Do you own a Timeshare? Do you like it?

I'm asking because I have several friends who own timeshares, and they all seem happy with it.  I have always had a negative impression of timeshares.  Filled with images of pushy salespeople, unredeemable weeks in bad locations and hidden fees.  But given the satisfied experiences of the few people I know who own timeshares, it decided to give it a second chance.

My Fiancee and I have been to numerous timeshare presentations, and here are our experiences so far.

I would estimate that we have been to at least half a dozen presentations.  The first few were at the same Trendwest location in Torrance, CA.  Each time, I received a phone call offering my gift certificates to casual dining, shopping, and free mid-week nights at selected lower end hotels.  Among the goodies we have received include $50 Black Angus, $50 Macy's, $50 Red Lobster, $10 Shell Gas and Four San Diego Padres tickets with one night at a lower end SD hotel. 

Each time, the presentation was promised to last no longer than 90 minutes and end up taking around 90-100 minutes.  Not bad.  The presentation is always the same.  They sit you in a small theater room, show you a video of some gorgeous properties, hosting some beautiful people having more fun than you.  They quote a Wall Street Journal article that scares you about the risks, both physical and mental, of not taking a vacation at least once a year.  They then call you out one couple at a time (it's almost all couples), and sit you down with a sales rep. 

The salesperson starts in with the expected questions, "how often do you travel?  Where are your dream destinations?  What type of accommodations do you prefer?"  You are expected to say that you travel about once a year, want to go to Europe, the Bahamas, Mexico, Asia, ski resorts and tropical beach getaways.  They ask you how much you spend on lodging when you travel.  Then they do a little "math."  They calculate how much you are spending on hotels over the rest of your life versus the cost of the timeshare.  The timeshare typically runs around $12k to $18k depending on whether or not you want the good one.

Here's the math.  One week per year for the next thirty years.  Say $150/night, seven nights.  That's $1,050 per year, and $31,500 over the next thirty years.  For an average cost of about $15,000 today, you're saving yourself more than SIXTEEN THOUSAND DOLLARS!  Wow!  But is that the true cost of a timeshare?  What about the time value of money?  Isn't $15,000 today worth more than a payment stream over the next thirty years?  The answer is yes.  Assuming you really will pay over a grand a year in hotels (which we do not, we find better deals than that), the present value of $1,050 over 30 years assuming a 6% cost of funds is $14,453.  So, unless you don't think you can earn 6% long term on your money, you should not pay more than that.

Of course, that's also not the only expense.  Timeshares typically have an annual maintenance fee ranging from $125 to $375.  At $125, your present value calculation drops to $12,732.  And at $375, you shouldn't pay more than $9,291.  Again this assumes you will actually spend more than a grand a year in hotels.  So, needless to say, we have not opted to buy.  But it's more intriguing than I am making it sound.

Funny thing though, whenever we show disinterest, one of the first things they pull out of their back pocket is, "We have financing if you want."  No kidding, you have financing?  So does my dentist, my hospital, local furniture store, big screen TV store, jewelry store, just about anyone selling anything for more than a couple hundred dollars wants to get me on a payment plan!

By far the coolest stuff we got for a timeshare presentation was during our trip to Maui.  Last summer I received an offer from Westin Resorts for five nights at the Westin Maui, with $100 "resort dollars" (money that can be spent anywhere in the hotel, including food and spa) and a free rental car.  The cost was just over $700, and after attending a 90 minute presentation at the hotel, where they served a nice breakfast, they gave us an additional $100 resort bucks.  We were somewhat tempted to buy there, the beauty of the island and all.  But that one was over thirty grand.

So, back to my original question.  Do you own a timeshare?  And do you like it?

Comments

[Donna]

My husband and I bought a time share about 7 years ago. We had 5 amazing vacations at our home resort (as they call it in the biz), but, have never really invested the time or inclination to get the deals on the exchanges. It's really hard to get the trades. We spent too much money on our time share (our salesperson was amazing and our naivety was amazing). In any event, we have decided to keep it because the resale value is very low on these things and we feel eventually we will enjoy many vacations.

A couple of issues: (1) can you travel off-season (in other words, if you don't have school schedules to work around, you can trade for lots of places; if you do, you'll have trouble finding vacation trades;
(2) Do you think you want to return to the resort you are at: that's the only sure thing, you will get a week at your home resort every year if you get a fixed week; thus, if you'll go to Maui or California yearly, staying in these types of places may make it worth it
(3) Maintenance: There are maintenance fees and mine have gone up by $150.00 per each of my weeks since we bought -- (we have a fixed and a floating week);
(4) Points or weeks: Points seem to be a more flexible way of trading and allow you to get cars, hotel stays and other things if you can't get as much trade as you wanted; and, finally,
(5) How long can you milk the system as it exists, i.e., I always tell my husband that we shouldn't have bought, we should have just gone on all our vacations by promising to listen to the pitch and spending 90 minutes to stay in a nicer place than we could afford for a lot more cheaply.

On the plus side, I'll say, if you like to vacation, there is nothing nicer than having a whole place rather than just a hotel room especially when you have kids. But, you should look into another option that my sister-in-law did: buying a resale. Many people are reselling time shares for a lot less than you would spend at the resort. With sufficient research, you could get a great place. Just make sure that the person has forever rights (not a lease for 99 years) and all the other important things that timeshares should have (I can pass mine to my heirs, I have a fixed week and a floating week, I have a valuable trade week at a sought after resort, and, it actually is owned by us.) So, do your homework. I find most people who are satisfied like their home resort or use a points system.

Donna (www.takingcontrolovermoney.com

[lamoneyguy]

Wow, what an awesome, detailed comment. Thanks for the insight Donna. Your comments about resale value are especially important. I think buying on the resale market is the best way to go if we decided to buy one.

