A Depreciating Asset
Timeshares are like new cars: the second you drive them off the lot, they lose value. Timeshares loses between 40 to 85 percent of their value once you buy them. If cars depreciated that quickly, I doubt anyone would buy a new one without being subjected to timeshare-like sales tactics.
If you don’t believe me, do a quick test. Look for units for sale on the e bay. You’ll find that the online listing amounts are typically 75 percent below the retail prices at the resorts. Most of those aren’t even selling. Unfortunately, most people put so much money into timeshares and are so unrealistic about their actual value that they have a difficult time pricing them at a market rate (the rate at which the unit would actually sell).
Timeshares, like new cars, are depreciating assets but worse
Rental Rates are Lower than you think
You can often rent someone else’s timeshare week for less than you are being asked to pay in maintenance fees. There are many timeshare owners out there who are unable to use their weeks for the present or coming years and will rent them out to other people. In fact, there are so many that they generally end up going for much less than the original asking prices. This is not something you will find out from the dubious salespeople at the resorts.
Exchanges
Holiday time is supposed to be your time and your time away from the stress and the rat race which modern day living attracts. Do you really want to feel tied down to a specific property each and every year?
Timeshare salespeople know that many people don’t want this, so they fervently push the values of exchanging your units in order to travel to other places in the world. Using an exchange company such as UKRE can assist you.
That said it is going to cost you some money to use the service (UKRE charge less that most).
Despite the efforts of UKRE your exchange value diminishes over time. Most people want to travel and stay in newer resorts. That works great when your resort is new and in a great location, but what happens in 10, 15 or 20 years? What you are able to exchange into is based on what you are trading in respect to some companies.
If you think the resort will remodel it once it gets outdated, it’s time to get your head out of the clouds. Resorts management companies and developers make their money up front. Remodelling, just like increased expenses for repairing roofs, grounds, etc., come from the owners, which means you could end up paying even more money. Let’s just hope you don’t buy a timeshare in hurricane country or a timeshare in a weather blighted area.
Timeshares can be a lifestyle expense (I didn’t say investment) if they are purchased in the right manner and for the right reasons.
It may make sense if you and your family know that you love a particular resort and would like to vacation there each and every year. However, timeshares are not an investment, and timeshare salespeople in most countries are prohibited from even using that word.
Your best bet, if you really want to buy a timeshare, is to purchase a resale. Don’t get caught up in the idea that owning a “fee-simple” timeshare is the same thing as owning an investment in property. It’s not.
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