Are Timeshares A Good Investment? RCIVP Help Resource
$10.5 billion is the timeshare industry’s annual revenue. While this figure clearly represents considerable active financial participation on many levels, the question of whether it is a good investment for you personally may be rather subjective.
Timeshares may be an excellent vacation investment into quality time with family and rest and relaxation, however they may not be a great financial investment. Depending on what you are looking to invest in, the timeshare option may or may not be for you.
Individual owners of timeshares are often on the losing end of their investment while large conglomerates typically win big financially, for example Lando resorts https://rcivip.com/what-is-lando-resorts/.
So, what exactly is an investment? The dictionary definition states: “the action or process of investing money for profit.” (1)
Or according to Wikipedia: “To invest is to allocate money in the expectation of some benefit/return in the future. In other words, to invest means owning an asset or an item with the goal of generating income from the investment or the appreciation of your investment which is an increase in the value of the asset over a period of time” (2)
As per the above stated definitions, no a timeshare is not a great investment, except for if you consider a different definition of investment, one where money is allocated toward a positive experience and you are able to withdraw rewarding family and vacation time. In that case, yes perhaps, under special circumstances your timeshare may be money well spent.
Timeshares As Investments For Quality Vacations Over Twenty Years
Timeshares may not be a sound financial investment; however if you and your family do in fact use your timeshare as a yearly vacation destination over a twenty year period it may pay off. This is contingent upon the desire to vacation in the same destination year after year, and your own ability to travel consistently over consecutive years.
While the initial and ongoing cost of a timeshare varies significantly, they are all essentially fractal ownership, meaning if you have use of your condo for one week of the year, then you are 1/52 owner of that piece of property. This is quite different from an investment property that yields a profit through rentals or appreciation in value.
If you, for example, purchase your timeshare for $20,000 USD, plus annual fees, and do in fact use it annually for several decades, then likely it will be less then renting a hotel for a week every year. Therefore if you are looking to vacation in the same place year after year over a lifetime, then yes timeshares are a good investment.
They are NOT a typical investment in that they will likely not yield any monetary return, even if they provide positive consistent vacation opportunities. According to Investopedia, here is what they have to say about a timeshare as a financial investment:
“Timeshares should not be considered investments, since the vast majority of timeshare contracts lose value in the secondary market and they do not generate income for owners….
A timeshare is not an investment. Investments are designed to appreciate in value, generate income or do both. A timeshare is unlikely to do either, despite what the salesperson says. The huge volume of used timeshares on the market, the appeal of buying new versus used, and the marketing muscle of the firms selling new timeshares all work against the idea that you will make a profit reselling your used timeshare. Thus, selling for a profit is an uphill battle considering you need to convince someone to pay more for a used unit and factor in all the fees you paid over the years.” (3)
Just because your timeshare may not earn you a monetary profit does not mean that it is not a positive investment for you and your family, as it concerns the quality of your vacation time.
Timeshares Are Big Business… If You Are At The Top Of The Food Chain
Believe it or not, the timeshare industry grossed $0.5 billion in revenue and is bigger than both the major league baseball revenue of $9 Billion, and the music industry of $8 billion. (4)
With close to 10 million American households owning a timeshare, this industry supports 612,225 full and part-time jobs in the US alone, accounts for $37 billion in income wages, and approximately $12.7 billion in tax revenue.
Additionally, communities surrounding timeshare locations are often supported by an infused tourist population spending money in the area, so considering these figures, there is a lot winning going on financially with the existence of timeshares, but not everyone wins.
Timeshare owners are often left in the dust of the high profit industry, with high maintenance costs, hidden fees, and absolutely no resale value on their fractional property ownership. So as an owner, no, your timeshare is not a good financial investment.
Timeshares Rarely Have A Resale Value
Typically, real estate investments are sound, low risk investments that gain in appreciation over time, this is not the case with timeshares. The resale market of a timeshare is stark, and you, the owner will likely be left with your timeshare for a lifetime (https://rcivip.com/timeshare-resale-tips-what-you-need-to-know/), or gifting it to a family member who may not even want to be saddled with the brunt of ownership.
If you are looking for a financial investment, look somewhere else because a timeshare is not one. If however you are looking to vacation in the same location over many years a timeshare may be for you, but not your pocket book.
To Timeshare Or Not To Timeshare, Is There Really A Question?
As an individual what are you looking for? Take some time to do an internal appraisal of what you are looking for from your potential timeshare investment. If the goal is a quality of life investment and not a financial one, then perhaps a timeshare may be just the consistent vacation opportunity you are looking for.
A timeshare is not a good or sound financial investment. If you have some cash to invest it would be wise to do it elsewhere and consider an investment that will yield a profit for the individual owner.