The American Resort Development Association recently reported that the timeshare industry is currently worth $80 billion dollars. This real estate sector creates over 500,000 full time and part-time jobs. Timeshares also generate over $10 billion in tax revenue as well.
With data like this, it’s not hard to understand why investors would be anxious to learn more. If you are one of these investors looking for new property investment tips, then this article is for you. Check out this article to find out more on what’s a timeshare so that you can make your next financial move a wise one.
What’s a Timeshare?
Timeshares are a different type of real estate transaction between a number of owners. Timeshare investments are when multiple people share the ownership of vacation homes like a condo or cabin. Each investor owns their own intervals of time to stay at the unit throughout the course of the year.
Timeshare owners jointly pay for certain property-related costs, whether or not they are currently staying on the property. Property repairs and maintenance fees are regularly charged. Timeshare investors are also responsible for their share of property taxes and utility charges as well.
Timeshare Investing Models
Timeshare investing models can be in three different forms: fee simple, right-to-use arrangements, or vacation club point system options. Here are the basics on some of the current timeshare investing models out there:
Fee simple agreements give investors title and ownership rights to the property along with the other co-investors. Fee simple timeshare ownership continues forever and the property can also be bequeathed to your heirs. Investors in a fee simple timeshare arrangement can rent, loan or sell their share of the property at their convenience.
Right-to-use agreements mean you buy the rights to use the property during certain times of the year. Right-to-use investors usually don’t own the bricks and mortar structure. Management companies or resort developers will hold the title to the property themselves.
Vacation Club Point Systems
If you are a timeshare investor, you can start to buy points in vacation club systems. You can use your points to vacation at other timeshare properties inside the club’s network. Some point networks will let you use points for other trip-related fees like rental cars or airline flights.
Pros and Cons of Timeshare Investing
Like all investments, there are pros and cons to timeshare investing. Here is just a short list of the risks and benefits of this investment vehicle for you to consider:
Risks With Timeshares
Don’t walk into a possible timeshare investment scenario uninformed. Consider the following points that could make this form of investing a bad idea for you.
Over the last few years, the timeshare industry has seen its share of rip-offs. Both timeshare investors and sellers are at risk of a scam artist’s unethical behavior.
Timeshare investors may be promised prizes or lavish dinners just to hear a sales pitch. Other times they are victims of pushy sales tactics. Brokers will sometimes drown them in a sea of phone calls or brochures.
Sellers will sometimes receive fake, “too-good-to-be-true” offers. Sellers assume the offer is true and will pay a brokerage sales fee. Once the brokerage fee is paid, the offer suddenly disappears and the seller loses his money.
Low Appreciation Value
Timeshares should not be the core of your long-term investment strategy. Timeshare owners usually don’t enjoy any profits from their sales. You’ll probably lose money in the long run.
Timeshares tend to depreciate in value since there are so many available in today’s market. So consider your timeshare investment as a way to lower your future vacation costs, not a long-term real estate investment.
Benefits of Timeshares
There are also many time and money-saving benefits that come with timeshare investments. Some of these benefits include:
Timeshare investments are ideal if you’re a traveler who likes to visit the same vacation locale every year. Your accommodations are already reserved. And you won’t have the hassle of making hotel reservations ahead of time.
Save Money on Vacation Spending
Timeshares can also help save you money that you would normally spend on your well-deserved time off. Since timeshare properties are usually condos or cabins, you also have access to a working-kitchen to prepare your own meals. Easy access to these features can reduce your eating-out expenses.
Timeshares are convenient if you expect to take your vacations at the same time every year. This works well if you have a job that has the same peak or low periods throughout the year. You’ll be guaranteed a vacation spot that accommodates your work schedule.
Most timeshare investment models will also allow timeshare investors who share the same property to trade their weeks with each other. These tradeoffs can happen throughout the year. Easy trading functions can help accommodate important family events such as graduations or weddings.
Check out this useful resource for more tips on how to weigh your options and make an informed decision.
If you’re serious about investing in a timeshare in 2019, then its best you do some homework first. The Federal Trade Commission (FTC) has a consumer consideration checklist that can help you prepare for this major investment decision.
Look for advertised timeshare opportunities at your local real estate offices. Online real estate websites such as Trulia.com and Zillow.com are two helpful resources.
Visit the property in person. Talk to any current timeshare investors attached to the site to hear about their experiences. Read up on all of the fees required of investors and get these obligations in written form for your records.
To find out more on what’s a timeshare, don’t forget to check out our website. You’ll find plenty of expert advice on today’s real estate investment scene. We’re here to help you succeed in your next investment venture.