Are Timeshares Worth It? How To Decide If Buying One Is Right For You

Did you ever have a vacation that was so good you wished you could go back every year? Maybe you want to go to different destinations, but you would rather avoid the hassle of trying to find somewhere to stay. Timeshares can deliver on both of these promises and more, but they also come with drawbacks. We’ll help you decide for yourself the question, “Are timeshares worth it?”

Before we get into this, we also just want to note that Rocket Mortgage^® doesn’t finance timeshares.

Timeshare Basics

Before we get into the nitty-gritty, there are a lot of misconceptions out there regarding what a timeshare is and how it works. Let’s cover some basics:

• What a timeshare is: A timeshare is an arrangement in which two or more people share usage rights for a property. They may share ownership or be lessees for the person or entity who owns the property.
• How a timeshare works: The traditional structure involves timeshare holders accessing a property in a single locale, with each tenant coming at different times. A more recent alternative is a timeshare structure where major hotel chains give a certain number of points that can be spent to go to different destinations, providing more flexibility.
• How much a timeshare costs: While it’s hard to pinpoint a specific average cost that’s going to apply everywhere because the structure of timeshare contracts varies quite a bit, 2023 data from the American Resort Development Association shows that the average price of a timeshare transaction is $23,940. The average nightly rental rate was $235.

Benefits Of Timeshares

As a getaway option, there are several benefits that might be appealing when it comes to timeshares.

They’re Low Maintenance

Whether you buy, lease or use a timeshare with a points system, there’s typically a company that handles the maintenance. Although you have to pay for it, there’s an advantage to not having to deal with the upkeep on your own. This is particularly beneficial when you’re not near the property all the time. If something happens, you don’t have to figure it out.

They Often Come With Amenities

Developments trying to attract tenants for their timeshares often woo potential new owners with things like wellness and fitness centers, pools, sports recreation areas and services for guests. If there’s something specific you’re looking for, be sure to target timeshares that offer that particular amenity.

You Have Guaranteed A Vacation

Whether you go to the same spot every year or a different destination, you have to use the timeshare for a certain amount of time. Because of that, you’ll be required to take a vacation. Having that time set aside may be a relief if you’re the type who has trouble finding time to get away. You’re scheduling me time and you just have to decide how to spend it once you’re there.

They Can Have Plenty Of Space For Large Groups

If you’re in a development where you own the property, you’re often staying in a house. This enables you to have more space for you and your entire group. If you’re getting a timeshare from a hotel group, it’s often for special bigger suites. So you may have more space even in that situation.

They Can Be Cheaper Than Vacation Homes

The upfront cost on a timeshare may be cheaper than getting a vacation home. While we talked about the average cost of a timeshare transaction being more than $20,000, when you’re looking at vacation homes, the minimum down payment on those is often at least 10% of the purchase price, plus 3% – 6% for closing costs.

Because most places where you would want to get a vacation home are popular destinations, the demand for homes in that market may be high, which additionally contributes to elevated home prices.

Risks Of Timeshares

While timeshares have their advantages, there are also several downsides. Let’s go over these.

They Can Be Difficult To Cancel

Be sure to read your timeshare contract and understand what your outs are if at some point down the line you determined that timeshare ownership isn’t for you. Depending on the terms, it can be more or less difficult to bow out.

In some instances, you may be able to sell your interest or give it to a friend. Other times, you may have to give it to the company. Know what fees you might be responsible for.

They Can Be Expensive

You’ll have to pay a large upfront fee to secure your share of the timeshare or membership in the club if it’s a hotel service. After that, there are also annual maintenance fees. These can be quite steep in some cases.

Be sure you understand the cost you’re responsible for in your contract. This will help you make sure it’s the right decision and that you’re financially prepared.

They Depreciate In Value

Typically, if you own a vacation home and you maintain it properly, these tend to go up in value over time. If nothing else, you own the land. Land is a scarce resource. Timeshares are not that way. You have to find someone willing to take on the terms of the contract. Because of that, the market’s not as big. You may find that you’re giving up your timeshare at a loss.

They Can Be Difficult To Resell

Because of the market dynamics we just mentioned, timeshares can be difficult to put on the market and get a fair price. You have to find someone who is interested in timeshares. Then they have to be interested in getting on where you’re at or with that particular hotel club. You can have a really hard time.

Scams Are Possible

It’s possible to get conned when either buying or selling a timeshare. On the buying side, it’s a sales-driven industry, so someone who is unscrupulous will tell you just about anything you want to hear if they think it will help them get a sale.

