Timeshares are often thought of as very luxurious and accommodating vacations. Timeshare salespeople make the pitch the vacation can even end up costing you less than traditional hotel vacations. Let’s take a look at the state of the timeshare industry in 2021+.
Despite how wonderful these luxurious vacations are, due to the recent COVID-19-induced recession, many timeshare owners are in need of a way out of their timeshares. Fewer people are traveling now, although travel is picking back up.
Because of this huge demand from existing timeshare owners to sell their timeshares, a few troubling problems have surfaced. The main problem is that with all of this supply of used timeshares there is little-to-no demand to purchase a used timeshare on the resale market.
This has resulted in many timeshares being listed on popular e-commerce sites like eBay and Amazon for as little as $1. These listings are basically a last ditch effort to get out of the timeshare contract.
Overall, I don’t think buying a timeshare is a good idea. The cost to own a timeshare will likely far outweigh your actual use of it.
The same goes for buying a vacation property. Most people will be better off just renting a place instead. The timeshare industry is not very strong.
Timeshare Industry: Almost Bought A Timeshare Due To Aggressive Sales
Back in 2006, I remember being *so* close to buying my own time share. I was vacationing on the North Shore of Kauai, when I got the hard sell of buying a Princeville timeshare. They threw in a free nights stay and a lovely buffet dinner for two. In exchange, we had to sit in a 2-hour timeshare session.
The pitch was simply that for $20,000, I would own 2.5 weeks of time at a luxurious 2bedroom, 2 bathroom condo. The condo is in one of the finest resorts in Hawaii. I was at the top of the “timeshare pyramid” they told me. If you’re at the top, you can trade in your time in Kauai for any other timeshare in their portfolio. Not bad, I thought to myself, and oh how tempted I was.
One of the big reasons why it’s so difficult to get out of a timeshare, aside from the oversupply of used timeshares, is because of the costs of ownership involved in timeshares and the length of contract. I had to pay a monthly maintenance fee for my timeshare in the hundreds of dollars, without being there. I thought that was slightly odd.
Read The Timeshare Contract Carefully
Timeshare contracts are written to be very iron-clad. It can be extremely difficult to get out of. It is often joked about that even death will not get rid of your timeshare as it will pass on to your heirs. On top of very long term contracts timeshares also involve something called maintenance fees and special assessments. Every timeshare has received some sort of maintenance fee. It is basically the cost of ownership once the initial purchase price is paid off.
On top of the maintenance fees you may be charged a special assessment for any unexpected damages. All these fees add up. Be careful. Ask what these fees are if you must buy a timeshare.
Solutions To Getting Out Of A Timeshare Contract
With so much difficulty involved in getting out of a timeshare contract a lot of owners have resorted to using timeshare relief services like those found at Transfer America.
These companies provide a guaranteed exit solution. While you will not receive payment for your timeshare you will have the peace of mind of knowing you will no longer be responsible for the financial timeshare obligations. It’s all about cash flow when you get into financial difficulty.
Getting out with a timeshare relief company may help. It will also allow you to avoid being taken advantage of by unscrupulous listing or resale companies.
The charge for using such services is very dependent upon your specific timeshare situation. The list of accepted timeshares is changing everyday.
The timeshare industry is going through immense pain right now. Maybe there are deals to be had. But again, the ongoing expenses make owning a timeshare not worth it.
Instead of buying a timeshare, you’re much better off renting or buying a vacation rental in a strong tourist market.
I’m bullish on the housing market for the next several years. However, to benefit from the investment upside, buying a timeshare is not the way.
Wealth Building Recommendations
Explore real estate crowdsourcing opportunities. Instead of buying a timeshare, invest in real estate passively to earn money. Take a look at Fundrise, one of the largest real estate crowdsourcing companies today.
Real estate is a key component of a diversified portfolio. Real estate crowdsourcing allows you to be more flexible in your real estate investments. You don’t need leverage. Further, you can invest in different parts of the country.
For example, cap rates are around 3% in San Francisco and New York City. However, they over 10% in the Midwest if you’re looking for strictly investing income returns. It’s free to look.
