You are sitting in a grand ballroom amongst what seems to be thousands of folks. You find it harder and harder to listen to the man sitting across from you. Your wife is feeding your newborn and every so often gives you a look that could kill. Suddenly a woman, five tables down from you, rises and asks for everyone's attention and continues to announce that the couple sitting at her table have just purchased a week from the resort and have elected to go to Italy for their first trip! Everyone in the room erupts in applause and you do the same, but in the back of your mind, you are wondering... "What have I gotten myself into?"
Yep, you were duped into sitting in on a presentation for a timeshare. More then likely, you have sat through one of these, and more then likely the above paragraph hits a little too close to home. Well this is my rant and my warning about the timeshare industry, their practices and a word of caution to those that may be thinking about "investing" in a timeshare.
The overall concept of a timeshare is not entirely bad, in and of itself. The idea of owning a co-op for a vacation property on a resort, where the activities are a plenty, big pools, golf courses and well-maintained facilities is enticing, to say the least. Unfortunately, the biggest problems with the timeshare industry are the timeshare companies themselves. First, there are the "Glengarry Glen Ross" style sales pitches, the "free" vacation packages that lure you in on your weekend off, the endless "empty" promises and the constant desire to up-sell you even after you already own your timeshare. All, for an overpriced slice of a phony real estate investment.
My biggest issue with the timeshare industry is the fact that their sales folks are selling these weeks of a single condo, as if it were an appreciating real estate investment. After all, you actually receive a deed to the week of the condo that you own, when you sign on the dotted line. However, this is the biggest lie that is told by the commissioned voice boxes of this industry. They lead you to believe that you are buying a real estate asset that appreciates. "It's an investment." They will tell you that you can do anything you want with this asset, just as you would your home.
However, this is false. Try using your timeshare as collateral on an equity loan. Try getting a mortgage for this "asset" (hint: this is why they finance internally). Worse yet, try selling this asset... Period! I'm not even talking about selling it for a "loss", I'm saying try selling it. Why, you ask. Because there is a glut of timeshares on the market. First, you have the timeshare companies themselves selling their overpriced "non-assets", but endless of timeshare owners who are trying to sell this so-called assets, as well. In addition, these same timeshare companies blatantly undermine the value of your condo by giving away weeks-upon-weeks of free stays at their resorts, in order to sell more timeshares.
Therefore, you can't sell your timeshare because there's more "supply" then "demand", and you can't rent your week of the condo, because anyone can get a "free" week or weekend anytime they want on the internet. Here in lies the biggest reason that this piece of paper that you receive which states that you own a single week, of a single condo at ABC resort in Anywhere, USA; is anything but an "asset" and subsequently, anything but an "investment". For you, that is. If you gain nothing else from reading this, remember this. Timeshares are only an asset to the “Timeshare Companies”. After all, they are the one’s who have leveraged a large parcel of land into overpriced money-making apartments.
When you consider that an average timeshare in a "red" week of an average resort is going for about $13,000 and that there are 52 weeks being sold, per condo. Quick math tells you that these timeshare companies are making over half a million dollars per condo. Now consider that many of these resorts have 300 or 400+ units, and you can easily see how lucrative this is for the timeshare companies, not you. Not only that, but then there is the association fees. "Well, that's normal for most real estate now-a-days." However, keep in mind that when you are paying $50/month for a single week of a single condo, those numbers actually come out to roughly $30,000/year in association fees per condo unit. When you are talking about 300+ units in a resort, you see how quickly it adds up. $9,000,000 annually is not a bad “residual” income. Now you might say, well a lot of that money goes to maintenance, upgrades, etc. Well, I will just say that I would like to see those books. In my subdivision, we have an association which charges $25/year/household. There are around 300-400 households in my subdivision, of which, only about 25% actually are members of the association. Now I don’t have a landscaper taking care of my property, but they are able to maintain the entry ways to our subdivision and provide many activities throughout the year for our residents. I’ll let you decide, but I don’t think $9,000,000 annually is required.
If you are seriously considering a timeshare, my suggestion would be to perform a search on the internet for "timeshare" and you will find a full page of results for sites that are selling timeshares. Folks, most of these timeshares are being given away, when you consider what folks have paid to purchase their original timeshare, that is. I can personally tell you that the best offer I have received for the only timeshare I own was for me to pay them $2000 to take it off my hands. This company was really taking advantage of timeshare owners by telling them they could claim the timeshare, and what you pay them, as a loss on your taxes. Since it would be considered a "failed" investment. This may be the case, but it just goes to show the "predatory" activities that surround this industry.
I am not saying that you should not own a timeshare. Have we enjoyed our timeshare? Sure, we have. We have gone to Orlando each of the last 3-years and traded our week for a resort 5-minutes from all the major parks. The facilities are phenomenal. It is very private and quiet. Its family oriented. They have an adult pool and kiddy pool for each building cluster. Not to mention it only cost me $150 for the entire week. However, when you consider what I may have saved over the past three years in hotels, and compare it to all the money I have put in to the timeshare (i.e. purchase, association fees and RCI membership) the ROI is not very good.
It is only my aim to begin your "education" process with this article. To give you some of my lessons learned and let you know how I would do it, if I had it all to do again (if I would even buy again). There are plenty of places on the net to find cheap timeshares from existing owners that would love, more than anything to offload their timeshare.
The next thing to consider is location. Buying a timeshare from a resort near where you live, gives you the opportunity to maximize your use of your timeshare, as you can use your "free" weekends more often. Most of these timeshare resorts are open (for free) for you to visit on weekends. Some of them you should be able to get in from Thursday – Sunday from $0-40 dollars. This makes for a nice getaway for you and your family. Also, visit the resort, but do not sit in on a sales pitch. If you are trapped into one, say no and do not let them keep you there for all hours (they will).
Once you own the timeshare, be prepared to be hounded by the timeshare corporate offices to sit down with a representative to discuss "recent changes" to your resort. This is a "bait and switch" routine and I cannot believe they get away with this. They really are there to try and "up-sell" your timeshare or sell you additional weeks. These are not required and I have yet to take in one of these meetings. I refuse to waste my time on a sales pitch in disguise.
So there you have it. My not-so-wonderful opinion of the timeshare industry and their practices. Incidentally, if you are still considering getting a timeshare, I have one that you can get for a bargain!
Have a great day!
