Buy Timeshare Only After Considering Its Pros And Cons

2007-03-08 10:33:40

( Real Estate )



The concept of timeshare is no longer limited to resort condos. Owners of campsites, recreational vehicles, houseboats and cruise ships have also started selling a timeshare in their respective property to interested buyers. The principal advantage when you buy timeshare is the predictability of your annual vacation expenses.

There are basically two timeshare categories: fee-simple ownership, and right-to-use. In fee-simple ownership, you own the property for one or more weeks with a right to give, lease, transfer, or sell the period to another person. The right-to-use is akin to a lease arrangement, generally between ten and fifty years, where the developer retains ownership over the property.

However, before you decide to buy timeshare, note that you only fix the purchase cost of the timeshare. You will be required to pay annual management fees, which may increase. You should read your management contract carefully because some management companies may have the right to terminate membership in case you fail to pay the fees.

Illiquid investment and limitation on a vacation place to stay at the same period every year are the other disadvantages when you buy timeshare. The exchange market has alleviated the monotony of going to the same place for vacation each year, but you should buy timeshare in a highly desirable area to make it easier to trade with other timeshare owners.

You should also take into consideration when you buy timeshare the possibility of liquidating your investment in the future. You must remember that selling a timeshare in the secondary market is still not as well organized as selling homes. Availability of financing, economic conditions and the attractiveness of the property may limit your ability to sell. And if you only have the right-to-use, selling a timeshare is not one of the rights that you acquire when you buy timeshare.


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