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Are Timeshares Worth It?

Owning a piece of a vacation home sounds perfect, doesn’t it? A place to call home and visit again and again, knowing it’s yours for a week or two. And you might think about buying a timeshare to make this dream a reality.  

Quick recap on timeshares: A timeshare is a vacation home split between folks who buy into it for the right to use it once a year for a set period of time. These people pay a lot of money upfront to guarantee their week every year to vacation in this timeshare location.

But here’s a little secret: You don’t have to own a timeshare to use a timeshare! So, let’s put timeshares on a time-out for a minute! They might sound like a good idea, but are timeshares actually worth it?

Are they worth all of your hard-earned cash and worth parting with even more of your money year after year once you’ve hopped on board the timeshare train?  

No matter how you slice it, timeshares are not worth buying into. Here are 6 reasons why.

1. Timeshares Have No Investment Value

In 2017, the average price of buying into a timeshare was a whopping $22,180.1 You’d think, for that much money, you’d get something substantial in return (besides a week in the sun), right?

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No, the timeshare has no value, because you don’t own anything in the normal sense of the word. It’s not like your regular home, which likely has some equity built up.

In fact, a timeshare goes down in value from the moment you sign the contract. There are much better ways to invest your hard-earned money.

2. You Can’t Resell Timeshares

A timeshare is really worth nothing, which makes them difficult to sell. eBay is full of timeshares on sale for as little as one dollar! People can’t give them away. Why? Because timeshares don’t go up in value like a piece of regular real estate—just the opposite! You’re trying to sell something that comes with a lot of baggage, including rising annual fees (more on these soon).  

And if you want to get out of a timeshare, it’s not as easy as you think. Sure, a timeshare salesperson will try to convince you you’re owning a little piece of this home, but what they’re not telling you is that if you wanted to sell it at some point, you’d lose thousands of dollars from what you originally paid for it.  

3. Timeshares Come With Rising Annual Maintenance Fees

Once you’ve bought a timeshare, don’t rush to put that checkbook away, because there are annual timeshare maintenance fees to pay (to cover the operating costs for the resort). In 2017, annual maintenance fees averaged $980 but can be in the thousands if your timeshare is high-end in its location and size.2

And it gets worse. The fees aren’t fixed—they go up a few percent every year! So, the value of your timeshare doesn’t rise, but the cost of maintaining it does? That’s no fun, and it really takes the shine off any timeshare vacation.  

4. You’re Paying for Timeshares When You’re Not Using Them

So, your neighbor just got back from an amazing summer break in the Caribbean. You’d like your family to vacation there too, but there’s one problem: Your timeshare is in Mexico, which leaves you racked with timeshare guilt. You feel like you have to use it every year.

What if you do decide to skip a year at that Mexican timeshare? You still have to pay those pesky maintenance fees, whether you like it or not! That’s a thousand dollars or so that could have gone toward booking your trip to the Caribbean.  

Instead of buying a timeshare, you could book a resort or rental at a different destination every year. And even if you prefer the same location every year, a timeshare stuck in the same place could mean you’re missing out on a new resort down the road with even better views and facilities (and no annual fees)!

5. Timeshares Are Not Easy to Rent  

If you do decide to skip vacationing at your timeshare one year and want to rent it to someone else, beware—it’s not easy! Timeshare companies aren’t keen on clients leasing their timeshares to strangers.

Many companies simply don’t allow it. And if they do, there are rules and restrictions in place. You’ll pay a fee, and the company might take a commission from you. Why? Because they are competing against you to rent their own inventory!

You’ll also pay a cleaning fee once your guest has left. And you’ll be charged a fee if the guest causes damage to the property. It’s clear, once you’ve paid these fees and commissions, you won’t see much in the way of rent.

This is all assuming someone actually wants to rent your timeshare. If it’s not in a popular destination, you could find it hard to generate interest!

6. Timeshare Loans Have High Interest Rates

If you’ve paid cash for your timeshare, that money is pretty much gone in terms of you ever wanting to get any of it back. And a quick reminder here, folks: You could have opted to put that $20K in a mutual fund, instead, and used the return on it every year to help fund luxury vacations galore!

If you’re set on a timeshare but can’t pay cash for it, a loan will be offered to you by the timeshare company. This is your cue to run for the hills! Why? Because a timeshare isn’t like a regular property, so the loan on it isn’t like your regular mortgage, either.

Mortgage companies know how timeshares lose their value almost instantly upon sale, so they’re not lining up to lend people the money to buy them! Special timeshare mortgages come with much higher interest rates than regular mortgages. And that’s even more of your money you won’t see again.  

Ramsey Solutions

About the author

Ramsey Solutions

Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books (including 12 national bestsellers) published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners. Learn More.

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