[Donna]

I was inspired by your article to comment -- we've been thinking a lot about our time share and what it has cost us and brought to us over the years -- we've pretty much decided not to sell it because one day we will not be contrained by school calendars (I'm a teacher so even though my youngest is only in school 2 more years, I've got lots of years left). Then, we figure we'll get a lot of great vacations! Thanks for the article.

Donna

[Brian]

I agree with the original poster about some suspect math on the part of the timeshare presenters. I decided to write my own program to calculate the cost of the timeshare :

http://mysite.verizon.net/brian_siu/timeshare/timeshare.html

I end up bringing this to the timshare presentations to save everyone time. I tell them to just skip right to the numbers, and I can tell them in a minute whether it will be worth it for me to buy or not.

[Sidney Hecker]

Cost of week vacation (private/non timeshare)=$1200

Cost with timesare =210 maintenance, 90 RCI membership fee, lost interest on 7000 at 5%=350 TOTAL = 650

??? Comments?

[hank]

I came across your post and agreed with most of what you've said. I also have friends that have been very happy with their timeshare, but so many people bad mouth them. I went and got "the talk" for 90 mins, and have to say I think I got a pretty decent deal on my timeshare. I was looking to find a way to calculate the current value of a timeshare when I came across this post though - nicely written...

[Doug Peterson]

We just returned from Maui and purchased a 2 bedroom, 2 week fractional interest at the Marriott Maui Ocean Club for $105,000. There are a lot of Marriott points that go with it, but I'm getting buyers remorse about the resale value if we decide in 5 to 10 years we are not getting enough use. Any word of wisdom on whether we will be able to get the original investment back?

[Kathy]

My husband & I have owned a timeshare on Cape Cod for 10 years. We only live 45 minutes away so we've never actually stayed there. We've "traded" our week and stayed everywhere; Hawaii, Bahamas, Aruba, St. Maarten, etc. This past fall while in Florida we attended a "presentation" which we fully intended not to purchase. Of course, we purchased. But we owned a week which was very restrictive, we were able to trade in our week and buy points with Wyndham. The points systems is much more flexible and you get more for your money with Timeshare. Although I felt a little buyers remorse after purchasing this new timeshare I know that in 5-10yrs when we retire I will appreciated the more than 6 wks of vacation I can take in Florida with my timeshare. Maybe timeshare is not for everyone but we have used it and wouldnt do it any other way.

[MyLameJob]

I work for a timeshare company. I unlike most of my co-workers do not own a timeshare. Why? Because it's the most expensive vacation you will every buy, and a big fat waste of money. I have no sympathy or respect for people who own timeshares. I would NEVER purchase something because I was pressured into it or lured into a presentation. So good on you for having the power to say "No". I am not a sales person. I actually work in one of the service departments at a timeshare resort. Nothing makes me more angry than people yelling at me because they were "tricked". Hmm no, you had no backbone and bought something that you didn't want and/or need. Also, a lot of timeshares are starting up departments like mine that help owners who have had trouble understanding and using what they purchased. Nothing kills me more than when I get someone on the phone, who is paying anywhere from 99.00-400.00 + a month not to mention EOY in ungodly maintenance fees and they haven't even utilized their ownership. So you enjoy flushing money down the drain? How about we light your hard earned paycheck on fire while we are at it? When I offer a solution, I get yelled at, accused of being sleazy, called names. I'm not the one who made a poor financial decision. Most of the time the people I talk to opt to just keep paying for something they don't use. I don't get it, it doesn't make sense. Anyway, that's my two cents. I wouldn't waste your money. You'll just be stressed and angry in the end. You will complain a lot. I'm not a fan of martyr syndrome, especially in timeshare owners. I have traveled all over the United States and Europe. I don't own a timeshare. Most of my trips stay within a reasonable budget so long as I don't go crazy shopping :) Don't buy one. I'm telling you. You will kick yourself in the head.

[Ariel Sterling]

I have worked in the timeshare industry also, and am an owner myself, and I have to say, it has changed the way we travel. I wish I had invested in this when my children were small. We save so much money cooking in many of our meals plus we know where our food has been and who's been handling it!! When you have a family of 4 eating 3 meals a day out, that's 12 meals a day x 7 days= 84 meals a week you've paid for in restaurants!! A lot of money. Plus everyone doesn't enjoy eating at certain times and not everyone agrees on where to eat. As for the people who see no value, consider how the prices of hotels and motels have gone up over the past 30 years. In 1969, a Hilton or Marriott was $19/night. So if you think you'll be staying for $150/nt in 15-20 years, forget it. Check out the prices now. Plus in a hotel or motel, you have a small bathroom, 4 or 5 people using the toilet, showering, crawling over each other...not much fun. I heard the argument that you don't spend that much time in the room and perhaps that might be true for some but who wants to stay in a room the size of a large closet and make coffee in the bathroom! That's what you're doing in a motel or hotel room. You have the kids crawling all over you and I tell you, you need a vacation when you get home from vacation. I like having a 1 or 2 bedroom place, full kitchen, excellent accomodations. We sold one of ours and the lady that sold it for us got us more than half of what we paid. She is a legit company who sells resales, no commissions or brokers fees for us. They get the money when they sale so they are motivated resellers. Maintenance fees keep the the place lovely and pays for all the dishes, linens and upgrades. Not a bad deal. You have to maintain your body, your car, your house. You don't just buy it and never spend another dime on it. For you folks who just go to presentations for the free trip, that is worse than taking advantage of the system and I believe what goes around comes around. So before you pack up and stay at a resort, taking an agent's time, moochers, think what the consequences are going to be down the road for you!!!!!