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Timeshares Are Good Investments

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This is a Devil's Advocate post.

This Devil’s Advocate post comes from my friend Lazy Man of Lazy Man and Money, owner of a timeshare in Aruba.

Almost every personal finance guru will tell you that it rarely makes sense to buy a timeshare. They often cite scary fine print, travel inflexibility, and difficulty in selling the timeshare. These are legitimate concerns for some timeshare owners, but not all. Back before I was heavily into personal finance, I considered a timeshare. And my girlfriend (now my wife) on a trip to Aruba actually bought one. Was it a bad decision? I don’t think so. Why? Well here are a few details that make our purchase seem “worth it.”

Aruba Beach

Four Reasons Why Timeshares Rock!

  • The numbers work out – I’ve run the numbers over ten times to be sure. If we took the money and put it in some safer investments earning 5-7%, we would be able to afford the same accommodations that we have now. No more, no less. The last time that we used our timeshare, I asked how much we could sell it back to Marriott for and it was more than what we paid for it four years ago, even after Marriott’s cut. Marriott has a similar unit listed at a price that, if were to sell ours, represents a 15% compounded annual gain on our original investment in 2004.
  • We have plenty of time to go away – My wife gets six weeks of vacation from her military job. I work from home. We know we are going to be using this vacation.
  • It forces us to take a vacation – Sometimes people get in a “work, work, work” mode and that’s simply not healthy. By having a timeshare, we are “forced” to take a vacation each year, which is enough of an excuse to get us planning and out the door. And if you’re a work junkie, consider this: You’ll be more productive when you get back after a week of fun in the sun.
  • It drives us to see the world – If you asked me two years ago if I ever wanted to go Thailand, I would have said it wasn’t in my list of top ten vacation spots. However, last year, as luck would have it, we had an opportunity to visit Thailand in an affordable way and we took it. Travel to Thailand was down and we were given an opportunity we didn’t want to pass up. We traded half of our timeshare (we have two rooms) for a suite fit for an emperor. One memorable experience my wife and I will never forget was Yambo, a baby elephant, playing with his log like a child with a new Wii.

These reasons make owning a timeshare right for us. However, that’s doesn’t mean you should run out and buy a timeshare right this second. Like any purchase, a little research and a few smart buying decisions goes a long way.

Timeshare Buying Tips

  • Buy on the Resale Market – You can usually save 30% or more by looking for timeshares on sites like Ebay or Red Week. Buying directly from the builder means you’re paying for all the marketing and freebies they’re offering people just to listen to their pitch. It’s estimated that 50% of the price of a timeshare goes to cover marketing costs. This is the one big mistake that we made.
  • Pick a Property with Staying Power – You want to pick a name that’s going to be around. We didn’t think Marriott was going bankrupt any time soon so we trusted the brand name. In this economy, you can never tell, but we had more confidence in Marriott, since it’s a widely recognized brand, over some other lesser known companies.
  • Choose a Deeded Timeshare Property – We own the Marriott timeshare for life. We can pass it on to our kids and their kids’ kids. There are some timeshares that are only “right to use” and expire after a set number of years. We like the fact that we own property in Aruba. Many people would argue that real estate ownership is an investment.
  • Pick One with Flexible Weeks – Some timeshares are for specific weeks of the year and only that week. If you buy week 42 and you can’t go on that week, you have to trade it, sell it, or lose it. With the Marriott timeshare, we can choose any week within a 6 month window and that flexibility is crucial. We pick when we go, not Marriott or some contract.
  • Buy Now If You Can – The economy is in the dumps. People should be looking to dump them because they simply can’t afford to go on vacation or pay the yearly maintenance fees. This gives you a ton of negotiating power. Use it.

What do you think of timeshares? Good value or a waste of money and time?

(Photo: VideoVik)

{ 23 comments, please add your thoughts now! }

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23 Responses to “Timeshares Are Good Investments”

  1. I’ve heard the downside to timeshares comes when you decide to sell them. I know he mentions another for sale at 15% return, but he didn’t go into much detail.

    Maybe we could see something on selling timeshares. When I think of timeshares, I think about a fantastic episode of southpark.

  2. Michael Harr says:

    Nice post and I agree with most of it, but there are two details that many will need to know. First, selling a timeshare at a property that is still selling new units is the best time to make a couple of dollars on your unit. As soon as the salespeople disappear, you’re out into the secondary market that tends to be tough on timeshare values. Marriott does have an inside sales platform, but even then your value will be diminished compared to when new units were still being sold.

    Part of the reason for this brings me to the second point. Maintenance fees often go up at rates far above inflation and over time they can serve to devalue your timeshare interest.

    No matter what, you MUST negotiate on the front end. In every timeshare presenation we attended (except Marriott), we were able to negotiate a price of half of the original asking price. With Marriott it was about 33% below ask. All of the presentations we attended were at properties still under construction.

    I am a ten year plus timeshare owner and have been very pleased with the purchase we made for the reasons mentioned in the post. However, a timeshare is NEVER an investment and you should only consider the purchase of one if the rest of your financial house is in order.

  3. Jim says:

    Maybe Marriott brand is the exception to the rule as they seem to have fairly high resale values. But usually the timeshares lose value it seems. My friend just got pitched a timeshare in Vegas. You can readily find same resort online for resale at less than half the prices they quoted him.

    To me the annual maintenance/tax fees for timeshares seem to be the biggest killer. The fees seem to run $400-900 per year.

