Many people have a question when thinking of buying a timeshare. Financially, does it make sense or does it make sense at all to buy a timeshare? Well the answer can be both yes or no depending on who is buying and for what purpose it is being bought. In this article we will discuss why it makes sense to buy a timeshare.
The main argument is that owning a timeshare means you now own your vacation property. This is a popular argument amongst many real estate investments which is: do you want to rent? Or do you want to own?
This is not an easy question no matter what type of real estate you are thinking of purchasing. For example: If you move every year, does it make sense to buy or rent? The timeshare industry grew because many people starting realizing that they vacation in the same spot in the same year very often and the demand came up to own rather than rent.
Timeshare math is like real estate math. Consider this fact you pay rent to stay in a hotel. You pay the rent for staying in a hotel for a week. Just to use a round number, suppose it is $1000 for a week. If you do this for thirty years that would be $30,000. Optionally, you could pay the entire $30,000 up front and have the hotel reserved for you every week for the rest of your life. The difference is in one example you rent, in the other you own. The math of course will be slightly different and one will end up costing more than the other, but when you compare possible ownership you have possible interest in loans if you finance plus maintenance fees which most likely will raise with inflation. On the other hand with hotels, during the course of thirty years the full rent to stay at a hotel for a week will raise with inflation. Taking into account all the math, you may find the costs are fairly close.
And now to compare the positives and negatives:
A benefit is that after you own, you only pay the small maintenance fees every year, much smaller than the cost of a full week rental in a nice hotel. So if you can think of the full rent on a hotel for thirty years being similar to a loan payment for thirty years, then after thirty years you continue to pay the full rent on a hotel where with your ownership after thirty years you only need pay the small maintenance fee.
It doesn't stop there because a third benefit is that these properties can usually be passed down and inherited. You will need to check with your developer to find out if that's the case with your unit. A deeded timeshare property can be passed down so for years to come only a small maintenance fee need be paid to enjoy a full week of vacation in a nice room with amenities instead of paying the full rate for a hotel stay.
There is a caution that this definitely makes financial sense, but only if you realize that this means vacationing in the same destination every year. If you do not vacation every year, you can spend extra time to rent your unit the years you do not travel. Another option is if you want to travel elsewhere to look into exchange programs.
If you can easily think of real estate in terms of homes, this comparison may make things easier to understand:
What is the purpose of buying a home if you do not use it? In the same vein, why buy a timeshare if you do not plan to use it? Moving on, with a home there is the option owning with the purpose of renting it. With a timeshare there is also an option of renting it though it may be more time consuming since you have to find new renters every year where as a normal home you can sign leases for a specific amount of time. Unlike a home, however, there is an advantage of exchange programs if you want to vacation elsewhere. Can you imagine doing that with your home? Deciding that for a month you want to live elsewhere? Probably won't happen, but with vacations that is a definite possibility.
Still the bottom line is that if you don't vacation often, it is probably not worth it. If you really enjoy takings vacations, it is definitely worth looking into. If you take vacations in the same spot quite often, then it really is worth looking into. And finally, some timeshare developments now offer an every other year proposal instead of every year, so if you think you may travel to Hawaii every other year, it almost doesn't make sense not to own a timeshare in Hawaii. I use this last bit from personal experience as that was the logic we used when we purchased our Hawaii timeshare.
I hope this article has provided you with some great food for thought on owning a timeshare. Best of luck in your timeshare endeavors.
The main argument is that owning a timeshare means you now own your vacation property. This is a popular argument amongst many real estate investments which is: do you want to rent? Or do you want to own?
This is not an easy question no matter what type of real estate you are thinking of purchasing. For example: If you move every year, does it make sense to buy or rent? The timeshare industry grew because many people starting realizing that they vacation in the same spot in the same year very often and the demand came up to own rather than rent.
Timeshare math is like real estate math. Consider this fact you pay rent to stay in a hotel. You pay the rent for staying in a hotel for a week. Just to use a round number, suppose it is $1000 for a week. If you do this for thirty years that would be $30,000. Optionally, you could pay the entire $30,000 up front and have the hotel reserved for you every week for the rest of your life. The difference is in one example you rent, in the other you own. The math of course will be slightly different and one will end up costing more than the other, but when you compare possible ownership you have possible interest in loans if you finance plus maintenance fees which most likely will raise with inflation. On the other hand with hotels, during the course of thirty years the full rent to stay at a hotel for a week will raise with inflation. Taking into account all the math, you may find the costs are fairly close.
And now to compare the positives and negatives:
A benefit is that after you own, you only pay the small maintenance fees every year, much smaller than the cost of a full week rental in a nice hotel. So if you can think of the full rent on a hotel for thirty years being similar to a loan payment for thirty years, then after thirty years you continue to pay the full rent on a hotel where with your ownership after thirty years you only need pay the small maintenance fee.
It doesn't stop there because a third benefit is that these properties can usually be passed down and inherited. You will need to check with your developer to find out if that's the case with your unit. A deeded timeshare property can be passed down so for years to come only a small maintenance fee need be paid to enjoy a full week of vacation in a nice room with amenities instead of paying the full rate for a hotel stay.
There is a caution that this definitely makes financial sense, but only if you realize that this means vacationing in the same destination every year. If you do not vacation every year, you can spend extra time to rent your unit the years you do not travel. Another option is if you want to travel elsewhere to look into exchange programs.
If you can easily think of real estate in terms of homes, this comparison may make things easier to understand:
What is the purpose of buying a home if you do not use it? In the same vein, why buy a timeshare if you do not plan to use it? Moving on, with a home there is the option owning with the purpose of renting it. With a timeshare there is also an option of renting it though it may be more time consuming since you have to find new renters every year where as a normal home you can sign leases for a specific amount of time. Unlike a home, however, there is an advantage of exchange programs if you want to vacation elsewhere. Can you imagine doing that with your home? Deciding that for a month you want to live elsewhere? Probably won't happen, but with vacations that is a definite possibility.
Still the bottom line is that if you don't vacation often, it is probably not worth it. If you really enjoy takings vacations, it is definitely worth looking into. If you take vacations in the same spot quite often, then it really is worth looking into. And finally, some timeshare developments now offer an every other year proposal instead of every year, so if you think you may travel to Hawaii every other year, it almost doesn't make sense not to own a timeshare in Hawaii. I use this last bit from personal experience as that was the logic we used when we purchased our Hawaii timeshare.
I hope this article has provided you with some great food for thought on owning a timeshare. Best of luck in your timeshare endeavors.
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Looking to find hints on how to buy a timeshare, then visit Emil Yau's Squidoo Lens a site full of tips and advice related to all things buy a timeshare and more.
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