My wife and I went on vacation this past October to Disney World. The family had a great time and I personally was glad to get away from business. We stayed at my parents Orange Lake Resort timeshare, which is just outside of Disney World. In the over 10 years they have owned it, this is the first time I went there. I never agreed with them on their purchase and always thought it was a bad decision. After all they paid $10,000 for it, and today the maintenance is $750/year. The resort itself is very nice, has all of the amenities, and is in a great location. My question is wouldn’t it be cheaper to just stay at a hotel, or better yet rent a unit in the resort for that week? The answer is, unfortunately, yes.
My parents timeshare is one of the older units. You buy a specific week, and can only use it during that same week every year. If you want to go at another time you must “bank it”, and exchange it for another time or location. In the sales pitch they mentioned they are no longer doing week based timeshares. It’s now a point’s based system. You get X amount of points per year when you buy a unit, and can then use it any way you choose. The points could be used instead for many other things: purchase airfare, go to another location, or upgrade to a bigger unit. Heck, like airline miles and credit card points, you can use them in stores like Best Buy or Bed, Bath and Beyond. Great I can buy that toilet seat cover, instead of going on vacation. I’m sure just like credit card points you are getting a fair exchange of points into dollars. If you don’t detect it, I’m being sarcastic. I didn’t run the numbers, but I’m sure the conversion rates are awful. So in the end, they are making timeshares a much more abstract than a hard asset to own, even one week of it. High pressure sales guy please remind me again what’s the purpose of owning a timeshare?
Unfortunately, I think the timeshare market targets the financially inexperienced and lower income brackets. Their sales material make it appear more about the bling and leading the good life, rather than about the investment return. That’s because there IS no return. If you are outlaying money for the future, it should be considered an investment. If it’s not generating income, it’s an expense plain and simple. You MAY get enjoyment out of it, but it’s still not an investment.
It’s been said in poker if you can’t spot the patsy, it’s you. This applies to purchasing a timeshare. The ones benefiting from the transaction are the sales person and the owners of the resort. You, unfortunately, are stuck with a small slice of a unit that has little or no resale value. Here are the issues:
- There is a HUGE reseller market. Often you can pick up units for less than half of what was originally paid for
- Like buying a car, it depreciates once you drive the timeshare off the lot
- It’s rare that a timeshare increases in value
- Timeshares are usually hocked when you are on vacation, and your defenses are down
- Most have high yearly maintenance fees. In my parents case it’s increasing every year faster than the rate of inflation. For the amount that you pay in maintenance fees alone (forget about the initial “investment”), you can stay at a nice hotel.
There are many web sites where you can buy a used timeshare. If you still think buying a timeshare is a good idea, buy one on the secondary market.
Timeshares are a terrible, terrible idea. My in-laws are in one of those “point” programs. What they don’t tell you is the points depreciate (or the number of points needed inflates) each year. So where you could get a nice 1 week vacation now you can only get a decent two night stay.
I’m not sure if they have found a way to get out of it, either. The contracts are ridiculous and essentially say you must stay with us forever or pay an enormous cancellation fee.
@No Debt Plan: Good info! I didn’t know this aspect, and another reason NOT to buy.
Yo man, GREAT job for resisting the hard sell! Those guys are aggressive aren’t they? I almost spent $20k on a “top of the pyramid” time-share in Kauai. Phew, glad I didn’t.
Time shares are those for people who can literally burn their money and not have to care.
So does anyone have any idea of how to get out of one of those timeshares again without having to actually paying like $5K to someone who will agree to take it over?? My fiancée bought one with his wife about 15 years ago – Kauai, Princeville – and now pays about 900$ maintenance fee a year, it’s been paid off in about 10 years and so far he’s used it ONCE in all that time. but there seems to be no way of getting out of it again. So any help will be appreciated
@Sole: Hi thanks for commenting. There are many services that will sell your timeshare and take percentage of the sale. Keep in mind there are unfortunately many others doing the same thing. I’ve seen sites with hundreds of timeshares for sale. From your IP address I see you are not from the US. If you were, I was going to suggest also trying craigslist.com and other similar web sites. I assume in your country there are web sites similar to craigslist and you can try selling the timeshare yourself. Have you also tried contacting the place themselves and see what options they may have? In the end it might be best to take your lumps (read losses) and just move on. Figure the $900/yr cost is increasing faster with inflation. How many years will you continue to pay the maintenance fee before it just makes sense to unload? Hope this helps…
My family bought a timeshare in Orlando 14 years ago and it was paid in full. The maintenance fee continued to go up. so about two years ago we decided to no longer play the game; we refused to pay the maintenance fee. Not to mention, the company had planned a major overhaul of the place and had assessed an additional $3k to each member. We decided to run the risk on non-payment. We were threaten with foreclosure but the timeshare was paid for…we laughed and told them to go ahead. We did not answer any phone calls or letters until they decided to playball. That is , allow us to return the timeshare….for us it worked out….Several months ago we were asked if we would be willing to give it back and sign the deed over to them…And, we did. We were told there would be no tax ramifications, but even if there are, we are RID of the timeshare.
