Tips on Buying or Renting Timeshare

There are two basic types of timesharing plans. Deeded or Leased. In a deeded plan, you buy an ownership interest in a piece of real estate. In a non-deeded plan, you buy a lease, license, or club membership that lets you use the property for a specific amount of time each year for a specific number of years. With both types, the cost of your unit is related to the season and the length of time you want to buy. For example, a winter week in a warm climate is worth more than a summer week in the same location.

Practicality.
One reason people buy timeshare property is the convenience of pre-arranged vacation facilities. Consider whether you'll be able to use a timeshare facility year after year. Are your vacation plans sometimes subject to last-minute changes, or do they vary in length and season from year to year? Does the property have flexible use plans? If you're evaluating a timeshare plan with units in several locations, ask whether the club has enough units to satisfy demand.

Buying as an investment?
Never consider the purchase of a timeshare as an investment. Timeshare resales usually are difficult. You may face competition from the original seller. Or, local real estate agents may not want to include the timeshare unit in their listings. Once all the timeshares have been sold, ask if the developer will be setting up a resales office on site.

Costs of ownership.
The total cost of your timeshare includes mortgage payments and expenses, such as travel costs, annual maintenance fees and taxes, closing costs, broker commissions, and finance charges. Annual maintenance fees can range from $300 to $500 or more. Since these fees can rise at rates that equal or exceed inflation, it's important to ask if there's a fee cap for your plan. Keep in mind that these fees must be paid whether or not you use the unit. To help evaluate the purchase, compare your total timeshare costs with rental costs for similar accommodations and amenities for the same time and in the same location.

Exchange benefits.
These programs allow you to arrange trades with other resort units in different locations for an additional fee. However, these trades usually cannot be guaranteed. There also may be some limits on exchange opportunities. For example, you may need to make your request far in advance. Or, even at an additional cost, you may not be able to "trade up" to a better unit at peak time in an exotic location. When you trade, expect a unit of approximately the same value as your own.

Pricing.
Do your research. Many resales are inflated due to pressure tactics from the resale company. Many resale companies will tell sellers that their property is worth far more than it actually is, sometimes exceeding the price that the resort or developer will sell it for. If at all possible, talk directly to the owner of the timeshare and try to negotiate a fair price for both parties involved. Both parties benefit from a fair price sale. The buyer gets a good deal on a timeshare property that they wish to own and the seller will not have to pay the maintenance fees and other expenses involved for a unit that they are no longer wanting or able to use.