Most of us start by looking for the perfect all inclusive vacation and end up getting pitched at some point to join a timeshare or vacation club. The worst part is the pitch often comes while we are on vacation in a three hour tour many of us take in exchange for some type of perk or free gift.
My basic philosophy is that no major investments should be made after a three hour sales pitch. The rushed sales process is your first clue that you are being asked to make a major investment with limited information. I wouldn’t even reserve a $100 hotel room for a night without taking the time to check online review sites.
If you are interested in doing some sort of timeshare or vacation club, do your research before you go on a tour. The sales process is designed to get you emotionally involved with both the idea and the sales person you are speaking with. Then you are hit hard with a buy now or forever lose this deal sales tactic. The entire process is designed to get your money with very little interest in allowing you to make a well thought out investment decision.
The first thing to understand is the difference between a timeshare and a vacation club. In a timeshare, you are usually buying a stake in resort property with ownership rights and responsibilities. In a vacation club, you sometimes get ownership rights, but sometimes you are just prepaying for vacation club points that can be used for a range of discounted vacation options.
The ownership rights do not automatically mean it is a good investment. Similar to buying a car, the investment will continue to depreciate in value from the moment you buy it. The resort will get older and will not be seen as a good investment option when you try to sell it in a few years. Many timeshares do not have caps on maintenance fees so your fees will most likely go up as the building needs more repairs over the years.
If you do the math, the value of a timeshare goes up the longer you are involved with it. To make the up front investment and yearly maintenance fees worth it, you need to use the property for 15 to 30 years to start seeing the financial benefits of the purchase. Are you really willing to lock yourself into a 15 to 30 year vacation plan? Why? What if your tastes change and you prefer to go on yacht charter vacations or spend all your time and money following your grandson’s baseball team? What happens if the management of the resort changes? What if a nightclub is built next door and you have to endure loud techno music each night until well past midnight?
If you end up not using the timeshare or vacation club property rights, do you really want to spend your time as a sales person for the resort? I see many posts on the internet with people trying to sell their timeshares, vacation club discounts or trying to generate referrals for their own discount purposes.
I know that some people don’t mind being locked into the same resort company for many years. The rise of exchanges that allow people to try different resorts and destinations certainly helps reduce the negative point of being locked into the same destination.
I would love to read some comments about this issue. Is there someone out there who will defend timeshares?
Does anyone know if there are stats or surveys showing the percentage of people who are satisfied versus disappointed with their timeshare and vacation club purchase?