A timeshare resort sounds like a pretty sweet deal. You have a consistent vacation home in some gorgeous slice of paradise, and you never have to go through the frustration of booking a hotel room again. Though a timeshare resort can verge on the pricey side, you and your family will always have a place that you can call your own... for one week per year at least! But there are definitely some timeshare tips to be aware of.
Sure, all those positives about timeshares sound ideal, we can't help but wonder: what are some secrets that timeshares are hiding from you? While buying a timeshare may seem like a smart investment, it's actually not an investment at all! Similar to buying a car, a timeshare loses 50% of its value the second that you purchase it. And similar to buying a car, the salespeople you have to deal with, can be pretty shady. Whether it's using tricky language or hiding certain fees so you're more willing to buy, timeshare reps, and time share resale reps are almost as bad (if not worse) than used car salespeople! No one wants to get hoodwinked by a timeshare scam, so be a smart shopper!
Before you decide to commit to buying a timeshare, you really should weigh all of the different pros and cons. Whether this list makes you rethink your decision or has you moving full steam ahead on securing your dream timeshare, we hope you enjoy!
It's Way Cheaper to Rent a Timeshare Than to Buy One
That pesky little thing called life can often interfere with you staying at your timeshare each year. Most timeshare owners try to rent out their space in order to gain back some of the money that they've paid. In most cases, if you rent a timeshare, you'll be paying the same amount it would cost to stay at a hotel for a week! And you won't have to worry about all the risks that come with owning a timeshare.
If You Default on Your Timeshare, You Could Face Foreclosure
If you manage to take out a loan to pay for part of your timeshare, you can face foreclosure if you default on any of those payments. However, that's not all! If you default on any other timeshare financial obligations (taxes, maintenance fees, etc.), you can also face foreclosure. Not only will your credit score take a hit, you'll have difficulty securing a loan in the future.
Similar to used car salesmen, timeshare reps have a lot of tricks up their sleeves. Though nowadays they're discouraged from telling prospective buyers outright that timeshares are quality investments, they use subtle wording during their sales pitches to make you think that purchasing a timeshare is a good financial move. Using phrases like "life-quality investment" subconsciously tricks buyers into handing over their cash.
Buying a Timeshare Comes with a Lot of Hidden Risks
When you buy a timeshare, you're technically purchasing a part of that building. That means, that if there's some natural disaster (earthquake, fire, etc.), you are fiscally responsible for rebuilding your unit. Despite the fact that most timeshares have some sort of insurance, there are some disasters that insurance cannot cover, leaving you to pick up the pieces.
Trading Timeshares Isn't as Easy as the Reps Make It Out to Be
During a sales pitch with a timeshare rep, they'll make it sound like it will be a walk in the park to trade your timeshare unit with other properties around the world. However, it's actually a lot easier said than done; you usually have to pay extra fees to make a trade happen, and, more often than not, a trade isn't possible at all.
The IRS Doesn't Care About Your Timeshare Losses
What a shocker, the IRS doesn't care about your bad business decisions! If you sell your timeshare at a loss (which most people do) the IRS will not let you claim a capital loss, as it would with other real estate investments.
