If you have ever been on vacation in a resort area, then you're probaby familiar with timeshares. It often starts off innocently enough, with an offer for a free gift if you sit in on a presentation or tour their facilities. But that's where the friendliness ends and the selling begins. Not all timeshare salesmen are aggressive, but most are. And if you can get past the high pressure sales tactics, there just might be a good deal waiting for you.
What is it?
A timeshare is a simple concept that has been around as long as there have been beaches. Essentially, you pay a company for time at a resort. Rather than shelling out $5,000 for a vacation every year, you instead pay an up front amount that is equivalent to several years traveling. You are not buying a physical asset, like a beachfront condo. Instead, you are buying time. This means you pay for a period of time that you can use in a particular resort. So instead of owning an entire beachfront condo, you instead own time in that condo. Remember "" you are not buying real estate; you're buying vacation time.
How it works
The first step in owning a timeshare is buying one. This means you either go through the salesman at your resort, or you have searched out the representative of a particular property you want to own a timeshare in. The key to purchasing a good timeshare is not the amount you pay, but the value of the resort property you want to invest in. One way of thinking about this is quality versus quantity. If you were to purchase a timeshare in Florida, you might be able to buy one at a very reasonable price. But there are drawbacks to this approach.
First, Florida does not always get warm weather in the winter, meaning you may not want to take your vacation. Second, there are a plethora of accommodations in Florida, diminishing the likelihood of your being able to exchange your property for a different destination. And finally, Florida is crowded, which may be a strike against you when you want to swap. Another factor to keep in mind with any US timeshare is that nearly all non-Americans entering the country are now fingerprinted and tagged for security, which could discourage any non-American into trading for your timeshare.
Destination
A good strategy is to try and find a highly desirable destination. Location is important, but so is the weather and the quality of the property. Savvy timeshare owners won't trade their timeshare to go to a resort that is cheap. You want to be able to offer a trade of high value, so you can in turn get a high value property in trade. Remember "" make sure your property is accessible by major airlines, or the cost to get there may be too price prohibitive.
Weather
Sunny, warm climates are the most popular timeshare locations, but don't forget about ski vacations. A 5-star resort in the mountains is great 12 months of the year, while most people won't go to the Caribbean during the summer.
Amenities
The more your resort has to offer, the better. This means a kitchen, air conditioning, access to services, and a great beach. Remoteness is always nice, but it can be a deterrent to some travelers.
Tradability
Again, the less timeshares in the area where you buy, the better. If you are competing with thousands of units, there is a good chance you will not be able to rent/trade your time. You need to find that unique combination of underdevelopment, low pricing, and easy access. Believe it or not, there are still lots of places out there that meet this criterion.
Fees
All timeshares charge maintenance fees in addition to the upfront charge. It is these fees that really hurt people who don't use their time, since they pay them regardless. Again, the fees really vary from timeshare to timeshare, so you need to make sure you are not getting charged an amount that could be a problem down the road.
Swapping time
There are a few organizations that offer timeshare owners the ability to swap their time. The biggest one on the market is Interval International. Essentially, you pay an annual fee and your time is listed in their catalogue and website. Your timeshare is ranked, giving you an idea of how much value you then have towards other properties.
Pitfalls
Timeshare pitches are high pressure because they want you to sign the contract. Taking the time to investigate the deal can save you a bundle. One great way to do this is to try and find out resale prices on the timeshare you are buying into. Since timeshares often lose money on a resale, this can be a crucial determining factor. You may also want to see if you can buy time in the location you want as a resale, since this may be one way of saving thousands of dollars. Many locations resale time, even eBay.
Scams
Here are a few common scams thrown at you by less scrupulous timeshare salespeople.
Limited time offer "" they might tell you a certain unit just became available, but they need an answer ASAP. They do this so you will think you are getting a great deal, and sign without investigating.
Free vacation, car or boat "" they all offer you the free vacation at some point, just for listening to the pitch. The free vacation usually has some major fine print, so don't be fooled. Things like 'when you can go' are usually very murky.
Free gift "" they all offer the gift if you sit through a pitch. If they get 'huffy' when you don't buy, don't feel bad. They want to pressure you, so they will do their best to make you feel guilty.
Administration fees "" no matter what the free gift is, you usually have to pay some sort of fee. It is often a few hundred dollars, making that free gift very costly.
It can be a good thing
Although a lot of timeshares have a bad reputation, they are not always negative. If you think before you buy, then you should come out alright. Take the time and do your homework, and make sure that the timeshare you are buying is not a dud. Have the contract looked over by your lawyer, even if you have to fax it to him from the Caribbean. Use the internet to check on prices, resale, and anything negative that might come up concerning the property. There are a lot of happy timeshare owners out there, make sure you do everything you can so you can be one of them.