If you’re looking to sell or get out of your contract, there are services who claim to be able to do that for you. However, realistically, you’re limited to the outs in your contract and the potential market for people interested in your timeshare. So if what people are promising you on either side sounds too good to be true, it probably is.

How To Decide If A Timeshare Is Worth It For You

Now that we’ve gone over the upsides and downsides, here’s the approach you can take to determine if getting a timeshare is right for you.

1. Weigh The Benefits And Risks

The first thing you should do is make sure that you fully understand each of the benefits and cons to getting a timeshare. But think about them as relates to your situation. Something that might be a big deal for someone else may not be such a big deal for you and vice versa. Only you will know what’s right for you.

2. Learn About The Different Types Of Timeshares

Understanding your usage rights has to be the next thing you tackle: there are three big variations of this:

• Fixed-week: When you have fixed usage weeks, you go to the destination at the same time every year.
• Floating-week: With floating week usage, you can book your timeshare for any time someone else isn’t using it.
• Points system: A points system allows you to use a points budget to pick different destinations to go to rather than being tied to one location all the time.

Understanding which option fits your lifestyle will help you narrow your list to timeshares that offer these options. If you don’t want to get tied down to a specific time or destination, it’s important to know that going in.

3. Understand Both Types Of Timeshare Ownership

There are two ways to possess your timeshare. It’s important to understand the difference because it could impact your rights under the contract and how selling works.

• Deeded: if ownership is deeded to you, you own rights in the timeshare. You and the other owners are typically tenants-in-common.
• Leased: If the timeshare is leased, you’re purchasing access rights to the property. The entity you bought from still retains ownership rights in the timeshare.

If ownership rights are deeded to you, you may have more freedom in what you can do with the property. The downside is you may have to figure out what the market is to sell it should it come to that. On the other hand, if the property is leased, you may not have to find a buyer, but you may be restricted in how you can end the lease and a termination fee may be required.

4. Consider How You’ll Finance The Timeshare

Because there’s no land changing hands, you can’t finance a timeshare with a traditional mortgage. You’ll have to look at alternative forms of financing and factor that into the cost of ownership.

Timeshares may be purchased with cash, on credit cards or with personal loans. No matter which way you go, be sure to consider the financing in light of your overall financial picture.

5. Think About How Much Time You’ll Spend At The Timeshare

There are significant costs associated with timeshares, both upfront and over the course of time in terms of maintenance fees. Because of this, you’ll want to make sure that you’re spending enough time there to make it worth it. You may want to calculate an estimated per night average.

6. Consider Alternatives

In determining whether a timeshare makes the most sense, it’s important to think about all the potential alternatives. When you do the math, does it make more sense to just buy a vacation home? There wouldn’t be maintenance fees.

If you’re going once or twice for a short time, would it make more sense to get a hotel or a short-term rental? This would offer the temporary nature of a hotel with the advantage of having more space given by a home.

7. Consult An Attorney Or Financial Advisor

If you decide a timeshare is worth exploring, have an attorney and/or financial advisor run through the terms of the contract. They’ll be able to go over the fees with you and determine whether this makes financial sense as well as being upfront with you on how hard it might be to terminate your agreement in a way that allows you to be in the best financial shape.

When Is A Timeshare Worth It?

Whether a timeshare is the right vacationing decision for you ultimately comes down to your personal situation. If you don’t mind going to the same place or operating on a points system, you might find this to be ideal in that it takes a lot of thinking out of going in vacation.

It’s also ideal that someone else handles the maintenance. A timeshare is a turnkey vacation. You just need to make sure you understand the contract.

When Isn’t A Timeshare Worth It?

A timeshare might not make sense if you don’t like the idea of going to the same place or dealing with date restrictions. There are also both upfront and ongoing fees to consider for maintenance.

Further, the fact that it can be hard to extract yourself from the contract or sell the property to own limited market also may dissuade you.

The Bottom Line

A timeshare grants you usage rights to a property for any length of time. Depending on your ownership rights, this may be deeded to you or leased. It may be a floating week or the same time every year. Traditionally, timeshares are for the same destination, but hospitality clubs from hotels have point systems allowing you to go to different destinations within their portfolio.

Timeshares take the work out of vacation planning and everything is taken care of for you in terms of maintenance, but the downsides are that the contracts may be difficult to get out of, and you can have a hard time with resale.