Owning a vacation home at the fraction of the cost? At first glance, it is easy to see why timeshares have been growing in popularity.
While timeshares can sound like an affordable alternative to buying a vacation home outright, it is important to understand the ins and outs before buying.
So how do timeshares work? Read on for everything you need to know.
How Do Timeshares Work?
A timeshare is a vacation property that has shared ownership. In return for sharing the cost of the property with other buyers, you are guaranteed a specific amount of time at the property each year.
What Are The Types Of Timeshares?
There are two general categories of timeshares.
The first is deeded. This is where you purchase a stake in the property itself, and your allocated time at the property is based on a percentage of your ownership.
The second is non-deeded. This is essentially the right to use and spend time at the property, typically for a set number of years. However, you do not have any ownership interest in the property and would not benefit should it ever be sold.
Clarify if the timeshare is deeded vs. non-deeded. This is an important distinction to make in that often you are not buying the property outright. In reality, most timeshares are multi-year leases rather than actual ownership.
What Are The Pros And Cons Of Timeshares?
Depending on what you are looking for, a timeshare may or may not be right for you. There are advantages and disadvantages of timeshares.
Timeshares are an affordable alternative to buying a vacation home outright. It eliminates the opportunity cost of owning a property you do not reside in or visit often. You are paying for the time you spend, and nothing more.
Maintenance is often centralized in timeshares, which means that someone else will look after the property while you’re away. This eliminates some of the burdens of homeownership.
However, there are cons to timeshares too. Firstly, The market is crowded and often confusing. The market is not regulated, which means you need to be aware of scammers.
If you prefer traveling to new places each year, timeshares may not be the right fit.
Buying A Timeshare
Even though buying a timeshare is cheaper than buying a vacation home, it should be treated just as seriously. There is a lot to keep in mind when buying, so research thoroughly in advance of buying.
As well, most developers or resorts will offer presentations and tours of the property. Take advantage to learn more about your potential future timeshare.
Selling A Timeshare
Luckily timeshares offer flexibility to sell your time if you can no longer make your allocated dates or life simply gets in the way.
How easy it is for you to sell your timeshare will vary by type and developer, such as Hilton Grand Vacations. Some timeshares have more flexible cancellation policies than others, depending on different factors including the time of year and the location. Read more about the HGVC cancellation policy to get an understanding of how selling and cancellation fees may impact you.
Is A Timeshare Right For You?
Before buying, be sure you understand the answer to the question “how do timeshares work?” Deeded timeshares are a good fit for those looking to own property more affordably, while non-deeded better suits those who are looking to lock down time in their favorite location.
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