Timeshare facts are key to understanding the vacation ownership industry, as well as why people get into it in the first place. This is especially true if you’re thinking about buying a timeshare but aren’t sure if it’s right for you.
There are different types of timeshare contracts, but each one is a commitment to prepay for a certain amount of time in exchange for a share or ownership of the property. It’s important to understand how this works before you tour a property and make a decision.
Deeded versus “Right to Use” Contracts
A deeded timeshare gives you real property ownership in a resort or condo. But the deed does not include all of the benefits that you would have if you owned a piece of real estate outright, such as the ability to rent your unit and sell it in the future, say Lisa Ann Schreier, author of The Timeshare Crusader blog, who previously worked as a frontline sales manager and director of communications for the timeshare industry.
It also does not give you rights to modify a unit or rent it out, although you can leave the property in your name when you’re no longer using it. It also does not come with any tax advantages or consequences, explains Nusbaum.
What You Own and How Much It Costs
In general, you’ll pay an upfront fee for the right to own your timeshare interval (typically a week). That price is determined by location, size of the unit and amenities, as well as whether you choose the winter or summer season, says Nusbaum.
You’ll also need to pay yearly maintenance fees, special assessment fees, property taxes and utilities. And those costs tend to increase over time, often faster than inflation.
What You Own and How Much it Costs
The average annual cost of a timeshare is $22,942 in 2019, according to the American Resort Development Association. Typically, buyers pay cash but many developers offer financing. The interest rates are generally high, Nusbaum says, and it can be a challenge to obtain a mortgage.
What You Own and How Much its Worth
There are several ways you can buy a timeshare, but the majority of them come with a significant downside. The most common is a fixed-week timeshare, which means that you own a specific week each year and you can only stay at that resort during that week.
Another type of timeshare is a floating-week timeshare, which lets you pick any week during the calendar year. This can be a good deal, as it means you have more flexibility in choosing the time of year you want to vacation and that you can usually avoid peak holidays.
A third option is a point system, which offers the same benefits as a fixed-week timeshare but allows you to trade your points for other weeks at other resorts. Some resorts also offer a membership club, which lets you get access to all of their amenities for a fixed price per year.