Do you long to have a vacation home but cannot afford it? Does looking after the resort on your favorite beach seem to be a daunting task? Consider time-sharing and acquire your dream vacation property.
A timeshare is a solution for people who long to own vacation property but don’t have money for investment or cannot spare time to look after its maintenance. Timeshare is a vacation property arrangement in which multiple users join together to own the same property. Typically it is a shared ownership model in which the cost of the property is shared with several buyers, and in return, you get an agreed time to spend there. It can be valid for a variety of properties, like vacation resorts, apartments, condominiums, campgrounds, etc.
Sometimes the buyers have the right to occupy small units of a larger property for a specific period with shared expenses for maintenance and cost of the property. Buyers have a fixed period of a week, decided with mutual consent. Property usage is sometimes limited due to seasons and weather. People also make timeshare arrangements for recreational vehicles and private jets.
How Do Timeshares Work?
The buyers of a timeshare have the legal rights to avail of the place exclusively for the defined period, which is decided according to one-week increments. Mostly there are three ways a timeshare works which are discussed below.
The original model of timeshare was the use of property within a definite time. Fixed week form of timeshare allows the buyer to exclusively visit the property for a specific number of weeks
annually. This gives the buyer the benefit of planning their vacations at the same time every year, but the downside is that changing the time slot can be difficult due to other factors or events in life. This mostly depends on how flexible the sharing owners are.
Most resort agents book the dates once the owners deposit the fee or call the agent up to two years before the agreed dates of the stay.
The period is not fixed using this way of a timeshare; the buyer can use the place at any time they wish to by booking it beforehand. This is also to make sure that the property is not occupied. The choice of weeks lies in a particular season. The owners may use it for an indefinite time. But, it can be difficult during the peak season when the shared partners are also interested and have reserved it well in advance.
This is the most elastic way a timeshare can work. The buyers or owners do not possess any particular weeks to visit the property; instead, they purchase some points. The points are like timeshare currency which can be used to book stays in resorts, hotels, or apartments. The points are renewed annually, and the owners can book accommodation for their holidays.
The point-based timeshare is continued longer than any other timeshare plan. They are valid for up to eighty years following Australian law. The owners can choose one of the two plans. They can conclude the deal and sell the land, dividing the revenue among the partners, or they can simply continue the program. Timeshare is known for providing a ‘lifetime of holidays’ and passing it on to their generations.
This way of a timeshare is gaining immense popularity because of the variety of locations buyers can book, allowing them to go to different destinations each time. Another reason is that this plan is extremely flexible, and buyers can plan their holidays at different times of the year, making their vacations exceptional and affordable every time.
Types Of Timeshare Contracts
Timeshare contracts can be structured in multiple ways. You have learned about different ways timeshares work; let’s now discuss the variety in which timeshare contracts are formed.
In a deeded timeshare, the units or resort is equally divided among the owners. The owners usually have a particular time slot for when they can avail of the property. The property rights given to the owners are like those given in deeded real estate. The owner can sell it to another party, rent it to others in their time slot, or give it away.
The buyers are a part of fractional ownership with other owners. One can own 1/50 of a resort’s ownership, but this is still legitimate ownership.
Owner’s Right To Use Timeshare (RTU)
The Right To Use or RTU timeshares contracts are normally found in international resorts. The reason is that people settled abroad cannot own any property in a country they don’t reside in. These contracts allow owners to use their timeshare for a specified time, and then the contract expires, ending the ownership.
These contracts can last between 30 to 99 years. Once the ownership concludes, the resort owners get back the ownership of the property. After the lease ends, the contract will terminate, returning the resort.
When you buy the property under a leasehold contract, the contract ends on the same expiration date the next year. This method is quite similar to the Right to Use method as the agreement concludes, resulting in the owner giving up the ownership of the property. In this method, you don’t get a deed, as you will own the use of the property as a lease. The payment will last for a long time, along with the ownership.
The leased ownership can be passed on to children as well. Your presence will not be needed, and friends can also use the property on your behalf. But check with the resort management first if they allow visits without the presence of the owner.
Biennial And Triennial Timeshares
Timeshares allow you to utilize the place annually, whereas biennial timeshares will let you use the place every other year. The year you use is either an even or odd year, depending on which year you used. Triennial timeshares allow the users to avail of the property every three years instead of using it every year or once in two years.
These ownerships work in the same manner as the other timeshare contracts, just that the frequency of utilization reduces. It is hard to change ownership plans once they have been bought. So, make up your mind about the type of timeshare you acquire, which should ideally suit your lifestyle and needs.
In point-based timeshares, if you are unable to attend the property, you may transfer the points to your account and switch the year in which you were not supposed to use them. For instance, if you were to use it in 2023 but cannot make it, apply in advance to transfer the points to visit the property on the same dates the next year, which will be 2024. Again, this depends on the terms and agreements of the contracts. Not every resort will do this, but many are up for this flexible routine.
Pros And Cons Of Timeshares
Timeshare arrangements seem tempting to buy since they offer affordable vacation homes, ownership, and no sole responsibility for taking care of it. But make sure you weigh the pros and cons of a timeshare before buying it.
You will find most timeshare properties in popular locations that tourists visit in large numbers. Finding accommodations in such places can be difficult and usually expensive, so timeshare owners are not worried about vacationing in their favorite spots every year without going over the budget.
Resorts or apartments are turned into timeshare properties. They are managed and looked after by professionals and provide better amenities than any hotel. Staying at a timeshare property means living in a larger property than a standard hotel room with better facilities without compromising on luxury and comfort.
Timeshare will suit you best if you like vacationing in similar locations every year. It is the right choice if you don’t want to get into the chaos of hunting or discovering a new destination every time.
