Although slick salesmen hawking timeshares often stress that the value of the property is likely to rise over the years, timeshare buyers would be wise to remember that timeshares are not investments. Think of them as pre-paid vacations instead, and you won’t be disappointed when their value fails to rise.
While many people who buy timeshares think of them as a type of real estate investment, they are not. When you buy a timeshare, you are only buying the right to use a part of the property during a certain time period each year. You do not have any ownership at all in the underlying property.
According to an article at Reuters, timeshares are difficult to sell, and those owners who are lucky enough to find a buyer usually do not get more than 10% of the original purchase price when they do sell. That doesn’t make timeshares very attractive as an investment, which is why you should not view them as such when deciding whether or not to purchase one.
If you think about it, buying a timeshare is like making a commitment to rent a certain vacation home every year during a certain week of the year. You are agreeing in advance to pay the rent, cleverly disguised as “maintenance fees,” every year whether you actually use the timeshare or not. Unfortunately, these maintenance fees can really add up.
Many timeshare owners have learned the hard way that timeshares can be a bad deal, even if they are purchased without an eye to investment. Timeshare owners have no say in the matters related to the management of the timeshare property. However, they are responsible for paying a share of the costs to run the establishment by paying maintenance fees. These fees can often be so high that the timeshare owner would have been better off renting a hotel room for the week.
The worst part is that timeshare owners are often stuck paying the maintenance fees indefinitely because the deed states that the owner is liable for all obligations associated with the timeshare in perpetuity. So unless the timeshare can be sold, the owner is obligated to pay the maintenance fees for life. If that’s not bad enough, the fees associated with the timeshare will pass on to their heirs when they die.