I’ve personally invested $810,000 in real estate crowdfunding since 2016 to diversify and earn income possibly.
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My wife’s grandparents bought her a timeshare in Maui in 2014. A 3 bedroom with ocenview, top of line chain hotel property. Currently, we are paying annual 5k maintenance fee. Prior to Covid, we are able to either use it by transferring to other timeshare properties or converting to the hotel points. Now with pandemic ongoing, it’s just impossible to travel anywhere. I see people say good things about Disney timeshare, but I’ll definitely pass it if I was in that presentation.
I bought into the Disney Vacation Club timeshare. Overall I would say it was a good experience, since when I needed to sell it (the marriage ended) I was able to do so easily. It also was actually a ‘top of the pyramid’ timeshare so when I wanted to trade out for more exotic vacations than Florida (think Spain, Paris, San Francisco) I was able to do so with no problem. I would even have made a profit on the deal except that I’m Canadian and while the value of the timeshare ownership increased, so did the value of the Canadian dollar against the US dollar, so the currency exchange differential killed my profit. I’d say the Disney timeshare was well worth it for the quality of accommodations provided at the resort, but if you’re a frugal vacation planner, you could definitely get less expensive accommodations in the Orlando area than what it cost me for my annual maintenance.
Good to hear you had a success story and sorry about your divorce.
You bring up a great point about currency as a foreign buyer. We need to always be thinking globally!
We’ve been to a couple presentations but we have never taken the plunge. My inlaws have one they use but we can justify getting one. We seem to like to travel to different places all around the world and stay in remote places where time share hotels don’t exist.
I attended one of these in Mexico with my parents. We got all the usual freebies and then the hard sell began. There was a tour and compliments etc. Luckily my parents are very conservative by nature and never agree to anything right away. After we looked over the fine print we realized that they could basically stay in a 4-5 star hotel for 1-2 weeks a year for what they would pay in the maintenance fees. It might be worth it in more expensive places like Hawaii or Europe, but for cheap tropical destinations, it isn’t worth worrying about the contract and associated paperwork. Just book early and look for hotel deals and you’re way further ahead.
Sam,
Last summer I went surfing with a friend of mine at a timeshare in Carlsbad, CA. Since I live in San Clemente, it’s only a half hour away from me. The true story is that he and his ex-wife were sold a timeshare in Maui on their honeymoon. And, they have been divorced for years, but they are still stuck with the timeshare. So, they split the costs and each one takes it on alternating years. My friend couldn’t afford to fly his kids to Hawaii, so he traded for a week in California.
I will defintiely be renting hotels, instead of buying a timeshare.
Bret, good story, and an example of “buyer beware” and know what you’re getting yourself into. Doesn’t seem to make sense if you can’t afford to fly to Maui, but buy a timeshare there!!
I’m glad there are services like Transfer America to get you out of purchase you don’t want. You might lose all your equity, but you save in all the ongoing operating costs.
I attended one of those presentations too but it’s not something I would ever go for. I don’t return to the same place to go on vacation year after year, so I’d rather just pay for a hotel and be done with it. At least with the company I looked at, timeshares seem like something of a scam to me where the owners end up paying more than they would have had they just booked accommodations!
@Invest It Wisely
I can’ believe how hard they try and sell you at the “info seminars”. It’s like you can’t help but want to buy b/c you end up thinking a timeshare is the greatest thing since sliced bread! I was younger then, and I wonder if I’d be able to easily resist now as a savvier consumer.
@Little House
You gotta take advantage of your parents timeshare! Glad they loved it. It’s not that bad owning one, especially b/c the initial outlay isn’t too much. It’s the maintenance which drags if you don’t have the funds.
@optionsdude
I’m either buying a vacay property because I can see myself living there for 3-6 months a year, or will rent, or go via hotels or temp apartments just like you.
Okay, well this part scares me:
…it is often joked about that even death will not get rid of your timeshare as it will pass on to your heirs.
My parents own one and they love using it. But I know I’d never use it (they always offer, but I never take them up on it). Hopefully they leave it to one of my siblings and not me. ;)