For the 50+ Traveler

Do you dream of a place you can visit year in and year out with your family? Does the idea of a holiday home excite you? If so, a timeshare may be the perfect solution.

Planning a new vacation every year can be stressful. Plus, the price tag of buying a second home just for holidays seems unnecessary if you consider the time-to-use ratio. Timeshares, on the other hand, can provide you and your family with a dedicated use time, a beautiful home, and a great location each year.

There are many joys to owning a timeshare, including saving money by paying for years of vacations in advance, but there are things you need to keep in mind before signing on the dotted line. In order to get the most out of your future vacations, consider the following 10 things before you get a timeshare.

A couple receives the keys to their timeshare.

1. Don’t Buy A Timeshare Impulsively

To save money in the long-term, you need to make sure you will actually use your timeshare. The biggest mistake and leading cause of timeshare buyer’s remorse is buying a timeshare without thinking through all the details. Most timeshare brokers are legitimate, but sometimes they can pressure potential buyers into making a hasty decision.

Of course this doesn’t mean you can’t purchase a beautiful timeshare that you will love for years to come!

Some tactics to watch out for include limited-time offers and giveaways with complimentary vacations. Although these offers are tempting, it’s important to make a carefully considered decision. For example, don’t purchase the timeshare before you see the unit in person. If you are going to invest thousands of dollars into a shared vacation home, you want to make sure it’s actually as good as it looks in the brochure!

Additionally, you don’t want to commit to something you don’t fully understand. Take the timeshare contract with you, have a lawyer read it, sleep on it for a few days, and then make your decision.

2. Know Your Vacation Budget

Sometimes people overlook the financial implications of taking a vacation at their vacation home.

Think about the costs that the vacation entails. Can you afford the cost of travel to your timeshare? Will you need airplane tickets, car rentals, or a budget for entertainment and activities for your family once you arrive? If you’re planning to vacation with extended family or friends, think about whether they will be able to afford these vacation costs as well.

One way to understand your vacation budget is to compile all your expenses from the past five or six years of vacations. If they add up to more than your assumed travel costs and timeshare fees going forward, then a timeshare may save you money long-term.

It may also be helpful to investigate prices of hotels or other accommodations in your desired vacation location. Will you be saving money by vacationing at this timeshare or are hotels, AirBnBs, or similar accommodations available at lower prices?

A timeshare cabin in the woods.

3. Know Your Time Commitment

Although you may have the desire to travel several times a year, is it realistic for you and your family?

Timeshares are worth the monetary investment if you commit to taking one or two trips a year. Consider if you’re able to take the allotted time off work and, if children will be involved in your vacation, whether your timeshare window falls on school holidays. Since many timeshare owners have a claim to the same place, changing your week may be hard.

If you’re not able to vacation during your allotted time, renting out your timeshare may be an option. However, this is not guaranteed with every timeshare. If you’d like to explore this option, check to see if your contract allows you to rent it out before you sign.

Also: Keep in mind the rental market is saturated. Fewer people are looking to rent a timeshare than there are timeshares for rent.

4. Know Your Timeshare Location

Does one particular vacation home excite you or are you always searching for new experiences?

Your designated week may be at a cabin over winter break, which can make an incredible annual destination. Yet, once you’ve vacationed 5 or 10 years in the same cabin, in the same mountains, will you be itching to try something new?

If that’s the case, it’s important to understand whether or not your timeshare affords you access to other properties or entails agreements with other timeshare companies. Contracts that grant access to affiliated resorts and hotels pave the way for timeshare owners to trade their weeks and points for new experiences. For example, vacation exchange program RCI claims to have 38,000 timeshare exchange opportunities!

If you choose to exchange your timeshare, your vacation usually has to be booked months, if not years, in advance. Since other timeshare owners have priority for their weeks and locations, it may be hard to lock in your desired time and location.

A piggybank watches over its financial records.

