The first official timeshare in the United States was started in 1965 by the Hilton Hale Kaanapali on the beautiful island of Maui. Since then, timeshares have sprung up in all the popular vacation destinations across the nation and worldwide.
Today, timeshare salesmen will give you every line in the book to get you to purchase their timeshare—and they’ll often offer deals that sound too good to be true or throw in appealing packages to close a deal. But through all the fancy sales pitches and added packages, you might be wondering what the real cost of a timeshare is.
Cost of Timeshare Mortgage
According to the most current statistic gathered by the American Resort Development Association, the average purchase price of a timeshare is around $22,942. Their research also claims that the average interest rate for a timeshare mortgage is a steep 13.8 percent on loan terms that typically last 103 months. This means that upon maturity of the loan, you’ll actually end up paying $16,326.45 in interest.
Maintenance Fees, Assessment Dues, and Taxes
If your timeshare mortgage was all you had to worry about paying, then you might think you were coming out ahead. However, timeshares come with an annual ownership bill that averages around $1,200. This equals about $10,200 at the time your loan matures.
Buying into some types of timeshares means you become a fraction owner of the property of interest. As a fraction owner, you’re responsible for the liability costs of ownership. These costs can include remodeling fees, natural disasters, or tax increases. Special assessments can typically range between $3,000 and $5,000.
Total Average Cost of Owning a Timeshare
Believe it or not, at the time that timeshare mortgage matures, you will pay out roughly $55,000. This equates to around $6,500 annually for vacation accommodations alone. This doesn’t even include vehicle rental, food, or entertainment costs.
Types of Timeshare Ownerships
There are three main types of timeshare ownerships—deed ownership, leased ownership, and right to use. It is important to know which timeshare you are buying into.
A deeded ownership time-share is real fractional ownership of a property with the percentage of ownership being equal to the amount of time purchased. Leased ownership time-share allows you to lease a property for a specific amount of time within a specific time frame. Right to use time-share is a contract that allows you to use a property in accordance with the contract.
Why Are Timeshares Not a Good Investment?
Most financial advisors will tell you that timeshares are not a good investment or the best use of one’s money, and here’s why—timeshare owners will never be in an equity position. This is why financial advisors deem timeshare ownership as a liability and not an asset.
Timeshare ownership is not considered an affordable alternative to other vacation accommodation options. If you bought into a timeshare and want to get out or sell, there are organizations with useful information on how to cancel a timeshare contract.
The Real Cost to Own a Timeshare
Buying into a timeshare can seem like a good idea until you find out all the hidden costs that come with ownership. Unfortunately, most salesmen selling timeshares only tell you the good in order for you to say yes.
Now that you know the actual cost of a timeshare, do you think it’s a good vacation option for you? If you found this article helpful, check out our other investment articles in our blog section.