« »

Sunday, October 27, 2013

Pitfalls and risks of timeshare investing

Annual timeshare costs are perpetual without expiration dates
Timeshare maintenance costs can be high as monthly rent costs
By Liz Nelson

Timeshares are alluring when considering some of the areas and locations they are available in. Even bragging rights when discussing locations to friends can make these investments seem more than they are. However, there are a great deal of risks that come with owning a part of a timeshare that sellers don't really discuss with those interested in putting money into the venture. 

Without taking precautions, you could wind up spending a lot of money on something that merely glittered in the dirt that definitely wasn't gold. What kind of problems can arise from such a hyped-up prospect? 

Your availability 

Many timeshare owners invest in the property in order to take a yearly vacation at the resort or location they purchase into. Although the first year or two provides reason to travel, life has a way of interfering. Before too long, you wind up incurring extra expenses for the property for no other reason than to say you own a timeshare. These chunks of availability are limited and you may not be able to break away from work during your allotted time. The most you can hope for is to hand your time to someone else for them to enjoy such as a family member or friend.

Fraudulent sellers 

When it comes time to unload your timeshare, you could be faced dealing with someone who promises that they can sell the property. Once you hand them your money, they could disappear. Of course this practice is common among many markets outside of property management. However, It may seem a greater loss due to the amount of money that is in question during the transaction. Expecting a $10,000 return after handing a person a couple hundred dollars only for the fraudulent seller to disappear is disheartening. 

Annual costs  

After the upfront fees of buying into a timeshare, you usually pay an annual maintenance fee for the property. For many individuals, this could be close to a month's worth of rent or mortgage payments. If things don't work out for you and your income is diminished, you could lose out on the several thousand dollars you invested in the original purchase. These annual fees could be a haunting reminder of this investment as it hangs over your head. 

Market values  

Affects within the economy could alter how the timeshare is viewed as well. If you are truly unable to use the timeshare and wish to sell it, you could be left holding the bag as others are in less of a position to buy it from you as you are to pay for something you can't use. Although there are a few websites that may be able to help you sell your slot to recuperate some of the money you've spent, they usually are not guaranteed to succeed and usually cost a monthly fee of their own. 

Lost interest 

The first few times you may visit a resort, the experience could be greater than your wildest dreams. However, time has a way of dampening the euphoric effects that the location once had on you. Before long, you could find yourself bored of visiting the same location year after year when there are so many other places in the world you can visit. While this "boredom" may not affect everyone, many still find themselves regretfully attempting to sell the timeshare. There's only so many times you can visit the same location before the excitement begins to wear off. However, many timeshares are tied in with global resorts allowing you to stay at other locations.

No end in sight 

For many timeshare owners, the financial burden is perennial. As there isn't usually an expiration date on these investments, you can be paying for the lot until the end of time - theoretically. Unless you are willing to lose a great deal of money on the investment, you could be obligated to pay the annual fee regardless if you have a job or not. This could put you in a stressful predicament if you can't afford to put food on your table.

Timeshares can be a wonderful thought at first, and the salespeople will make the experience all that more enticing. It's their job to separate you from your money and lock you into an annual fee. Is this really an investment if you only pay money without seeing positive returns from the venture? The goal of any investment is to at least break even in terms of expense. If you continuously pay an annual fee on top of your initial deposit, which could be as much as $20,000 depending on the locale, then where is the payoff exactly?

About the author: This is a guest post by Liz Nelson from WhiteFence.com. She is a freelance writer and blogger from Houston. Questions and comments can be sent to: liznelson17 @ gmail.com.

* Image license: Obyrneje, RGBStock royalty free