My wife and I just got back from a great long weekend getaway at a vacation resort in Kimberley, BC.  We stayed at a family members’ timeshare townhome, which was a spacious 3 bedroom condo with a private hot tub on the deck.  The resort was family friendly, with a heated outdoor pool and a ‘tot-lot’ playground for the kids.  It was just what we needed to relax and unwind for the weekend.

While we enjoyed our luxury accommodations, we were all discussing the same thing.  Is it a good idea to buy a timeshare to use for your vacations?

Why Buy a Timeshare?

If you are looking for a property to use as a regular vacation getaway or as a 2nd home for part of the year then you might be an ideal candidate to buy a timeshare.

At a timeshare resort you don’t have to spend your time mowing lawns or performing any myriad of tasks that go along with home ownership.  You can also build some equity with your investment, especially in a well established or fast growing resort destination.

The other benefit when you buy a timeshare is the flexibility to exchange your time to stay at one of thousands of other resorts around the world.  The two largest exchange agencies are RCI and Interval International, with a combined inventory of over 7,000 resorts.

Fractional Ownership

The cost of buying a home in Canada has surged in recent years, which has led to a slowdown in traditional timeshare sales.  Fractional ownership has now revolutionized the timeshare market.  More akin to a second home than to a timeshare, fractional ownership at most resorts grant buyers deeded title to their property every fourth week.  This allows investors to build equity in the growing recreational real estate market rather than simply buying vacation time.

Fractional ownership is not a new concept, as friends and family have long pooled their resources to share their vacation accommodations.  However, the fractional industry has added many features such as hot tubs, exercise facilities, professional landscaping and housekeeping to give the buyer a turn-key vacation destination.

Ways to use your Timeshare

If you choose to buy a timeshare you should try and get the most out of your investment.  If you can’t use all of your allotted time you can always rent out your time privately or have the resort rent it out for you.  In many resorts, you can give out your week as a gift to friends and family.

You can also exchange your time internally within the same resort or resort group, or exchange it externally through the larger timeshare networks.  Owners put their timeshare up for sale just like a regular property via private sale or through a real estate agent.

With most timeshare point systems, owners may also elect to:

  • Assign their usage time to the point system to be exchanged for airline tickets, hotels, travel packages, cruises, amusement park tickets;
  • Instead of renting all their actual usage time, rent part of their points without actually getting any usage time and use the rest of the points;
  • Rent more points from either the internal exchange entity or another owner to get a larger unit or more vacation time or at a better location;
  • Save or move points from one year to another.

Downside to Buying a Timeshare

Timeshares have a bad reputation for aggressive sales tactics after luring potential buyers with their so-called free seminars.  Timeshare owners also have to deal with ongoing costs of annual maintenance fees, which can increase over the years.  The monthly fees on the Kimberley condo were $400/month, but at least they re-stocked your toilet paper.

With new properties developing all the time, timeshares can be extremely difficult to sell on the open market.  Flipping your timeshare after a few years of ownership could take a long time and you may not recover your initial investment.

Is This a Good Investment?

As we relaxed in the hot tub and discussed the pros and cons of buying a timeshare, I determined that a timeshare is not something that should be purchased as an investment like you would purchase a rental property.  A timeshare is an investment in your leisure time and family.  It could be perfect for retiring boomers who have the time to get away every month and can use the property to host family gatherings.

I wouldn’t buy a timeshare to use solely for our own family vacations because I find the costs too high for the limited time we would be able to use the property.  I’m also at a stage in my life where I’m looking to maximize our savings and pay down our mortgage as quickly as possible.  Adding the burden of a second mortgage and recurring monthly expenses is not something I’m prepared to take on right now.

Down the road I would consider buying a timeshare if we find a place we can all enjoy and can start building some family traditions.

Do you think it’s a good idea to buy a timeshare?

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