6 Must-Know Facts Before Buying a Timeshare
Have you fallen in love with a favorite holiday destination that you return to year after year, but are getting tired of paying high rental fees every time you go? If the answer is yes, then the idea of buying a timeshare may appeal to you. But before making any purchase which you may regret in the future, make sure you know the facts about timeshares to avoid getting a bad deal.
Things to Know Before Buying a Timeshare
1. Timeshares are Not Investments
No matter what anyone tells you, don't buy a timeshare in hopes that you can resell it in the future for a profit. That is almost never the case. Timeshares typically depreciate in value over time, and you should only purchase one if you intend on using it for yourself or your family.
2. Shop Around
Purchasing a timeshare from the developer is almost always the most expensive option. You can most likely get a much better deal on the price of a unit by buying it directly from a previous owner. There are lots of sites online which resell used timeshares. If you decide to go this route, you should be extra careful about what you are buying and should never depend on the information that the seller provides. Always check with the property management for verification before completing a deal.
3. Know What You Are Really Purchasing
It can be confusing to determine your exact benefits when it comes to timeshares. Unfortunately, many sellers of timeshare properties use high-pressure sales tactics designed to encourage people to make hasty decisions which discourage buyers from completely understanding the transaction. Before purchasing a timeshare, you need to know the complete terms of the sale. For instance, are you purchasing a timeshare which you can resell in the future or are you buying a right-of-use property which means you can't resell it? You will also need to know if you must use the property the same week each year (fixed) or if you can change the week each year (floating). Finally, you should be aware if you can rent out your timeshare week and if you must pay any additional fees if you choose this option in the future.
4. Understand Reoccurring Fees
The purchase price for a timeshare is to just get in the door, but there is an ongoing cost of ownership. The significant yearly cost is maintenance. Never purchase a timeshare without knowing the current maintenance fee for the unit and when and how you must pay the bill. Ask the property manager for a history of the maintenance fees for at least the last five years to get an idea of yearly increases since most will increase yearly. Besides maintenance fees, special assessment fees can occur when the property needs a major renovation. Be aware of any upcoming assessment fees in the future especially if you are purchasing a used timeshare.
5. Know How Healthy the Community Is
Make sure the property you are considering is thriving. One of the best ways of checking the financial well-being of a community is to request information on how many owners of other units are behind on maintenance payments. This information can help you gauge the satisfaction level of the other owners and provide clues to broader issues. You should also ask for information on the total occupancy of the property. Properties with a low-occupancy rate will mean you may be responsible for higher fees to cover the total operating costs. If the community balks at providing any information, it may be a sign that you should choose a different option.
6. Have an Exit Strategy
Things change, and there will probably come a time when you won't use your timeshare. Consider how you will sell your unit in the future to avoid being stuck with a property you no longer want it.
This content is developed from sources believed to be providing accurate information. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information only.