Do look into the drawbacks before signing timeshare contracts. The maintenance costs are increased yearly at a fixed percentage which can be significantly high. The total cost of living in a resort can be lesser than paying all the fees for keeping the property.
The time the owners can visit, or the only period they own the property is predetermined. If the owners cannot visit during their allotted time, the expenses paid all year round can go to waste. The reservation must be made well in advance for a floating period timeshare. The fees will be wasted if you miss booking for your preferred period and cannot make it due to work or life events.
Visiting the same vacation spot can become boring sometimes. Timeshare is not for those who love to explore and discover new places.
The timeshare contracts lack the liquidity to resell on convenient terms. Even if resale is possible, the process is hard, and many find it difficult to abide by the terms of the Timeshare agreement.
Comparison Between Timeshare And Airbnb
You must have only seen Airbnb on their website or app. But the experience can be different in reality. Timeshare guarantees a clean and secure place to live without unpleasant surprises.
Airbnb can have an insecure environment, while Timeshare is sure to be a safe spot for every guest.
Renting Airbnb can be more expensive than Timeshare with similar kinds of properties. The kitchen of your Timeshare property will be stocked according to your preferences, unlike in an Airbnb.
Timeshare properties are, after all, your own home, just that the ownership is periodical. The place will be set like you prefer, with services to give you maximum comfort.
The facilities available at Timeshare will be according to your demand, whereas the owner of Airbnb might forget to keep the basics for you and might not help.
Timeshare is owned by larger corporations, namely Wyndham, Disney, or even Hilton. This ensures your property stays in safe hands. The place is looked after by professionals who make sure to take care of the guests who visit and that no unnecessary trouble is caused. The contract will be signed with reliable companies, unlike Airbnb, where the place might not be what you wanted.
Things To Consider
Most timeshare buyers are impulsive in buying their places with aggressive marketing campaigns. These campaigns are often successful in swaying people who are impulsive buyers. You should invest in a timeshare but consider some important things to ensure it fits you perfectly.
Most of the remorseful timeshare buyers are those who decide to buy it right away and don’t look into the details before making their decision. As a result, instead of saving money, they waste it by not being able to do their best when they make their purchases in haste.
Even if you have paid for the property, you will still need to spend on plane tickets, activities, food, and other travel expenses. Make thorough calculations before making the deal. If the costs are within your budget, a timeshare will save you a lot of money in the long term.
Purchase a timeshare if you can commit your schedule to arrive on the dates agreed. Tentative plans often cause you not to appear on the decided dates. That will be a deal breaker, and the investment will surely be wasted.
Now that we know how timeshares work let’s look at the costs. When it comes to timeshare costs, many factors determine the amount spent. Interested people must pay various purchase agreements, exchange, maintenance, and annual fees.
So it turns out that purchasing a timeshare involves a hefty sum of money. First, you will have to pay an average of $24,000 or more as the upfront purchase price. If you don’t have money saved, you will be applying for a loan which is not a good idea. If you cannot pay the front cash, the sales personnel will convince you to use the personal loan financed by timeshare. And over the next 2 years, you will be paying your loan with an interest rate of 8.73%.
Now, if this is not enough, each year, you have to pay maintenance fees that have an average of $11,00 or more. And these maintenance fees are increased by 2% per year.
The timeshare owners also have to be vigilant in paying their annual dues. These include utility maintenance fees and any taxes related to the location and property. The dues may fluctuate based on utility prices and your timeshare locations’ peak season. So even if you use your timeshare or not throughout the year, the annual dues are a must for you to pay because you own it.
Another cost related to timeshare is the exchange fees. Suppose you selected a beautiful resort in an exotic location but each year, visiting the same resort feels very boring now. In that case, you might be thinking about exchanging your timeshare for one in a different location for a week.
Exchange is possible but difficult; you cannot choose any other location or resort on a timeshare as you want. The timeshare owners interested in exchanging have to choose from a list of resorts in the same category as yours. This exchange also requires you to pay exchange fees. Since all timeshares are unequal, you will have to pay quite a lot of money to make the trade.
Getting Rid Of A Timeshare
If you have a timeshare and don’t want to keep it anymore, how can you get out of it? Whether you were feeling the weight of buying or were talked into buying a timeshare, you can still get out of it. Let’s take a look at some of the options you can explore.
The first and foremost thing to note is that you have the right to cancel the contract. Right to cancel, also called rescission law, can be very helpful if you try to get out of a timeshare. These laws are different in different states, so check out your local laws where your timeshare location is before you plan further. Although it may vary from state to state, you can cancel the contract anytime within the rescission period. Upon receiving the cancellation letter, the owner must give you a full refund within a month.
Timeshare Deed Back Program
If the right to cancel in your state is not feasible, don’t fret because it is still doable. All you have to do is contact the company to take the dead back. There is no guarantee that it will work, but it never hurts to ask and it is free of cost. As you make up your mind to get out of the timeshare, move quickly and check your contract to see if there is anything related to the deed back program.
If there is no deed back program or you have missed the rescission time, you can still get rid of the timeshare by selling it.
If you are considering selling the timeshare, start by carefully reading and analyzing your contract. Selling a timeshare depends upon how you purchased it; financed or cash. This will decide how easy it will be for you to resell it. Don’t forget that if your timeshare is financed, your option to sell is not open until you have fully paid the loan. If you are thinking of hiring a real estate agent, try your luck with a good professional or find a reputable timeshare listing company to sell your timeshare.
The vision of the perfect vacation home on your favorite beach is possible with Timeshare. Now you can own a resort without fully paying for it. However, there are many challenges, pros, and cons of owning a timeshare, so it is better to research.