What is a Timeshare?
A vacation timeshare is when multiple people own a piece of a vacation property. Usually the property is similar to a condominium, resort, or luxury hotel. However, you can also buy into a timeshare campground or RV Park. Each owner in a timeshare is guaranteed yearly access to use that timeshare and must contribute to the cost of maintaining the entire vacation property. Essentially a timeshare owner "owns" a specific unit of a resort for a specific week each year. You have the option to later sell or transfer your timeshare.
What is a Vacation Club?
A vacation club is a variation of a timeshare with two main differences. With a vacation club, you join as a member rather than an owner. The vacation club will typically own several properties in different locations that you then have access to during your vacation week. Like a timeshare ownership, as a vacation club member your vacation week and resort options will be part of your membership ownership terms and you can sell or transfer your vacation club membership at any time.
Types of Timeshare Ownership
Each timeshare property runs its reservations on one of two systems; a fixed week ownership or flex week ownership. With a fixed week timeshare, you must choose your vacation week or two and room number when you complete the purchase. Your vacation dates then remain the same every year unless you can trade your dates and room with another owner. With a flex week schedule, you can have more flexibility as to when and in what unit you stay each year. However, there are usually still limitations depending on the season and units available.
What a Timeshare or Vacation Club Is Not
In addition to knowing what is a timeshare, you need to also understand what a timshare or vacation club are not. A timeshare purchase or vacation club membership is not a real estate investment. Both the Federal Trade Commission and The Timeshare Users Group state that if you later sell your timeshare you should not expect to make a profit. In fact, most timeshares sell for 50 percent or less than the initial purchase price. If you spend $10,000 to buy a timeshare, then expect to only get about $3,000 to $5,000 when you sell that timeshare. There are also typically timeshare association fees that owners much pay to maintain the property and facilities that increases the overall cost of the timeshare. You will not get this money back when you sell your share of the property.
Why Buy a Timeshare or Vacation Club Membership?
Although you cannot expect a timeshare to be a financial investment, it can be an investment in your vacation and leisure time. If you have a favorite vacation spot that you return to year after year, then buying a timeshare can make that vacation spot all the more enjoyable. When buying a timeshare you can choose one in your favorite location and with the amenities you want in a hotel such as a luxury suite, pool, spa, laundry facilities, or onsite restaurant. The monthly payment on your property can also help you spread out the costs throughout the year of what you would have otherwise spent on a hotel. Also, once your timeshare is paid for, other than the yearly association and maintenance fees, your vacation hotel is free. Over several years, this may actually lower your vacation expenses.
A word of caution. There are many timeshare scams out there. Be sure to do your research before giving money to anyone when buying or selling a timeshare. It helps to fully understand what is a timeshare to avoid timeshare fraud.