Navigating the Timeshare Industry Successfully
The timeshare industry is a core part of the national economy. It creates half a million jobs, contributes billions to national labor income, and creates $10 billion in revenue via direct spending. The sector has grown consistently over the past 30 years, and no industry can sustain that level of success unless it satisfies the needs of a great number of holidaymakers. It is, nonetheless, a contentious purchase, partly because it’s often misused by timeshare owners. Wield your vacation product well, and it will serve your pocket and lifestyle for years.
Understand Your Needs and Product
Timeshares give hotel chains and the like a range of income options from a single property. Annual fees, purchase costs, and vacation expenditures deliver continuous revenue, which is bolstered by a constant influx of holidaymakers. If you’re a frequent vacationer who needs a few weeks of housing each year without any time investment for maintenance, timeshare ownership lets you pay a fraction of a property’s price to satisfy those needs. There are several basic ownership types:
- Right of Use Ownership gives you the right to use a particular unit within a set time frame. This period typically has an expiration date. You can buy a timeshare and use points to decide your length of stay and accommodation dates or receive a specified vacation period every year. If you’re a strategic thinker who’s willing to make sure you get the most from your points, this option will give you the most flexibility.
- Fee Simple Ownership lets you buy a set period for a unit along with the right to sell that ownership. If you don’t want to put any work into arranging vacations and are willing to do away with flexibility, this will suit you well.
- If you take vacations at the same time each year, a fixed time option will fit your scheduling needs. Floating times offer more flexibility in exchange for less predictability.
- Biennial timeshares come with reduced maintenance fees, while banked usage ownership lets you carry any unused vacation time forward into future years.
- Fractional ownership tends to come with more luxurious bells and whistles, along with longer vacation periods and exchangeable points. Here, you can “spend” your points on your preferred amenities, so you can build precisely the kind of vacation you want year upon year. This is ideal for those who like a variation in their annual vacations.
Understand Your Limitations
Timeshare ownership is too often approached as an investment that will appreciate in time. It can’t form a part of your real estate investment portfolio, but you can certainly use it to save pennies. The trick is to be realistic about how well your timeshare will serve you in the long run. If you think you might get bored with the same holiday destination within a few years, you’d do better applying your savings to a holiday home that you can flip later.
Understand the Secondary Market
When you sell a timeshare, it isn’t like selling other types of property. Buyers are hard to come by and the market is competitive. You generally won’t make a profit from resale. In fact, many timeshares sell for less than 20 percent of their original price, so a timeshare isn’t something you want to buy thoughtlessly. That said, you can rent out your timeshare and make a profit that way, an approach that’s become remarkably easy with the advent of social media and holiday exchange programs.
Timeshare requires a commitment, so make sure you choose a resort with ample demand already. The more developed the brand is, the better the secondary market will treat you.
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