What is a timeshare? Lots of us have heard about this form of shared property ownership, but it’s not always clear what exactly it means. At Remitly, we are all about sharing knowledge and exploring the world, so let’s talk about what a timeshare actually is.
Basically, a timeshare is a way to own a share of a vacation property at a lower cost. In this guide, we’re going to explain fully what timeshares are, how they work, the costs involved, and what to consider before making a timeshare purchase decision. We’ll give you everything you need in plain language so you can buy with confidence.
What is a timeshare?
A timeshare is not a type of house, but a type of homeownership. It’s when multiple people buy a property together and agree to use it for specific time periods each year.
Timeshares are most often associated with resort ownership, but in reality, a timeshare can be almost any kind of apartment or house.
Every timeshare agreement is a little bit different. One common arrangement is for everyone who owns a stake in the property to get to use it for one week per year. That means 52 people could own the place, and as you can imagine, that makes buying it a lot cheaper than it would be to buy it yourself.
Often, with timeshares, you’re not necessarily buying the property itself, but are simply buying the right to use it. That means you might not get any share in the value of the property if it is sold.
Ultimately, it all depends on the specific arrangement you make with the other owners. That’s why it’s so important to be clear on the exact terms of any agreement you sign.
How timeshare ownership works
The goal of a timeshare is to fairly share the property among the owners, and also share the costs. Although every agreement is different, most timeshare agreements follow a similar pattern.
Fixed week timeshares
A fixed week arrangement gives you the right to the property during the same week every year. For example, you might buy the right to stay at a beach resort unit in the first week of July every summer.
Pros
- You get guaranteed access during your week every year.
- It’s easy to plan your vacation.
- You don’t have to make a reservation, as the property will be open to you at the same time each year.
Cons
- Limited flexibility. If your schedule changes, you may not be able to use your week.
- Popular weeks around holidays or peak seasons can be more expensive.
- It can be hard to swap weeks unless you’re part of an exchange program.
Floating timeshares
A floating timeshare lets you change the week you get at the property within a particular time frame. For example, you might be able to book any week during spring. You have to book your week in advance, and availability is usually first-come, first-served, so it’s a good idea to book early.
Pros of floating timeshares
- More flexibility than a fixed week.
- You can adjust your travel plans from one year to the next.
Cons of floating timeshares
- Popular dates get booked early.
- You’ll need to plan in advance to get the week you want.
Point-based systems
Some timeshare systems let you buy points, which you can then redeem for vacation time at multiple resorts within the network. Having more points can get you a bigger unit, access to peak travel times, or locations with high demand.
Each resort and season is assigned a point value, and owners use their annual points to book. Some systems let you bank points for later or borrow them from future years.
Pros of point-based timeshares
- This is one of the most flexible timeshare arrangements. You can travel at different times, stay in different units, and even change locations from one year to the next.
- Points can sometimes be exchanged for other benefits, like cruises or hotel stays.
Cons of point-based timeshares
- This system is more complex and requires you to be more aware of the rules.
- Popular destinations and peak dates may require more points than you have.
- Availability can be limited, especially for popular resorts.
Timeshare costs: what you’ll pay
It’s important to remember that buying a timeshare isn’t just about the upfront purchase cost. These vacation properties also come with ongoing financial responsibilities. Understanding the agreement will help you decide whether ownership works for you.
Upfront purchase price
- Timeshares can cost anywhere from a few thousand dollars to tens of thousands for luxury resorts.
- Pricing is affected by:
- Location, with beachfront or ski resorts being the most expensive.
- Season, with school holidays and peak travel periods costing more.
- Amenities, since resorts with pools, spas, and restaurants cost more.
- Ownership type, as fixed weeks are sometimes less expensive than flexible arrangements.
Annual maintenance fees
- Owners must pay ongoing fees that cover the cost of property maintenance, utilities, insurance, and management.
- Fees can range from $500-$1,500 per year, but they can be much higher for luxury properties.
- Fees generally increase over time because of inflation and the rising cost of maintaining aging buildings.
- If you don’t pay your fees, you may lose the right to use the property.
Special assessments
Sometimes, resorts need to charge one-off special fees for major repairs or improvements. This could be something like replacing a roof, fixing hurricane damage, or upgrading the swimming pool.
These costs are divided among all the owners, and they can sometimes cost thousands for a major project. Unfortunately, these costs are unpredictable, so it’s wise to keep some money set aside just in case.
Exchange fees
Exchange programs offer great flexibility, but be aware that you may have to pay an annual membership fee and transaction fees for any exchange. Membership could cost around $100-$200 per year, with an exchange fee of $150-$250.
Pros and cons of timeshare ownership
Owning a timeshare has both good and bad sides. Understanding the pros and cons can help you make a decision about whether it’s the right choice for you.
Benefits of owning a timeshare
- Guaranteed vacation accommodation every year. You know you have a place to stay without worrying about availability or fluctuating prices.
