Are Timeshares for You?
You’ve probably seen advertisements trying to convince you to buy timeshares. But what are they? How do they work? It can be a little intimidating trying to get your questions answered while facing an aggressive sales person. Here’s some straight talk for you.
Simply put, in a basic transaction you purchase a block of time, usually a week, during which you have the right to use a particular suite at a resort. If you buy a fixed week - you will always have that week every year for as long as you own.
From that premise there are several deviations. Representatives selling timeshares may also suggest you purchase points, floating weeks, fractional time, high season, low season, etc. Do yourself a favor and memorize some brief definitions:
- Points: you purchase points and use them to “buy” time at locations that are owned by the resort from which you purchased the points
- Floating: you purchase a week, and can reserve a week during the season you purchased in.
- Season: most resorts break up their year into a timeshare calendar. Increments of time, from several weeks to several months, are then coded according to use. For example, you’ll pay a premium to vacation in Hawaii during Platinum season (which can also be called High season - each resort tends to name these seasons a little differently), conversely, if you want to trade for a resort somewhere else - you’ll have more trading power.
- Fractional time: developers are always in tune with what owners want. One emerging market is the fractional. Instead of owning a week during the year, you own a “fraction” of the year. For instance you may own several weeks or months at a time.
Timeshare sales are usually brisk but don’t let the “fear of missing out” convince you to buy a timeshare if you haven’t fully ascertained the benefits. Be sure to educate yourself before buying a timeshare. Keep in mind that while you may never have to pay for a hotel again, you will have expenses. You’ll have to pay maintenance fees for the building’s upkeep, utilities, etc. Here are some questions you should ask:
- When was the last time the maintenance fee was increased and by how much?
- If there are improvements to be made to the property, do the owners or the management company decide how much to increase maintenance fees?
- Are points inflation proof? In other words if I can reserve a 2-bedroom suite for 100,000 points this year - can I do the same in 5 years or will I need to keep buying points?
- If I choose to sell my ownership, are points transferable?
- Do I have to purchase my own membership in an exchange company or is that included in my price?
Timeshares can make for wonderful vacationing for the right buyer. You shouldn’t buy timeshare as an investment - they always depreciate. Additionally, it is generally accepted that you’ll have to own your property for 10 years before you see the savings add up.
But for those who frequently vacation, ownership can be a great alternative to hotels.
