Timeshares: Are They an Asset or Liability?

If you’re thinking about buying a timeshare, or if you already purchased one, you might want to revisit your decision. On the plus side, people purchase timeshares to save on vacation accommodation expenses. You can pick specific dates to use them, and they provide more amenities than a hotel room, such as the ability to do laundry, cook, and more. Bottom line, when it comes to timeshares, are they an asset or liability? and are they really worth it in the long run? The short answer: no.

Time Is Money and Vice Versa

Timeshares can hit you in the pocketbook—hard. When you invest in a timeshare today, you’re giving up the pursuit of other investments in the coming years. What’s more, a tremendous opportunity cost or future high-interest rates may accompany it. The benefit of owning a place to stay on vacation once a year doesn’t make up for all the financial opportunities lost the rest of the year.

Get Ready for the Fees

You’ll often hear, mostly from timeshare sellers, that they’re cheaper than a hotel room. Unlike a hotel room, however, your timeshare property comes with a mortgage, annual maintenance fees, property taxes, and sundry other costs. Also, more likely than not, those fees will rise every year. If you’re already paying for one permanent home, taking on a part-time one can be financially punishing.

Depreciation Is Unavoidable

Unlike some property investments, when you buy a timeshare, it immediately begins to depreciate, sometimes by as much as 70 percent. Comparatively, even new cars, which go down in value after purchase, are a better investment. Furthermore, if you take out loans to pay them off, you risk falling into a potential situation of throwing good money after bad.

Use It or Lose It

When you purchase a timeshare, it’s on you to use it. Every season you pay for it but fail to visit is just money down the drain. And even then, you can only use on the agreed-upon times and may even need to make reservations to use your property, possibly during the off-season.

If you’re questioning the choice to purchase a timeshare and wondering, “Are they an asset or liability?” that’s a good first step. If you’re also asking yourself “Can I cancel my timeshare?” contact us to learn your options.