Timeshare sales contribute more than 80 billion dollars to the U.S economy each year, according to the American Resort Development Association. The average timeshare buy-in costs just over $21K. That’s a lot of money individuals are spending on these vacation properties, and even more that the cumulative owners are pumping into the industry. Is it worth it? Maybe. If you’re someone who takes regular vacations, paying the up-front fee plus the nominal annual fees associated with timeshares could mean paying, on average, far less for vacations over your lifetime than most do.
One study done by Bank Rate found that, on average, an American spends about $2,000 a year on vacation between airfare, accommodations, entertainment, and meals. If you plan on vacationing at least once a year between the ages of 25 and 65, that cost quickly adds up to around $80,000 in your lifetime. And, given inflation rates, we know that two grand a year average will only go up and up. So, when you look at it that way, paying $22K today to take “free” or nearly free vacations then onward, can make sense. Maybe. It sounds perfect, right? Sometimes it is. Sometimes it isn’t. Here are questions you should ask before buying a timeshare.
What are the annual fees?
You may expect to pay an upfront fee of somewhere in the $15,000 to $25,000 range. But that’s not the end of it. The timeshare company needs money to sweep the grounds, pay for the housekeeping service, keep the lights on, staff their front desk, and much more. For that, you could pay annual fees of around $500, if not more.
Can I see the history of those fees?
Just like you might do when purchasing a home that has a Homeowners Association Fee, you should ask for the five-year-history of the annual fees for your timeshare. The fees may look doable now – say they’re hovering at around $400 a year – but a five-year report could show you they were just $100 a year at the start, and have gone up $100 a year since then. If they keep increasing at that rate, they’ll get out of hand, quickly.
How available will the timeshare be?
Many timeshare holders face this frustration. They identify a week that they can take off work. They collaborate with their friends and family. Everyone is ready to go, but the timeshare company has no available properties within any reasonable distance during that week — and you’ve called three months in advance. Ask how early owners must typically reserve their stays and how available properties are.
Are there blackout dates?
Remember that some timeshare properties do not only cater to timeshare owners. They also offer overnight or multi-night stays to non-owners, functioning like a regular hotel. In these cases, “hotel” guests pay far more per night (sometimes five times as much) to stay at the property than timeshare owners do. For that reason, the property may cater to non-owners during major holidays, knowing that’s how they make the most profit. This can be frustrating for timeshare owners, who find they cannot use their timeshare during said holidays. The property may black these out for timeshare holders, reserving them for short-term guests who will pay much more.
Can I see a full list of destinations?
Some timeshares are part of a larger vacation club, and offer you properties around the country, if not the world. If you’re seeking a timeshare for this very purpose, it’s important to see a list of destinations. Every timeshare company has a different reach. Some have properties in every major destination you could desire, while others have surprisingly limited options. You’ll get the most value for your money if your timeshare company has properties in almost every place you want to go.
Can I see a full list of locations?
The locations are different than the destinations. A timeshare company could have three properties in, say, Lake Tahoe, Nevada. Nevada is the destination. Those properties are the locations. Take a look at the properties offered. Some timeshare companies lure you in by showing you their most beautiful property, but upon closer inspection, you’ll find that their others are lack-luster. They may have few amenities, look very dated, and even be in less-than-desirable neighborhoods.
What comes with the timeshare?
If you’re looking at just one property, ask what amenities are included, keeping in mind that each thing that isn’t will cost you money. Does the timeshare provide airport pickup or a shuttle from the property into town, reducing the need to pay for taxis? Do you have access to the tennis court and golf course for free, or is that an additional charge? Is parking included? All of these things add up if they aren’t included in your annual fees.
What is the cost, all in?
There can be closing costs, in addition to the up-front fee. There could be commissions to pay. Ask for a very clear rundown of every dollar you’ll have to pay to get into this place. Also, ask for any assessments that may come up every few years. You may find that, in five years, all owners have to pay $1,000 while the property installs new roofs.
Can someone else use it?
It’s common for timeshare holders to want to lend out their property to friends and family. In fact, some purchase timeshares for this very reason. How easy does this timeshare company make it for your loved ones to use the property? Some may charge, for example, a $100 fee per visitor, for each person using the timeshare, when the owner is not present. Some simply do not allow anyone to use the property if the owner is not present.
What would you pay, if you didn’t get this?
This is a good question to ask yourself. In the introduction, we went over what the average American spends annually on vacation. But maybe that wouldn’t apply to you. Maybe you have friends you can stay with in most places. Maybe you just don’t have time to travel often. Figure out what you’d pay to vacation each year, and then through your lifetime, without the timeshare. It should be significantly more than what the timeshare would cost you, to make purchasing a timeshare worth it.
Would there be a profit if I sold it?
One day you may want out of your timeshare. It’s important to know if there would be any resale value in it. The company may be able to provide you a history of resale value and show you what other owners have made on their holdings. You should do your own research on the area. What sort of development is planned? Will it become a more desirable vacation destination throughout the years? Or is it on the decline?
What do others say?
Ask other timeshare holders if they’re happy with the property, and their contract. Look up reviews of the company. Vet them to make sure they are real reviews. Look the company up on the Better Business Bureau. Take note if critical reviews keep appearing.
What’s the contract like?
You should know what sort of contract you’re entering. Is it a five-year? A ten-year? A twenty-year? Is there a fee for exiting early? Are you charged late fees if you don’t pay annual fees on time? What happens if you don’t use your timeshare one year? Can your days roll over into the next?
Who controls HOA fees?
Some timeshare properties operate like a traditional HOA, with the entire property owned and divided up by the actual individuals who use the property. They control the HOA fees. They have say in what happens on the property. Some timeshares operate more like a resort. You have access to it for a very reasonable price, but you have no say in what happens to it. You aren’t invited to board meetings to discuss new changes or fees.
How full is it?
Get a sense for how the company is doing. In most cases, if the company were to go under, your upfront costs would just go down the drain. That $20K you put up is only useful so long as the property still exists. Ask what percentage of units have already sold. Ask how many owners are delinquent on their fees. All of this information gives you some sense of the financial health of the company.