MoneySense Magazine, May 2008
Confessions of a timeshare junkie
Despite their dubious reputation, timeshares can be the best deal going. I should know — Iâ€™ve owned 20 of them.
This article was first published in the May 2008 issue of MoneySense.
I have a confession to make: I’ve owned 20 timeshares. The properties in which I have shared time range from a boat that plies the old industrial canals of England, to glorious beachfront properties in the tropics, to exciting ski resorts. As Hank Snow sings, “I’ve been everywhere.” And I can boldly say that for family holidays, there is nothing that matches timeshares.
Yes, yes, I know you think I’m crazy. Timeshares have a bad reputation. But that’s entirely because of the dubious ways they’re sold. Developers entice you to presentations with come-ons such as ski-lift tickets, cheap accommodation, even cash — and once you’re seated, the developer’s sales staff put the hard sell on you. Some of you may have been to one of these presentations. Perhaps you paid $10,000 or more for a week’s use of a vacation property each year. Heck, I’ve heard of people paying over $100,000.
Too bad they didn’t read this fi rst. That’s because there’s a simple way for you to get timeshares much, much cheaper. All you have to do is to cut the developers out completely and buy your timeshares on the resale market. That’s what I do. Instead of paying thousands for the rights to spend a week once a year in a resort condo, I’ve paid as little as $150. I have an annual March Break reservation in Grand Cayman where I bought into a gorgeous 110 sq m (1,200 sq. ft.), two-storey unit with full eat-in kitchen, three full baths, two bedrooms and a full balcony overlooking the ocean. I paid less than $2,000 for it — and I can use it every year for the rest of my life.
Bargains like this are hiding in plain sight. Visit eBay and you’ll fi nd thousands of timeshares up for sale. The discounts can be staggering. My wife and I were once lured into a presentation at a ski resort where the salesperson offered us an every-other-year off-peak week for $8,000. I declined. Shortly thereafter I bought the same package on eBay for $865.
Don’t be intimidated if you have never bought anything on eBay before. Signing up is fast and easy. You should know a few ins and outs pertaining specifi cally to timeshares, though. First, I recommend that you buy from a timeshare specialist, at least for your first purchase. You can recognize the specialists because they tend to have several timeshares for sale at any one time.
Second, you should expect closing costs ranging from $300 to $500; in addition many resorts charge a transfer fee of $50 to $300. Most timeshares also charge an annual maintenance fee, which varies from under $300 to over $2,000 a year. These fees are much like condo fees, and you pay them every year to cover the operation of the resort.
Finally, closing takes a while, perhaps as long as three months. Do not be dismayed if you haven’t heard from the vendor for a while.
I love my timeshares, but I’ve made my share of mistakes, and this is what I learned from them:
• One of the beauties of a timeshare is your ability to trade a week at the residence you own for a week somewhere else. However, if you always want to go to the same place, don’t buy elsewhere with the idea of trading to your preferred destination each year. It’s far simpler to buy where you want to go and be done with it.
• If you like the idea of mixing it up, buy into a resort system that has multiple resorts. You’ll find certain systems cater to specific areas. Shell Vacations Club is strong in the West, especially Hawaii and California. It recently formed an alliance with Bluegreen Resorts, which is strong in the East. Divi Resorts has several resorts in the Caribbean. Diamond Resorts (now including Sunterra is strong in Europe. Some of these chains are better than others, so read the online reviews (see "And the critics say…" below for tips).
• Once you’ve narrowed down your selection, watch a few auctions on eBay to see how much things sell for. No matter how tempting a deal looks, don’t start bidding too soon. Trust me, you won’t miss out on the deal of a lifetime. There’s always another one coming along.
• Most resorts have some sort of rental program, so you can try before you buy. But don’t get sucked in by the sales presentation once you get there. The sales staff will do everything to convince you to buy at full retail rather than on the secondary market.
• Like a condo, resorts can be subject to a special assessment for repairs, maintenance, whatever. I’ve been dinged a few times. I recommend that you call the management company and ask when the last special assessment was, and whether a new one is being contemplated. If a special assessment occurred recently, you’re probably good for a while.
• Off-season weeks are worthless. Never buy one. This is one of the mistakes that I made early on. The only time one of these off-season weeks makes sense is if you intend to use it in the season that is available to you. It will be useless as a trade vehicle to get you to another resort.
• Pay attention to the maintenance fees. Too low a fee and the resort may be poorly maintained.
Ready to join me on the slopes? I’ll be in Whistler ($750 cost versus a $2,500 rental value) and in Tahoe ($750 instead of $1,500). Beach more your style? Meet me in Cayman ($1,000 instead of $3,300) or Cabo ($1,150 versus $5,500). You’ll know who I am: the guy on the beach singing “I’ve been everywhere.”
And the critics say…
Want to get a second (or third) opinion on a timeshare before buying? These resources can ensure you don’t run into nasty surprises:
• Timeshare User’s Group (www.tug2.net): This site’s users are opinionated and scrappy — and they’ll give you the unvarnished truth about the timeshare you’re thinking of buying. They also maintain for sale and for rent boards. The site charges $15 for a year’s membership, which gives you full access to their review database.
• Resort Condominiums International (www.rci.com): This site’s primary function is to arrange timeshare exchanges for a fee. However, with more than 3,700 resorts listed, it’s also a great way to get an idea of what’s out there.
• Interval International (www.intervalworld.com): Another timeshare exchange site, this one with about 2,200 listings.
MoneySense Magazine, May 2008