore this question we have to go to the core of the cost of a timeshare. In order to tell if a time share or hotels is a better deal we need to look at the cost of a hotel, the Hotels.com Hotel Price Index found the average price of a hotel in the United States to be $137 a night. We know that a smart traveler can easily beat this rate but for the sake of argument lets use $137 as our base rate. With our $137 base rate two weeks of motels will average $1918 a year. The financial reality is that between the initial investment in a timeshare, the cost of maintenance fees, the cost of unit exchanges and the cost of being a member in an exchange program like RCI your outlay over a 20 year period can be as much or more then $1918 a year. Thats a lot of motel rooms.
In a blog I wrote a few months ago I described how you should buy a timeshare. If you take the advice in that article your yearly costs should drop to about $700 a year.
If you will travel 2 to 3 weeks a year and can be flexible in your travel plans a time share can work for you.
Charlene and I will use 10 to 14 time share units a year. In August we will be in Steamboat with our kids. We will be using 4 two bedroom units on that trip that is the equivalent of 8 motel rooms. Plus we will have the advantage of having full kitchens and 4 fold out couches so we will be able to sleep 32 people comfortably for a week. Thats a lot of motel rooms!
Timeshares work for us but only consider buying one if you can’t answer yes to most if not all of the questions above.
Keep in mind if you buy the following down side factors because your timeshare is real estate:
- You may be on the hook for maintenance fees for the rest of your life and even your kids life.
- You may see significant increases in your maintenance fees.
- You may be charged for major costs at your time share such as catastrophic damage.
- You will have to pay fees like exchange fees, club fees and cleaning fees with each rental.
- It will be almost impossible to sell your timeshare.
- It will be almost impossible to rent your timeshare.
- You will almost never make any money on your time share.
In short if you are not going to use and abuse your time share asset do not buy!
In Part 2 of this article I will explain how Charlene and I use and abuse our timeshare assets.