| More than three million households
own timeshare rights at more than 4,000 resorts in 81 countries. 380,000
people joined these ranks last year.
Here’s a checklist to see if you’re the sort of person who should
join them.
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Compare rental costs of similar accommodation. If you really do need
a suite, then make the comparison that way, if you need just a hotel room,
the total of interest on your purchase price + maintenance is usually higher
than a straight rental. Most timeshare units also rent to the public at
attractive rates when space is available.
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Check resale prices for your unit (use the Internet). If
you’re buying direct from the developer, you can expect the immediate
resale value to be 30% to 60% less than you’re paying. Nobody, not even
the developers recommend timeshares as long-term investments. Gloria Collinson,
President of the Canadian Resort Development Association says “the resale
market is not yet mature” and that about 50% of the price of a timeshare
week can be attributed to initial marketing costs.
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Compare purchase costs of similar accommodation. The resale market
may be immature, but it’s worth checking out because it offers very
significant discounts from prices quoted by developers. If you’re checking
for value be aware that you should go by sale prices, not listing prices.
There is a very large and dubious business in obtaining paid listings from
timeshare owners who want out. Listed prices may relate only to the owners’
wishes, not reality. The BBB can help here too.
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Do the math yourself. Vendors may have charts and projections which
show unrealistic figures. As well as getting the BBB record on the companies
involved, an hour’s research can get you the cost of renting where you
are considering buying and the rates for comparable resale properties. Leif
invested $US20,000 for his 14 nights per year and pays about $C1,500 a year
maintenance. Supposing a ROI of 10% on the capital outlay, accommodation
in Hawaii is costing him $C305 per night. On his last visit to Hawaii, they
would have rented his suite to a walk-in customer at $US 105 per night. And
if you decide to buy - negotiate on the price.
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Compare Apples to Apples. Timeshares typically provide apartment-sized
accommodation with facilities for food preparation. If you intend to bring
family and friends to share your space a comparison on a square foot basis
would make sense.
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Can you travel? Will you use it? Even missing one year’s occupancy
rights changes the numbers on your value for money.
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If you’re planning to exchange your occupancy rights, are you
flexible in times and requirements and able to plan ahead? No timeshare
company guarantees the availability of your first choice of exchange
accommodation.
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What is the opportunity cost of the money tied up? If you’re
valuing the interest on your investment at only the rate of inflation, well,
I have this bridge you can buy …
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The economic health of the developer or Owner’s Association is
critical in maintaining your property. It is very tricky to do this, as the
Owners’ Association will be a different corporate entity that the one
which sells you the timeshare. This is time to haul our your business-valuation
skills and read the find print on such things as the existence of a
“non-disturbance clause” to see that developer is not mortgaging
your property and finding out where the deed is lodged.
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Have you talked to other timeshare owners? Visit the resort and ask
around. If owners love the deal they’ve made they will not be shy about
telling you.
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Even if you’re sure right now, check your right of rescission.
Your seller’s attitude to your questions on this might tell you a lot.
Florida and Hawaii protect their reputations with strong legislation in this
area as do most, but not all, states in the US. There is no legal requirement
to include the chance to change your mind in Mexico, the Caribbean, and most
Canadian provinces.
If the numbers are close to making sense ask yourself “Do I really want
this?” If pride of ownership, the pleasures of returning to the same
place, the thoughts that it’s there waiting for you are important to
you, and if those considerations will encourage you to plan for a restorative
week in a place you like, then maybe you should do what makes you happy.
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