Hello again and thanks so much for answering my post. Well, though it’s right that I’m not from the US, my fiancée is
Will suggest craigslist to him, not even sure that he’s even tried that. He went to a meeting some time ago with some investor who’d undertake the sale for a $5K!!!! And then of course not even with a guarantee that anything would come out of it, so that was mainly giving it to him and then pay 5K on top of that. But you’re right, instead of paying every single year it would be better simply paying someone 5K in go and then get rid of it if that’s the only solution. My fiancée has tried contacting the place itself and they were less than cooperative – which of course makes sense. Well, again thanks a lot for answering. I’ll continue my search over the week-end, but it’s a jungle out there and it’s difficult to see through some of the websites and know which are serious and which aren’t. But of course it would be nice getting just a little bit of money back, think he paid about $12,500 those 15 years ago, so price should have increased considerably LOL
USAToday has an interesting article about time shares. Enjoy:
http://www.usatoday.com/money/industries/travel/2010-01-17-time-shares_N.htm
Craigslist.org is global. At least every place I’ve been in the past five years.
Years ago a friend of mine bought a timeshare because he got some sort of tax break (US). He has been trying to get out of it for years. He even tried to give it to me so I could use his alloted time in different locations and when we met with them to do the transaction they tried to sell me one. My friend lost it and we walked out. It seems that they don’t want someone to own it who will actually be able to use the facilities. That experience pretty much let me know I wanted nothing to do with them.
I will stay at them when invited by friends but I will not attend any lectures. It does seem that many of them are owned by a certain age group. Maybe there was a tax incentive at one time?
I agree with everything you say about timeshares; depreciation, expensive, and better alternatives are available. However, having a timeshare on tap, frankly, is the only reason we've gone on vacation over the years. Knowing we have a familiar place, that is paid for, forces us to think in vacation terms. Sure, we could map out hotels…rental places….but our eyes and motivation glaze over quickly. The convenience is very tangible and available. Plus, it is easy to share with friends and family. Compared to spending money on a consumables like a cars, furniture, or other toys…our timeshare has been a pleasing fit into our hectic lives.
Hi Jeffery,
I don't know in your case how much you paid or your annual fee. In many cases the amount you pay compared to a weeks vacation in the same location is usually much cheaper. As long you don't view it as an investment and have it for other reasons, that's fine by me.
This is how my friends view it. They have two weeks at a time share right on the beach in New Smyrna Beach Florida. They bought them for $4 for each week off eBay (+400 closing transfer costs). Fees are $1200 a year for the two weeks, and they sell one week for around $1000 during Daytona bike week. So it costs them around $200 a year for a week on beach. They like the resort, and the quiet area, and are happy they have it. While it’s not a “great” value, it’s not too bad either.
*I am speaking specifically regarding Disney Vacation Club Timeshares/Memberships*
I don’t agree with the blog at all. Nobody is buying into a vacation timeshare with the idea they are making an investment that grows. Although, I’m sure the sales pitch literature pushes it that way. I am looking into the DVC timeshares and have found they are of great value *IF* you can build it to work in your favor. If somebody has the cash up front to pay and can afford the quarterly maintenance fees then there is a potential savings to be gained over time. I do admit, you must understand the terms and workings of the timeshare and choose a package that is best for you and your situation so that you may utilize the timeshare in the best possible way for you. The points you reference in this blog that Disney swapped over to are actually a very decent conversion and save you money when looking at the cash cost of just booking a trip through Disney. If this timeshare wasn’t useful, profitable, or manageable it would not have survived like it has. There are countless sites selling points to individuals with a profit for the seller and savings to the consumer when comparing to Disney prices, once again.
It’s funny you mention Disney! I was looking at Disney Vacation Club, and I ran the numbers over and over. The result was the same….don’t do it. I go to Disney a lot, so I just started buying time from other DCV members and have been happy with the results. I am going in the fall, and a “value resort” would be $130 a night. I decided to look for a DVC member selling time. I managed to get 10 nights at Bay Lake Tower (Contemporary resort) for $150 a night. The room is slightly larger than a moderate resort room, but the amenities are nicer, and location can’t be beat, but it is $20 more a night.
DVC is a scam by Disney. They are getting in on what others in the area have been doing for years.