I’m vacationing for a long weekend in Los Cabos, land of the timeshare… although we’ve parked ourselves at the Sheraton with Starwood points, we’ve met plenty of people taking in a week of their timeshare. Who knew? Here’s a reprint of some earlier thoughts on these investments…

“For everything you have missed, you have gained something else.” — Ralph Waldo Emerson

Los CabosAnyone ever bought a timeshare? My friend, Gary asked if I had seen the recent article in the LA Times that covered this topic. I missed it but couldn’t resist searching online after he noted a number of people he knew that had been suckered into this type of investment.

In the LA Times article, Kathy M. Kristof interviews Rosanne Luba, director of sales at SellMyTimeshareNow.com. She says, “Buying a time share is a lot like buying a new car. Your interest depreciates steeply the moment you walk off the sales floor.”

“You never make money reselling a time share,” Luba said. “It’s not exactly that you’ve lost money. It’s like a car. If you’ve used it, you’ve gotten value out of it. But it’s not like buying a house that’s going to appreciate.”

Kristof continues with this example, “In retrospect, Jack and Grace Harkness know that they should never have purchased a time share in Myrtle Beach. They’d never been to South Carolina. They hadn’t planned to go there. Their vacations generally involved visiting relatives or heading to exotic locations such as China and Panama. But the salesman told them that they could use the time-share interest to swap for vacations around the world. And that seemed like a good idea.”

It always seems like a good idea when you’re under the spell of a salesperson. Wikipedia gives a good outline of the pros and cons:

“The timeshare industry has been widely criticized and even sometimes likened to a travel scam. Unlike the customary renting arrangement, where the customer decides every year on the quality and price of accommodations, timeshare requires to make a major payment up front. There exist doubts as to whether timeshare buyers ever recover the money spent.”

“One of the major benefits of the product is the fact that vacation timeshare is real property. Resort developers purchase land in a location and develop a timeshare resort. They are actually selling consumers deeded weeks of real property at a specific location, meaning customers can do what they wish with the weeks they own. This flexibility includes the opportunity to rent out weeks that are not used or indeed to lend them to friends or family.”

“Other complaints include issues surrounding the yearly maintenance fee. Some critics talk of ever escalating fees that mean owners cannot afford to keep their weeks due to financial pressure. These vary case by case, but many timeshare owners cannot afford the escalating fees. In the worst cases, there are maintenance fees, homeowners’ fees, rental fees, fees for trading weeks, property taxes (depending on location), and an assortment of hidden fees that buyers were not aware of when they first bought their timeshares.”

“Persons interested in purchasing a timeshare are strongly advised to look online at the secondary market listings for the development they are interested in. Developers put a very large mark-up on new inventory and a new owner will find the resale value of their timeshare to be half or less of what they purchased it for. In the very worst of cases, timeshare resales are virtually impossible and users are stuck paying fees indefinitely.”

Rachel Solano gives Ten Reasons Why You Should Not Buy a Timeshare noting that it could be the most expensive vacation you ever purchased. Click on the link above for the details on each point below:

1. Timeshares are not very good for spontaneous traveling, especially in high season.
2. There aren’t as many resorts available as they made you think.
3. Hidden Fees.
4. Resell Values are horrible.
5. They are too expensive.
6. They will send you to collections too quickly.
7. The interest rates are up to the roof.
8. They won’t let you cancel your reservation after 24 hours.
9. Many of these places are still “under construction”.
10. Even if you have “points” they aren’t enough most of the time.

Do you have a timeshare and just want out?? Aleksandra Todorova at SmartMoney suggests that you consider donating it. She writes, “You can do that through Donate For a Cause, a nonprofit organization that, in partnership with a timeshare closing company, will sell your timeshare and donate the proceeds to charities like the National Foundation for Cancer Research and the American Kidney Fund. For the owner, the sale price is deductible, up to $5,000. So if you were in, say, the 28% tax bracket, and your timeshare was sold for $5,000, you’d get $1,400 knocked off your tax bill.”

This brings us full circle… anyone ever bought a timeshare? Care to comment on your experience: good or bad?