Let’s Talk About Timeshares

The concept of timeshares began in France in the early 1960s. Paul Dourmier, a resort developer in the French Alps, began the trend with a radical idea, “Stop renting a room and buy the hotel.” The concept caught on quickly and proved to be cheaper and better than renting an individual room. In 1963 the Swiss company Hamipag created a shared vacation ownership program. Other companies quickly got on board and the right to use selling of resort properties to vacationers really took off.

The word timeshare has been adapted over the years to include many different vacation products and plans. Vacation ownership, holiday ownership and interval ownership are other commonly used phrases that describe the same system. The concept is simple. You join a group of people who share the purchase cost of a vacation accommodation. This ownership is bought in increments of one week’s use per year. If you want more than one week, you buy multiple shares. This purchase guarantees that you can use the accommodation during the period of time you choose.

Timeshare doesn’t always refer to a condo or room. Many timeshares are cabins or luxury homes and you can actually buy timeshares on boats or planes. Although the property is different, the concept remains the same.

Normally, each share of a timeshare is equal to 1/50 of the value of the property. Each share allows the owner to use the property for one week of time during the year. The extra two shares are used for maintenance.

Timeshares can also be set up using a point system. Each share is worth a specific number of points that can be traded in for time at that property or used at other properties the development company owns or has trade agreements with. These points are spent to purchase time at the property, with more valuable dates costing more.

If you are buying a timeshare, you will want one that comes with a membership to an exchange company. Companies such as RCI or Interval International have exchange programs that allow their members to swap their timeshare with other members. This expands and facilitates the owner’s choices for vacation stays. Instead of being limited to one property, these companies have hundreds of affiliated resorts around the world. They even allow you to exchange timeshare points for cruises, golf vacations or spa vacations.

On occasion, a timeshare can make you money as a rental property, but unless it is located in Hawaii or an even more exotic and desirable location, it will not. Even in a great location, the rent on a timeshare will not be enough to create a reliable source of income.

Timeshares, on the other hand, can only be considered a reliable investment for family time. As a financial investment, they are not worthwhile. The depreciation, from the moment you sign the contract, can be staggering. It is a rare timeshare purchase that will pay its owner back when the time comes to sell.

How do they suck you in at these presentations? Find out more about timeshare sales.


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