America’s timeshare industry really hit its stride back in the 1970s and, despite changes in vacation trends, it is still going strong. In fact, nearly 10 million households in America own a timeshare. So what’s a timeshare and why did they become so popular?
Well, on paper, timeshares give you the opportunity to secure a cheap vacation home to use each year. However, it is never quite as simple as that.
To understand the value of a timeshare and whether it is a good investment, you need to understand how a timeshare works. In that case, you’ve come to the right place. Read on to find out everything you need to know about timeshares.
What’s a Timeshare?
There are more than 200,000 timeshare properties across America and each of these is owned by multiple people.
Buying a timeshare gives you access to the property for a set amount of time each year. Companies usually grant access in week-long intervals, so one timeshare property could have up to 52 joint owners.
However, because multiple people own each timeshare property, you only have to pay a fraction of the overall property value to use it. Your timeshare contract details will outline how long you can use the property for each year and when you can book it.
Floating or Fixed-Week Timeshares
Most timeshare companies sell property access in week-long intervals each year. Of course, you can buy multiple intervals for the same property if you want to book a longer vacation.
A fixed-week contract lets you use the property for the same week every year. This guarantees you a vacation home even during the busiest seasons. Of course, this also means that you have less flexibility when booking a vacation.
Because of this, some people choose floating contracts instead. This gives them access to their timeshare property for the same amount of time each year. However, each year they can choose when they want to book their vacation.
Other companies offer different types of timeshares, using a points-based system instead. This gives you a set number of booking points to use with the company each year.
However, you can choose when and where you use your booking points. So you could take two shorter vacations or visit different resorts each year.
How Does Owning a Timeshare Work?
When you buy a timeshare, you don’t automatically own the property itself. This depends on the type of timeshare contract you choose.
Shared Deeded Ownership
Deeded ownership means that you will own a percentage share of the property itself. This is usually around 1.9% if you buy a week’s access each year.
Deeded ownership timeshares tend to be more expensive and can be passed down in a will.
Shared Lease Ownership
Shared lease ownership contracts give you access to the timeshare property for a set period of time. This means that you won’t actually own any of the property itself.
As a result, these contracts are usually cheaper and easier to get out of. That said, a long lease (for example, of 100 years) can also be inherited.
Pros and Cons of Owning a Timeshare
So why do people choose to buy timeshares? Well, timeshares give you access to a vacation home at a fraction of the price. You also don’t have to organize the maintenance of your property, as the company will take care of this for you.
Some people also like the guarantee of having the same vacation spot set every year. Others like the flexibility of floating-week or points-based timeshares.
However, there are some serious downsides to owning a timeshare. First and foremost, properties can book up way in advance. So there is no guarantee that you will be able to book a vacation when it suits you, especially on a flexible booking contract.
On top of this, timeshare contracts are notoriously difficult to get out of and are a serious financial commitment. Deeded ownership and lease ownership contracts can tie you into paying fees for years, even if you no longer use your timeshare property.
To better understand this, let’s take a closer look at the financial side of owning a timeshare.
How Much Does Owning a Timeshare Cost?
On average, buying a timeshare for one week each year costs $24,140. Buying a timeshare for longer will obviously be more expensive and a number of other factors can affect how much you pay. This includes:
- How big the property is
- The type of contract you choose (fixed, floating, or points-based)
- Whether you own the deed or lease the property
- The location of your timeshare
- When you want to use it (if you are getting a fixed contact)
However, you don’t just need to budget for the upfront cost of your timeshare. You also have to cover timeshare maintenance fees each year.
These are usually around $1,000 a year, depending on the size of your property and what work needs doing. The big downside of these fees is that the timeshare company sets them. They also decide when the work takes place and which contractors they use for it.
So your maintenance fees could become very expensive without much warning.
Can You Get Out of a Timeshare Contract?
A timeshare can become a huge financial burden. If you no longer use yours or have inherited a contract, you have a few options for getting out of your timeshare.
- Selling your timeshare
- Canceling your contract (provided that you are inside the recission period)
- Speaking to the resort about canceling your contract
- Getting help from a timeshare exit company
It is a good idea to speak to an expert to decide what will work best for you. They will discuss your options and help you find a good deal for your timeshare.
Get Help Canceling Your Timeshare Contract
If you’ve been wondering “what’s a timeshare?” the short answer is a vacation home that you partially own. However, the amount of access you have to it and its financial impact depend a lot on the details of your contract.
Do you need help understanding your timeshare contract and how to get out of it? Then get in touch with Lonestar Transfer today. We’re happy to help.