    Jim

  4. Kelly Rusk says:

    Agreed it’s only a wise investment if the rest of your finances are in good shape. My parents bought one back in 96–they took up an offer for a free cruise, in exchange for the timeshare presentation. They had no intention to buy one, but ended up getting one. One thing some may not realize–in the sales pitch, the more you resist the better deal you get. The reason they ended up buying is because after saying ‘no’ so many times, the sales person had reduced the price by so much that it was a great deal.

    Though buying second hand may be a better deal anyway, not sure.

  5. Start-Up says:

    I don’t have any experience with time shares, but I do really like the idea of being able to trade the time share to visit a different place. That really opens up the traveling opportunities.

  6. My father owns 5 timeshares that he intends to gift to his children someday. Four are Marriott units. Only one is used regularly because it is in NYC. The others get traded out for time elsewhere. Sounds like Lazy Man is in a good situation with his but that can change when kids arrive on the scene. My partner has a timeshare in the Bahamas that he hasn’t used in years because it was not little-kid friendly and older kids are bored in a hurry.

  7. Mary says:

    Excellent info…and nice to hear positive comments on timesharing. With a little research and careful planning, buying a timeshare can be an investment, but mostly an investment in your quality lifestyle. Renting first, is a good way to check out whether you like it or not. Right now there are a lot of good deals available. My dad really liked working with http://www.TimeshareAdventures.com. He has enjoyed staying at timeshares all over the world for over 20 years.

  8. Eric N. says:

    Oh god do I have a story. My sister (when young and naive) went to Hawaii for a vacation and got conned by one of those ruthless timeshare salesman. She signed up for a horrendous loan and now can’t get out of it. I’ve helped her as much as I can by doing research and listing her options–needless to say, none of them are pretty.

  9. Tom says:

    I’ve always thought they were lousy investments without knowing all the facts.
    I guess you have to do your research to avoid the scumbags.

  10. fathersez says:

    I wish I could say the same about our experience. It was bad.

    Timeshares are not for everyone. It seems to have worked well for you as well as some of the commenters. Good for you.

    Regards

  11. Yana says:

    I would not consider a timeshare. I don’t like the way they are marketed, and that alone is enough to keep me away from them.

  12. James says:

    Timeshares are a elatorate con game that suck people in in a “High Pressure” sales meeting tell you a bunch of lies in order to appeal to your desires. By the time the consumer figures out that they have been told nothing more that lies and misleading promises.

  13. Carver says:

    Great article. It seems like the pros and cons are mixed. Either way it was a super interesting read. Thank you.

  14. EUSKAL REDUCHERRY says:

    Why should anyone pay so much for something that he may not use when or how he wants? I had a timeshire and two happy moments When I bought it and most of all WHEN I SOLD IT! Now with the money I save in that lousy investment I can plan my travel ahead using Internet plane plus accomodation.. it is a lot cheaper, I travel when I want, and I do not have to worry about maintenance, taxes etc.. I would never recommend a timeshare property to no one… and did you know you can not give it in heritage to your sons? If the family decides to sell it you lose… it is nothing yours it is theirs Very very bad business… never buy it again, never in my life!!!

    Euskal Reducherry Basque Country Spain

  15. Whata Croc says:

    THIS POST IS A JOKE! TIMESHARES ARE THE BIGGEST RIP OFF IN THE WORLD AND

    DO NOT GO UP IN VALUE!!!! That’s why you can buy them cheap on the resale market, so to say that you made money on yours, you fing LIER>.

  16. carol says:

    Have you ever tried to sell a timeshare back to Marriott? No dice ended up donating to a charity just to get rid of it. The user fees went up every year until it was no longer a good deal for us.

  17. JR says:

    Michael Harr is correct. You have to negotiate to get the best deals. Another thing is to go to used time share websites to get the best deals.

    Also, if you do purchase, use the off season.
    You can stretch your points a lot farther. Wife and I are Wyndham owners. They give you a book, as well as website to look over the resorts.

    One other thing: read the booklets they give you & watch the DVD as well to get the max return for your money.

  18. Kathy says:

    We just traded our Marriot Newport Coast time share for a week in Hawaii. WE have a room over looking an endless cement parking lot. Might as well have gone to Cleveland! So much for the privleges of being a Marriot owner.

  19. Antonio says:

    Don’t do it, BIG scan!!!

  20. TJ in MN says:

    I own through Wynhdam with a point system. I love and are happy with it.Timeshares are like anything else you buy in life some have value some don’t. A friend of mine sold his place on Sanibal island in florida and did great. People complain about fees. Of course there are fees. thats what pays for insurance, taxes and repairs. When I bought mine my sales rep explaine everything from cost of fees and how ownership worked. There were no suprises. yes I did do prior research and even talked to owners. My timeshare gives me flexability, I have used it for hotels, car rentals, airline tickets and I have even rented it out. Plus my package allows me to even sell my unused points to wyndham each year which helps pay for my maintenance fees. Do your research, Don’t buy to travel cheap but buy because you like the resorts. Think of it as a car you have regular maintenace to keep it running and with all vehicles most loose money when you first buy them but classic cars go up in value. But most of all like any purchase, only buy what you can afford

  21. Natalie Wilden says:

    Not all time shares are bad, actually, a time share can be a good purchase for someone who does enjoy revisiting the same destination each year. However, vacation properties are not for most people, being that they only seem to work for people with very specific vacation desires. Time shares are not for people who like to enjoy trying a new vacation spot each year, nor for people who like to travel spontaneously, or families who do not use to stay at expensive resorts.

  22. Timeshares need to be looked up as a purchase and not an investment. Regardless of how timeshares are presented, they don´t perform as well as a house or stock investment. If you look around the resale market for timeshares on websites like EBay, Redweek, or TUGBBS will find that you can buy a timeshare for far less money than what the first owner purchased it for.


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