Breaking Down Timeshare Costs: Is Ownership Worth It?

Marriott Vacation Club and Wyndham, among other timeshare companies, often promote the advantages of owning a timeshare. They highlight the potential for quality family time, unforgettable memories, and a variety of vacation destinations as reasons to consider investing in a timeshare. However, despite the alluring promises, many timeshare owners find themselves struggling financially. This is because timeshare ownership is not a genuine investment, as it does not generate income, and there are numerous undisclosed fees that can accumulate over time. Those considering purchasing a timeshare should be aware that owning one entails more than just making yearly payments. Along with the purchase price and annual maintenance fees, there are numerous other costs that can quickly add up. These hidden expenses can be a surprise for new timeshare owners, underscoring the significance of being fully informed prior to making a purchase decision.

Breaking Down the Timeshare Cost

Timeshare companies entice regular vacationers through various incentives like gift cards and free hotel stays to attend their presentations. During these presentations, they offer lavish complimentary breakfasts and showcase breathtaking photos of luxurious timeshare locations to make the lifestyle seem affordable. However, the true costs of timeshare ownership become evident soon after signing the contract. These companies distract potential buyers from the various expenses that come with timeshare ownership. Here are the expenses that buyers must pay if they choose to invest in a timeshare property.

Upfront Costs

Each timeshare property has a fixed upfront cost, which is determined by factors such as location, size, and developer, and can range from $10,000 to $100,000 or more. However, as paying the full amount at once is not possible for most people, financing options are necessary. Various financing options are available for timeshare purchases, including payment plans with the provider and personal loans. Personal loans may offer lower interest rates and monthly payments, but not everyone is eligible for them. Consequently, some buyers opt for a home equity loan, which uses their primary residence as collateral. However, this option is not recommended since it puts both properties at risk if timeshare payments are not met. It is essential to bear in mind that the upfront cost is only the beginning. Timeshare companies often impose high-interest rates, ranging from 14-20%, and buyers end up paying significantly more than the property’s listed value. For example, a $30,000 timeshare with a 10% down payment and a 20% interest rate over ten years will cost over $55,000, excluding maintenance fees. Even with a personal or home equity loan, the interest rates will significantly increase the overall cost.

Maintenance Fees

Annual maintenance fees are a standard expense for timeshare resorts that cover the cost of maintaining the property and paying staff salaries. These fees are used to upgrade and maintain communal facilities, such as pools, tennis courts, and lounges, as well as for in-unit upgrades, like replacing old air conditioning units or upgrading bathroom tiles. Keeping the unit in good condition is essential to maintain its longevity and appeal to potential renters.

However, like apartment rent, maintenance fees tend to increase over time. They are notorious for escalating dramatically every year, with up to 30%-50% of the total amount allocated to management fees. Unfortunately, many timeshare buyers do not read their contracts thoroughly and may not be aware of a clause that limits the annual fee increase, which is typically around 10-15%.

Assuming a national average maintenance fee of $1,000 per year, one can anticipate an increase of at least 5% annually. This means that after a decade of ownership, a timeshare owner will be paying $1,500, which is a 50% increase from the initial fee.

Special Assessments

The timeshare industry derives revenue from various sources, including upfront costs, maintenance fees, and special assessment fees, which may be levied at any time. These additional fees are intended to cover unexpected expenses related to property maintenance resulting from natural disasters, such as hurricanes, blizzards, or earthquakes, which can impact vacation properties located in even the most unlikely areas. It is not always possible to avoid these costs by choosing a timeshare property in a location that is not susceptible to weather-related disasters, as many timeshares are located in such areas. While special assessment fees are not an unethical expense imposed by developers on their clients, they are an unforeseen cost that is often not disclosed during the initial signing of the timeshare agreement.

Emotional Distress

Aside from the financial expenses, owning a timeshare can also result in significant stress and negative emotions, which may not be associated with vacationing. While the prospect of timeshare ownership may appear attractive and economical at first, the actual reality can be burdensome. Scheduling vacations for a large family can be challenging, especially with limited timeshare weeks, leading to frustration and stress. Moreover, interacting with uncooperative timeshare companies that have put you in financial trouble can contribute even more tension. Considering the emotional and financial costs involved, one may question if owning a timeshare is a worthwhile investment.

Avoid an Unprecedented Timeshare Cost

To entice potential buyers to sign a timeshare contract, companies often use persuasive strategies, showcasing luxurious vacation destinations and offering tempting perks, making buyers believe that they can experience a lavish lifestyle at a reasonable price. However, these claims are usually false. Even if the timeshare company discloses the initial property cost, they fail to mention the additional expenses associated with owning and maintaining the timeshare property.

Acquiring a timeshare has several hidden expenses, whether you opt for developer financing or take out a loan. Timeshare mortgages have high-interest rates that make you pay more than the property’s upfront cost. Annual maintenance fees are another significant expense that grows exponentially within a few years. These fees go toward resort upkeep and employee salaries. If your timeshare is located in a region prone to natural disasters, assessment fees may unexpectedly drain your savings.

If you are looking for a profitable investment without hidden fees, buying a timeshare is not a suitable option. However, if you are already struggling with additional expenses related to timeshare ownership, canceling your ownership might be the best decision to avoid financial disaster.

Thankfully, the Centerstone Group can assist you with this. As a full-service advocacy group, we specialize in helping clients terminate their timeshare contracts. If you were a victim of high-pressure sales tactics, fraud, or misrepresentation during the sales process, we can help you exit your timeshare ownership. Contact us for a free consultation.