As an investor, you may have read or heard about Timeshare, and perhaps you now consider buying into it. But then you stop to ask, “would this be a good investment in the long run?”
First of all, Timeshare isn’t an investment and shouldn’t be regarded as one. Unfortunately, many real estate investors have bought Timeshare probably because they were misinformed or the choice looked promising at the time.
Whether you’re new to Timeshare or are already into it, you will want to read on.
What is Timeshare?
Timeshare is fractional ownership of a vacation property. Typically, several people will each own the property for a specified period. For instance, you, as a fractional owner, may have the right to live in the property for a week or month yearly. You have 1/52 (1 week out of 52 in a year) ownership in such an instance.
When does Timeshare make sense in your real estate portfolio?
Timeshare becomes only sensible if you go on vacation at a particular time and place each year. You have the entire unit to yourself so you don’t have to rent a vacation apartment every time to go to the Maldives or Hawaii.
But if you do not regularly spend a predetermined amount of time at a particular destination, Timeshare isn’t something you should get involved in or hold on to.
Why should you get out of a timeshare?
You may have arrived at a luxurious condominium overlooking a splendid landscape or sparkling blue water. And there comes the timeshare salesperson telling you how incredible buying the property for a week is. Although the thought of paying only a fraction of the actual cost feels great, a timeshare hardly ever turns out to be a wise choice in the long run.
Trading isn’t always as easy as portrayed
The salesperson may have told you that you could trade your week/month for another or trade the property for another property somewhere else. But when you try to do so, you run into a challenge: you hardly find anyone willing to come to a place you desire to leave. Most tourists travel to the same destination at the same time of year. Besides, trading timeshare attracts an additional cost.
Fees are not exactly buyer-friendly
The maintenance cost of a timeshare property can be ridiculously high. The costs become pretty discouraging when your loan is financed through the timeshare company since this attracts a high-interest rate.
The value of a timeshare can depreciate over time
A few years from now, you may have less passion for that destination. Unfortunately, your bills remain constant. And by then, your Timeshare may have depreciated because you own no equity in it like a regular home.
When can you exit a timeshare?
You can exit a timeshare at any time. And truth be told, it may be best to do it as soon as you can if you’ve realized it isn’t a desirable addition to your real estate portfolio. Typically, the average cost to get out of a timeshare would depend on some factors, such as whether you’re selling off the Timeshare on your own or with the help of a broker.
Again, Timeshare isn’t an investment. You actually don’t own the property since you only have rights to it for a very limited period. Renting it out is also almost impossible.
If you’re looking for an investment option, there are much better places to look than Timeshare.