5. Understand The Costs Involved With Owning a Timeshare

Buying a timeshare includes an initial purchase fee based on your share of the property. While a house mortgage can cost hundreds of thousands of dollars, according to the American Resort Development Association (ARDA), a timeshare cost an average of $20,940 in 2016.

Compared to average homeowner prices, this seems like a nominal fee. Unfortunately, a one-time purchase fee is not the lifetime price. Brokers often don’t disclose all the costs involved with timeshare ownership during their sales pitch.

In addition to the one-time fee, timeshare ownership implies annual fees and maintenance costs. Naturally, you want your timeshare well cared for, but the annual fees add up. In 2017, ARDA disclosed the average annual ownership fee was $980.

These fees are not stable either. For example, if the timeshare needs repairs, the fees increase to cover the costs. Even if you don’t take your annual trip, you’re still responsible for paying the fees.

6. Make All Payments On Time

In addition to understanding the costs associated with your timeshare, it’s essential to make the necessary payments consistently. Defaulting on payments can have scary repercussions -- including facing foreclosure.

Of course, foreclosures reported to credit agencies can negatively affect your credit score. It will be harder to get a loan, and future lines of credit will have higher interest rates.

On top of that, you may be sued for the "deficiency" if the timeshare sells at a lower price than what you owe. Although some states protect against deficiency judgments, your other assets may be at stake.

A beautiful Italian subdivision.

7. A Timeshare Is Not A Real Estate Investment

It’s essential to understand that timeshares are not a property investment. In fact, timeshares’ values can depreciate, much like a car’s.

House purchases can be written off on taxes, while only certain timeshare expenses are tax deductible, and these depend on your ownership type. If you need to borrow money to purchase a timeshare, it’s probably not worth the investment. Due to depreciation, banks often refuse loans for timeshares. If they do provide a loan, it will come with a higher interest rate.If you decide to sell a timeshare in the future, you will have to do so at a significantly discounted rate.

8. Know The Difference Between “Deeded” And “Right To Use”

There are different types of contracts -- “deeded” or “right to use” -- that stipulate your timeshare ownership.

When a timeshare is divided into weeks and provides fractional ownership, this is a “deeded” contract. As an owner of a deeded contract, you can use the week yourself, rent it out, give it away, leave it to someone else, or sell it to another buyer, etc. With this type of contract, you may also be liable for a portion of the real estate tax as part of the maintenance fees.

If your contract specifies your timeshare as “right to use,” you don’t own part of the property, you’re just allowed to stay there for a certain amount of time.

If you’re unclear on the type of ownership implied by a contract, consult with a lawyer before purchasing.

A couple admires their new timeshare.

9. Understand Your Trading Power

As previously mentioned, it’s possible to exchange your timeshare time and location. The higher your “trading power,” the easier it is to exchange your timeshare for another window or destination.

There are several ways your trading power, or the value of your timeshare, is determined. Main factors include location, type of property, and ownership season. For example, if your assigned timeshare is on the beach over the 4th of July, you will have more trading power.

You may even consider buying a timeshare based on its trading power to increase your chances of taking vacations in different places. However, this can be risky as trading power can fluctuate. Depending on the number of units being exchanged, your trading power will increase and decrease with supply and demand.

10. Understand The Difficulty Of Selling A Timeshare

Before you commit to purchasing a timeshare, it’s essential to understand that it’s a lifetime investment. Although it’s possible to sell a timeshare, it can be challenging.

If buyers remorse hits after a few years, the best option is to sell it to a timeshare seeker. It’s possible to sell it back to the original company, but it’s rare. Either way, due to timeshare depreciation, you should expect to sell at a considerable loss.

Due to the difficulty of selling a timeshare, many selling services exist, and they usually take a large cut of the profit.

Additionally, it’s important to be aware of reselling scams. Fraudulent companies may ask for upfront fees that amount to hundreds or thousands of dollars. They provide promises about existing buyers when in actuality they pocket the upfront fees and never sell your timeshare.

Photo Credit: Kristi Blokhin / Shutterstock, totophotos / Shutterstock