Rationalization for Buying a Timeshare. Is it some form of Investment?
Most people who purchased timeshares were enticed and sometimes induced into the acquisition, indeed with the idea that owning one is an investment. They were persuaded to believe that owning a timeshare can greatly benefit a person, especially in the long run. The said this initiative is usually employed by timeshare selling agents or companies who are trying to dispose these packages to people for a profit which is a self serving interest.
Challenging the Concept that, Timeshare is a Financial Investment
People may be and sometime are unaware that timeshares may be considered as investments but not a financial one. Timeshares cannot be considered as financial investments because it’s worth decreases in time (a liability). This is because timeshare simply mean long term holiday packages that anyone can avail of for a more worry-free vacationing. As Homes/houses (by some) are not to be considered to be financial investments, it is even more impossible to consider timeshares, which are only holiday packages, as opposed to economic investments.
Stretching the Concept Timeshare could only be considered an Investment for Good Health
Timeshare can only be considered as an investment if it is related to the health benefits that a person can get from having time for a regular holiday (ignoring the worry of how to dispose of it). As it is already a holiday package, timeshare owners find it more advantageous to have timeshares because planning, scheduling and having a regular holiday is made easier with timeshares.
These are the real benefits that timeshares offers, easy and yearly vacationing.
Get Relief from the Timeshare Myth
Having laid down all facts and possibilities, timeshare owners and even those who are still looking at acquire the similar package should keep in mind that timeshares are not financial investments.
It is for all intent and purposes a holiday package and should never be considered as an asset. It is more of a liability because of the maintenance and other associated fees being regularly collected by timeshare resort clubs. So, when the time comes and you consider selling your timeshare property you are already aware that you cannot obtain a gain from a future sales transaction because it is not an investment and never will be.
Time Value of Money
Investors in timeshare should always be mindful of the time value of money.
This is the fundamental assumption that money in hand today is better than the same amount tomorrow, (bird in the hand) or at any other time in the future.
This hypothesis continues to be proven true thanks to inflation and opportunity cost (opportunity cost reflects the inability to pursue other opportunities because the funds are tied up).
With timeshares, you are charged a large chunk of money up front for something you are planning to use in the future. Those of you who think financing will solve this may not be familiar with the rates being offered, which fluctuate in the range of unsecured credit card rates (but without the discount for those with high scores). That leaves one of two choices: pay high interest rates or pay a significant opportunity cost (since you’re essentially pre-paying vacations). Pre-paying for your vacation accommodations is the antithesis of leveraging cash flow producing investments.
Maintenance Fees
All timeshares have maintenance fees. This means that every year, regardless of whether or not you actually use your week, you have to pay a fee. This maintenance fee goes up every year. The timeshare clubs who run the sites of have to charge enough in maintenance fees to not only cover the costs of running the resort, but also to cover the profit that the company doing the property management needs to make. In reality the fees also include every legal cost the club incurs and the exit expenses which are paid to the outgoing consumers who were mis-sold their timeshare.
For more information regarding this article or assistance in any other timeshare related issues please contact the TCA on 01908 881058 or email: info@TimeshareConsumerAssociation.org.uk