A timeshare, also known as vacation or fractional ownership, is a real
estate program in which a residential property is divided among many owners who
have purchased the right to use the property for a specific period of time.
Today, more than 9 million timeshare owners worldwide have access to
more than 6,000 resorts in 95 countries. An estimated $10 billion in timeshares
are sold every year, making them one of the top money producers in the global
travel and hospitality industry.
And the United States has a booming timeshare industry, as well.
According to the American Resort Development Association (ARDA), a Washington,
D.C.-based trade group, in 2011, there were 1,548 timeshare resorts in the
United States, with approximately 194,200 units. An estimated 8 million
Americans – 7 percent of U.S. households – own a timeshare.
Types of Timeshares
A timeshare typically
involves a room or suite of rooms at a resort or vacation destination. Instead
of paying full price, each owner pays only a share of the property’s total cost
and can only occupy it during an assigned interval, based on the number of
shares bought. For example, a 1/52 “share” entitles a purchaser to “own” – and
use – the property for one week per year.Most timeshare purchases are deeded — or “fee simple” — transactions. This means that the purchaser is buying an actual share of ownership in the property in perpetuity, and can resell, rent, give it away or bequeath it to heirs, just as with any other type of real estate. The share may be for a specific week (fixed week system); a specified season (floating week system); or one where the usage week changes from year to year on a fixed schedule (rotating week system).
In contrast, non-deeded timeshares, also known as right-to-use, certificate or vacation-interval timeshares, more closely resemble a lease. The buyer owns the right to use the property for a specific period of time, and usually for a specified number of years, but doesn’t actually own it. At the end of the term, usage rights revert to the original property owner.
Two variations of the timeshare concept are vacation clubs and points-based programs. A vacation club is an organization that owns multiple timeshare properties in different locations, which are rented to its members. Club memberships can be bought, sold or passed to heirs.
Membership in a points program provides the buyer with a specified number of points that can be exchanged for timeshare usage at various properties owned or contracted by the operating companies, which are often hotel chains or well-known resort brands.
Why a timeshare is great
for you
You get
what you pay for
Timeshares are financially attractive for several reasons. Instead of owning a condominium and living in it for vacation purposes only two weeks out of the year, the program allows you to pay only for what you use.
Less hassleTimeshares are financially attractive for several reasons. Instead of owning a condominium and living in it for vacation purposes only two weeks out of the year, the program allows you to pay only for what you use.
At the same time, many believe you get your money's worth simply because you don't have to deal with upkeep (annual fees take care of that) or worry about a property's security amid the 50 weeks you're in the city working.
Guaranteed vacation destination
In the same vein, timeshares seem alluring because you can get your money's worth. Terms of the agreement usually stipulate that the property, whether a spacious condo or studio apartment, be occupied by you once a year. This guarantees you a vacation destination each year, making it easier to budget and save for the days off. If you enjoy visiting the same place each year, this is definitely a sound investment.
In the same vein, timeshares seem alluring because you can get your money's worth. Terms of the agreement usually stipulate that the property, whether a spacious condo or studio apartment, be occupied by you once a year. This guarantees you a vacation destination each year, making it easier to budget and save for the days off. If you enjoy visiting the same place each year, this is definitely a sound investment.
Economical for large families
Similarly, if you do have a large family, there will be significantly less financial and mental stress with a timeshare, since you do not have to worry about renting many rooms. Most timeshare units are very luxurious and fully equipped, so you can hold your brood in one location and take advantage of the kitchen to save on food.
Similarly, if you do have a large family, there will be significantly less financial and mental stress with a timeshare, since you do not have to worry about renting many rooms. Most timeshare units are very luxurious and fully equipped, so you can hold your brood in one location and take advantage of the kitchen to save on food.
Subletting offers revenue potential
Those less interested in the actual vacation benefits may see timeshares as golden investment opportunities. Several owners of timeshares profit by renting them out to others instead. There is little principle to make up before profiting, since you do not have to worry about monthly payments for repairs, taxes and other hang-ups.
Those less interested in the actual vacation benefits may see timeshares as golden investment opportunities. Several owners of timeshares profit by renting them out to others instead. There is little principle to make up before profiting, since you do not have to worry about monthly payments for repairs, taxes and other hang-ups.
Exchange programs
On a related note to subletting, timesharing is especially interesting when you consider that an owner can profit from trading to a different location every year. Programs have been set up that allow timeshare owners to trade units (and times) with other owners, allowing each one to experience a different place in the world every couple of years. Also, as someone who may want to lease his timeshare, you remain attractive on the market, always diversifying your product.
On a related note to subletting, timesharing is especially interesting when you consider that an owner can profit from trading to a different location every year. Programs have been set up that allow timeshare owners to trade units (and times) with other owners, allowing each one to experience a different place in the world every couple of years. Also, as someone who may want to lease his timeshare, you remain attractive on the market, always diversifying your product.
Make money from the market
You don't have to rent out your place to make a pretty penny. Many play the timeshare market: they buy time at a nice property for cheap and then get involved in an exchange program. They find someone to trade with, and end up having a new prime spot valued higher than the one they originally bought. This means a profit was made without even staying in the place or lifting a finger. Fluctuations in the market can play in your favor this way, especially if you keep your ear on the market's pulse and find out where the next hotspot is sprouting up.
You don't have to rent out your place to make a pretty penny. Many play the timeshare market: they buy time at a nice property for cheap and then get involved in an exchange program. They find someone to trade with, and end up having a new prime spot valued higher than the one they originally bought. This means a profit was made without even staying in the place or lifting a finger. Fluctuations in the market can play in your favor this way, especially if you keep your ear on the market's pulse and find out where the next hotspot is sprouting up.
