The average vacationer spends about 200 dollars a night on a hotel room. Depending on how long your vacation is, this can get pretty expensive. An entire week of accommodations will run you $1,400 or more.
That’s why many vacationers opt for timeshares. They provide guaranteed accommodations without the need to pay for a pricey hotel room. The floor plan for most timeshares resembles a house. They give vacationers access to plenty of bedrooms, bathrooms, and a fully stocked kitchen.
Timeshares are also flexible, and they require less maintenance than vacation homes.
If all of this sounds good to you, there are a few things that you’ll need to know before buying a timeshare. Continue reading to learn more.
What Is a Timeshare?
A timeshare is a real estate program for resort properties. Multiple families pay into the price of the house.
In exchange for their payment, these families get to use the property for a certain period of time during the year. This time is usually a week, but it can vary from timeshare to timeshare.
1. Don’t Buy on Impulse
Before investing in a timeshare, it’s important to consider how often you’re going to use it. As you’ll find out later on in this article, timeshares are expensive, so you don’t want to buy one on impulse and never get anything out of it.
Some brokers make the decision-making process difficult. While most are legit, some try to rush potential customers into buying. The biggest red flag to look out for is limited-time offers. That complimentary vacation might be tempting, but you need to take the time to think about the timeshare before delving in head first.
Take the contract with you and have your lawyer comb over it. Talk about it with your significant other, and consider all your options before moving forward.
2. Know the Difference Between Deeded and Non-Deeded Contracts
There are two different types of timeshare contracts that you’ll run across. These are deeded and non-deeded.
Deeded contracts are similar to the ones you sign when buying a house. You own a piece of the property that you buy into. It’s an asset that you can pass on to your children and grandchildren.
Non-deeded contracts are essentially a lease. You have the right to use the property for a set time during the year, but you don’t own any part of it.
3. There Are Different Timeshare Options
When it comes to choosing a timeshare investment, you have options. Fixed-week timeshares allow you to use the rental property for one week out of the year.
Once you pick your week, you can’t change it. So, if you enjoy predictability, fixed-week timeshares are for you.
If you’re looking for a timeshare that has more to offer in terms of flexibility, you should consider a floating-week arrangement. You’ll still only have one week out of the year that you can use your timeshare property, but that week doesn’t always have to be the same one.
Point-based systems are a good option for those who want to change up their vacation destination. You’ll buy points that you can use to book time at a participating resort. These systems are also called vacation clubs.
4. Consider Your Vacation Budget
Depending on your usual vacation budget, buying a timeshare might save you money in the long run. Take a minute to consider how much you’ve spent on past vacations.
If the cost of these expenses equals up to or goes under what you normally spend, getting a timeshare is a great money-saving decision.
There’s more that goes into a vacation than finding accommodations. You also have to pay for plane tickets, food, and entertainment. Don’t forget to include these factors in your calculations.
If you tend to travel with friends and extended family, ask them if they can afford the expense that goes along with vacationing every year.
5. The Average Cost
Speaking of vacation costs, how much is a timeshare? The answer is that it varies depending on the size and condition of the property. On average, you can expect to spend about $19,000 upfront.
When you arrive at your timeshare property, you’ll have to do very little in terms of cleaning and fixing things. However, you will have to pay for this convenience in the form of a yearly maintenance fee.
You’ll also have to pay closing costs and property taxes. When it’s all said and done, you’ll most likely spend about $1,000 a year on your timeshare.
6. Investigate the Unit
You wouldn’t buy a house without taking a tour of the place. The same rule applies to buying a timeshare property.
You should always check out the unit before writing your name on the contract. Check every nook and cranny to evaluate the quality of the space.
Look up online reviews to see what others are saying about the resort, and contact the state’s local attorney general to find out if there have been any complaints about the property’s management team.
7. Think About Your Time Commitments
As much as you would love to travel every year, it might not be a realistic option for you. When you buy into a timeshare, you’re committing to taking at least one trip a year.
You’ll need to find time to take off work for the vacation and if you have kids, ensure that your time block doesn’t occur during a school week. If something does come up, you might be able to rent your timeshare out to another family, but depending on the type of timeshare you have, that’s not always an option.
Keep in mind that other vacationers are also trying to book vacation time slots that work for them, so there’s a lot of competition. You’ll need to act fast to schedule a trip during your ideal week.
8. Location, Location, Location
Let’s say that you book a timeshare for the same winter cabin every year. After the third or fourth year, you may want to mix things up.
If you’re someone who wants to explore different parts of the world, a points-based timeshare might be right for you. Again, it will allow you to cash in your points to spend time at a different resort every year.
Some timeshares will allow you to exchange your property for a different one, but you’ll have to book months in advance. Timeshare owners that have already locked in their time will be prioritized.
9. Don’t Take Out a Loan
Due to the high initial cost of buying into a timeshare, you might be tempted to start looking around for a loan. At the end of the day, this will only hurt you financially.
Even if you’re approved for a loan, you’ll have to make payments on top of handling timeshare taxes and maintenance fees.
If you can’t pay the bill, and the property is foreclosed on, you’ll have to take care of the outstanding balance on your timeshare.
10. Make Your Payments on Time
Your timeshare is a bill that you have to pay every month. If you fall behind, it can lead to foreclosure. This will hurt your credit score and make it more difficult for you to get approved for a loan in the future.
If the timeshare resells for a price that’s lower than what you owe, you may find yourself in a courtroom. The timeshare company can sue you for deficiency.
11. Use a Reputable Provider
Considering how complicated it is to get out of a timeshare, you’re going to be with the same provider for a while. This being said, it’s important to choose someone reputable.
Before committing to a company, get recommendations from friends and family. Look for a provider that’s transparent and more than happy to answer all your burning questions.
Credentials are also an important factor. Any timeshare provider you go through needs to have the proper license.
As stated above, some providers try to rush potential customers into a buying decision by offering special limited-time offers and giveaways. A general rule of thumb is that if a company makes you feel pressured, they’re not the right one for you.
Get the Most Out of Buying a Timeshare
Buying a timeshare is a great way to give yourself a mandatory vacation every year. Depending on your usual travel budget, it can save you money on accommodations.
As you can see, there are a lot of things that you need to consider before you settle on a provider. Look for a broker that answers your questions without making you feel pressured, don’t buy on impulse, do your research, and take the time to consider all the costs involved.
If you already have a timeshare and you want to cancel, contact us for a free consultation.