Our financial expert says no!
Danielle Hoston: Ahhhhh ... vacation. I just spent the last week in Orlando with two close friends and their families at a beautiful time-share. Over the years, I have sat through multiple time-share presentations and happily walked out of them without spending a dime. Last year, however, I shocked myself and decided to purchase one while on vacation with my daughter.
I am sure that many of you have either purchased or have considered purchasing a time-share before. Here's what I recommend taking into account BEFORE you buy:
1. Evaluate your vacation spending. Time-shares are certainly not for everyone. Depending on your family size, employment, income, and typical vacation spending, you may be better off shopping around for vacation deals or renting someone else's time-share when you are looking to plan a vacation.
2. Don't count on appreciation. No matter what the salesman says, this is not an investment that will likely yield a cash return. In most cases, time-shares depreciate as soon as you buy them.
3. Ask a LOT of questions. Make sure you understand the package options available to you, the travel booking system, restrictions, and benefits of the time-share you are purchasing. Don't accept unclear answers, and take notes. They can provide helpful hints that will allow you to make an informed purchase choice and better vacation decisions down the road.
4. Finance as little as possible. Interest rates are incredibly high on time-shares. Put as much cash down as possible and keep your payments low. Remember to budget for annual maintenance fees, etc.
5. Consider the time-share resale market. Cash is king nowadays. There are plenty of owners who are looking to sell their time-shares for a deep discount in order to get their hands on some cash. Research the time-share that you are most interested in buying and check the availability of that time-share in the resale market.
I have to be honest. Time-shares can be a bit of a headache. They require considerable advance planning and can have unnecessarily complicated booking systems and/or point structures. Furthermore, depending on availability, you may not always get the exact location and/or week you want. While I can't stand depreciating assets and would hardly recommend purchasing them in most cases, I believe that time-shares offer a unique type of investment.
In the past year, I have been lucky enough to enjoy three timeshare-related vacations with my daughter, friends, and family. I believe that there is no greater return you will ever have from your money than an opportunity to invest quality time with the people that you love. If you are spending money on spending quality time, it is never a rip-off.
Do you think timeshares a rip-off? Do you love or hate your timeshare? Would you recommend it as a financial or emotional investment?
|Danielle Hoston is a business and finance expert with Hoston and Associates. She is the mom of one and resides in Los Angeles.|