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How to Consider Buying a Timeshare
May. 11th, 2022 08:47 amWhen we went to Hawaii last month on a trip built around a timeshare presentation. Although we went in knowing there was 0% chance we were going to buy, new (yesterday's blog) the exercise did change my thinking a little on whether a timeshare, at the right price, is worth it for us. Here are Five Things I recommend anyone considering a timeshare consider before buying:
1) First, a timeshare is fractional ownership in a condominium. Maybe you already know this, but it's worth repeating. It's a real estate transaction. You are buying partial ownership in a property with the right to occupy it, say, one week per year. When you can stay that week may be limited by the terms of the contract and may also involve a lottery or first-come-first-serve reservation system.
2) Don't pay retail. As I explained in my previous blog on this topic, the timeshare industry manages to sell new timeshares for way more than they're worth. Second-hand timeshares— yes, you can resell them because they're real estate— can cost just half the new price and possibly way less.
But even once you find a good price there are still other factors to consider. You've got to compare the money you're spending on the mortgage / the opportunity cost of the cash you've bought it for, plus the annual maintenance fees, to other options for vacation accommodation.
3) Does a timeshare unit suit you better than a hotel? The first "compared to...' thought experiment I considered years ago was whether a timeshare is cheaper than just paying for a hotel room when on vacation. Unless you get a screaming deal on the timeshare price the answer is almost certainly No. But consider also that a timeshare unit gives you more than a hotel.
With a hotel you're getting a single room. (Yes, there are efficiencies and suites, but those can be way more expensive). With a timeshare you're getting, really, an apartment. It may be a 1-bedroom with a kitchen and living room, like the condo we had in Waikoloa, or it may have 2 bedrooms. The question, then, is whether you want/need the extra space.
When we were younger I thought, "Ha! No!" but now that I'm older— and more discerning from traveling a lot the past 15+ years— I see real value in a small apartment. And if you have kids, a 2-bedroom apartment is huge upgrade from a hotel room. In fact if you have a growing family you're probably looking at paying for two hotel rooms when you travel. At that point the cost of a timeshare can become favorable.
4) Do you want to go to the same place every year? I defined a timeshare in #1 above to emphasize that what you're buying is property. You're buying an interest in a specific condo tower, in a specific place. Do you want to go to the same place every year? Some people vacation like that, some don't.
To address that most timeshares belong to exchange networks that allow you to swap a week at your place for a week somewhere else. Trading by its nature is inefficient, though. I hear from relatives who own timeshares that they often up giving away their week or letting it go unused because they can't get out there to use it.
I suggest as a rule of thumb that you only buy a timeshare if you expect you'll stay there at least every second year. By that rule Hawaii isn't right for us... though a place like Lake Tahoe might be. We can drive to it, and it's a great jumping-off point for abundant outdoors activities we enjoy.
5) Do you want to stay for a week at a time? Even if everything else is right you need to consider whether staying in a place for a week at a time matches your vacation style. For many people, possibly even most people, it does. For us, though, it's a tough fit. Our vacation style is almost always to hop around. We love seeing different things when we travel and often only stay in one place for a day or two. If we stay in one place for 4-5 days that's a lot for us. That's a big reason why a timeshare remains a tough sell for us, even if we see one selling for pennies on the dollar.
1) First, a timeshare is fractional ownership in a condominium. Maybe you already know this, but it's worth repeating. It's a real estate transaction. You are buying partial ownership in a property with the right to occupy it, say, one week per year. When you can stay that week may be limited by the terms of the contract and may also involve a lottery or first-come-first-serve reservation system.
2) Don't pay retail. As I explained in my previous blog on this topic, the timeshare industry manages to sell new timeshares for way more than they're worth. Second-hand timeshares— yes, you can resell them because they're real estate— can cost just half the new price and possibly way less.
But even once you find a good price there are still other factors to consider. You've got to compare the money you're spending on the mortgage / the opportunity cost of the cash you've bought it for, plus the annual maintenance fees, to other options for vacation accommodation.
3) Does a timeshare unit suit you better than a hotel? The first "compared to...' thought experiment I considered years ago was whether a timeshare is cheaper than just paying for a hotel room when on vacation. Unless you get a screaming deal on the timeshare price the answer is almost certainly No. But consider also that a timeshare unit gives you more than a hotel.
With a hotel you're getting a single room. (Yes, there are efficiencies and suites, but those can be way more expensive). With a timeshare you're getting, really, an apartment. It may be a 1-bedroom with a kitchen and living room, like the condo we had in Waikoloa, or it may have 2 bedrooms. The question, then, is whether you want/need the extra space.
When we were younger I thought, "Ha! No!" but now that I'm older— and more discerning from traveling a lot the past 15+ years— I see real value in a small apartment. And if you have kids, a 2-bedroom apartment is huge upgrade from a hotel room. In fact if you have a growing family you're probably looking at paying for two hotel rooms when you travel. At that point the cost of a timeshare can become favorable.
4) Do you want to go to the same place every year? I defined a timeshare in #1 above to emphasize that what you're buying is property. You're buying an interest in a specific condo tower, in a specific place. Do you want to go to the same place every year? Some people vacation like that, some don't.
To address that most timeshares belong to exchange networks that allow you to swap a week at your place for a week somewhere else. Trading by its nature is inefficient, though. I hear from relatives who own timeshares that they often up giving away their week or letting it go unused because they can't get out there to use it.
I suggest as a rule of thumb that you only buy a timeshare if you expect you'll stay there at least every second year. By that rule Hawaii isn't right for us... though a place like Lake Tahoe might be. We can drive to it, and it's a great jumping-off point for abundant outdoors activities we enjoy.
5) Do you want to stay for a week at a time? Even if everything else is right you need to consider whether staying in a place for a week at a time matches your vacation style. For many people, possibly even most people, it does. For us, though, it's a tough fit. Our vacation style is almost always to hop around. We love seeing different things when we travel and often only stay in one place for a day or two. If we stay in one place for 4-5 days that's a lot for us. That's a big reason why a timeshare remains a tough sell for us, even if we see one selling for pennies on the dollar.
