Pros and cons of timeshare investing

US-PDGov

By Andrew Donaldson

It is difficult for the current generation to appreciate that the concept of regular vacations to nice resort areas is a relatively new experience for the average family. Although the wealthy and upper class have always found a way to enjoy their time off, it wasn’t until the 1950s that the opportunity to take regular vacations became commonplace for the working class. As more people began to travel on vacation in the post-war years, hotel chains began to spring up along the highways. An increasing number of resorts followed as popular destinations.

With the number of vacationers growing into the millions, developers offered them the opportunity to gain control over the costs of their trips and stays at nice locations. This concept is based on the idea of fractional ownership, or what is known as timeshare.

In its simplest form, timeshare is an arrangement where several people own and share the use of a specific property. The property is divided into time intervals, usually periods of one or two weeks, and the members of the ownership group use their allotted interval for vacation. When the term timeshare first became widely used, it almost always referred to a home or residence in a vacation area. Today, the concept is adapted to a range of properties, including camping areas, boats, and even airplanes. Any property that has a high cost can be made affordable with fractional ownership programs.

Since most timeshares are a part of a larger development, there is almost always a third-party management company that controls the available intervals of time. The timeshare market has experienced phenomenal growth, and there are now national companies that manage timeshare intervals. With companies like Resorts International, timeshare owners can even swap their times between other properties for a small fee.

Good news and bad news

The timeshare concept is a very practical way for families to make quality vacations more affordable. Because prices for stays in desirable areas always increase, the ability to control that cost through ownership is often a chance to save money over the long term. In fact, many people have made attractive returns on their investment. They achieve this in two ways. First, they rent their weeks out to someone else at rates that generate a profit. Secondly, some timeshare interests appreciate enough that they can be sold at attractive levels above the original cost.

The downside of timeshare results from the same factors that affect any idea that gains rapid popularity. Many developers rushed into the market and created properties that were poorly planned and constructed. They often used high-pressure tactics to sell these properties to uneducated consumers. The result has been a black mark on the industry for many consumers who have lost money on properties worth far less than the purchase price.

Another factor that many people fail to consider or plan for is the ongoing management and maintenance fees that come with every timeshare interest. These costs are usually assessed monthly to all owners on a pro rata basis. Without good management, these fees are burdensome and have a negative effect on the economics of a timeshare.

Many people are attracted to timeshares in other countries. These, too, can be attractive investments. However, they come with their own set of risks and legal issues. It is important to thoroughly understand all aspects of owning a foreign timeshare interest.

With careful and educated shopping, a timeshare can make a great investment for profit and fun. With so many options, it is possible to find many good properties from which to choose.

About the author: This article was written by Andrew Donaldson, a passionate financial guru who loves writing articles across the web to share his knowledge. He writes this on behalf of Wordwide Accom, your number one choice for finding a holiday home, especially in Italy where WWA inspects every Rome apartment on their site. So make sure to check them out when going to Rome!