- Potential savings. If you travel frequently, owning a timeshare may work out cheaper than paying for hotels.
- Access to resort amenities and services. Timeshares in resorts offer pools, gyms, spas, and other features.
- Possible exchanges for variety. With an exchange system, you don’t have to be stuck with a single vacation destination.
Drawbacks of owning a timeshare
- Large upfront investment. It can cost thousands of dollars to buy a timeshare, and you’ll need to pay upfront, before you get to enjoy it.
- Ongoing annual costs. You have to pay maintenance fees whether you use the property or not.
- Limited flexibility. Fixed weeks lock you into the same holiday schedule every year. Exchange systems give you more flexibility, but they still depend on availability.
- Difficulty selling. The resale market for timeshares is sometimes weak, and many owners take a loss when they decide to sell.
- Increasing costs. Maintenance fees only get more expensive, so what was once affordable may end up being a financial burden, especially if your circumstances change.
Important considerations before buying
Some people regret buying a timeshare, while others think it’s the best decision they ever made. Before you sign anything, it’s essential to think carefully about whether this form of vacation ownership matches the way you like to travel, as well as your budget.
- Assess your vacation habits and preferences honestly. How often do you travel? Where do you like to go? Are you happy going to the same place every year, or do you prefer to explore new ones?
- Calculate the total costs. Consider the upfront price, the annual maintenance fees, and any potential exchange costs. Assessments (one-time fees) are harder to predict, but it’s a good idea to be aware of the possibility of an unexpected bill. Once you have a realistic figure of what your timeshare will cost, compare it to what you would typically spend on hotels or other vacation rentals.
- Do your research. Look into the reputation of the specific resort, the quality of its amenities, and the track record of the company managing it. Online reviews can be really helpful here.
- Understand your state’s rescission period. This is the “cooling off” period you have after signing a timeshare contract, when you can cancel a purchase with no penalty.
- Consider alternatives. Vacation rentals can offer a similar experience with no upfront cost.
- Read all contracts carefully. Timeshare contracts are binding, and it may be helpful to consult with a lawyer before you commit.
Alternatives to timeshare ownership
Timeshares aren’t for everyone. Depending on your budget and how you like to vacation, there are several alternatives to owning a share of a resort property.
Vacation rental services
Platforms like Airbnb and Vrbo let you book unique homes and apartments for short stays. These rentals let you choose your location and dates without upfront investment, so you can go somewhere new and stay flexible.
Vacation clubs and membership programs
Some hotel groups offer membership plans. Members pay an annual or monthly fee, which gives them access to discounted status, exclusive resorts, or flexible booking options. That way, you get variety without a long-term contract.
Saving for vacations
You could set the money you would have spent on a timeshare aside each month or each year, and use that as your travel savings account. This gives you total flexibility with no contract to sign.
Hotel loyalty programs
Major hotel chains offer reward programs that award you points every time you stay. The points can buy you free nights and upgrades, so they can give you good vacation options without upfront costs.
Making the right choice for your vacation needs
A timeshare lets you use a vacation property at a fraction of the cost of owning a second home. By splitting the costs between multiple owners, you get to use a vacation rental on a regular basis with less exposure to financial risk.
If you like to go to the same place and want access to resort amenities, a timeshare can be a good deal. Plus, many timeshare systems allow you to swap properties so that you can see more of the world.
But timeshares aren’t perfect for everyone. Often, you need to book well in advance to get the weeks you want, and you can be hit by unexpected costs, like assessments, at any time.
Before signing a timeshare contract, it’s wise to make sure you have a good idea of all the costs and benefits. You may even want to speak to a financial advisor before making a large purchase.
There are so many ways to enjoy great vacations, so if a timeshare isn’t for you, you can look into vacation rentals and other ways of traveling. On the other hand, if a timeshare does work for you, these arrangements can give you some memorable vacations year after year.
FAQs
How much does a timeshare typically cost?
Timeshare prices vary a lot, depending on location, amenities, and the type of ownership. A share in a modest property might only be a few thousand dollars, while a luxury resort can cost tens of thousands of dollars.
Can I sell my timeshare if I no longer want it?
Yes, but it can be difficult. The resale market for timeshares isn’t all that strong, and many owners end up selling for less than they paid. Some resorts offer a mechanism to buy back your purchase, but it depends on each property’s policies.
What happens if I can’t use my timeshare week?
You may be able to rent your timeshare out, exchange it through an exchange program, or bank your points. Remember, though, that you’re still responsible for annual fees whether you use the time or not.
Are maintenance fees tax deductible?
Usually not. In most jurisdictions, property that is not your primary residence does not qualify for tax deductions. In some cases, if you rent out your property as an income source, you may be able to write off some expenses, but consulting a tax professional is the best way to go.
How long do timeshare contracts last?
Timeshares are long-term commitments. Agreements may be for decades or even for a lifetime. Some arrangements do expire after a set number of years, so it’s important to be aware of the rules before you sign.