Timeshare - What is it? Should I buy a Timeshare?

What is a Timeshare?

Timeshare, or co-ownership of a vacation home, is an industry that started in Europe over 50 years ago. Soon after, it crossed the Atlantic and was embraced by the United States, where there are now more than 2 million families who own timeshare property. It makes a lot of sense. Nobody wants to pay a million dollars for property they use once a year, but everybody would like to spend ten or 20 thousand dollars and have annual usage of a million dollar asset in perpetuity. That is what timeshare ownership gives you.

The industry adopted many of the legal precedents used in multiple dwelling developments, or condominium developments. Condominium, incidentally, primarily means “joint administration,” or “joint dominion.” It later, through common usage, and abbreviation to “condo,” came to describe a particular unit in a development. This joint administration used by developers in multiple dwelling residential housing, gave deeded ownership of the internal area of a specific unit to residents, and co-ownership to the other areas. These areas, external to the unit, such as carports, walkways, gardens, the walls of the building, recreation facilities, are termed “common property,” and owned jointly with other residents. Each unit owner has a percentage of the common property, based on a formula that uses the size of that person’s residence in the complex as a basis for the calculation.. Ownership was traditionally by way of a deed for real property and reflected the parties’ legal rights for both the common property and the living space of his unit or condominium, as it has become known. Common property is not only co-owned; it is managed cooperatively or as a condominium, with annual levies for its upkeep and repair. States have enacted laws to govern the administration and collection of levies.

Timeshare ownership is usually similar to this, except that the right to occupy are only for a specific period each year. This period is usually one week per annum, and is called a timeshare week, but can be as high as six months per annum or for bi-annual usage. Regardless, you still receive a title deed to real property, just as you would if you purchased a residential condominium in any State of America.

Is a timeshare property a good investment?

Timeshare ownership is an investment in your well being. It should not be viewed as one part of your portfolio of assets you track for increasing value. Like stock in a corporation, or even your own home. Equally, it should not be dismissed as expenditure without a return, such as petrol or food or any other commodity.

Before anybody purchases a time-share unit they need to do a “cost benefit analysis”

For example, a recently divorced businessperson, who finds it hard to take scheduled vacations, might not find timeshare ownership a profitable investment.

But for a family with two children, who take regular vacations, there are often many, many thousands of dollars to be saved over the lifetime of the investment. Some models show a six or seven year payback period for the investment. Even less if it is a re-sale purchase. And thereafter, you and your family can continue to use the property for a lifetime of vacations with your only expenditure a nominal annual maintenance fee. Imagine the savings over a lifetime if vacation inflation was to reach four or five percent.

And, through exchange companies, you can choose where and when you go on vacation each year.