DEFINITION of 'Timeshare'

A timeshare is an ownership model in which many customers own allotments of usage in the same property. The timeshare model can be applied to many different types of properties, such as condominiums, homes, campgrounds, recreational vehicles and private jets.

BREAKING DOWN 'Timeshare'

With opportunities to rent out allotted time each year and eventually sell timeshare interests in the future, many owners of vacation timeshares look at purchasing their timeshares as an investment. However, this view is frequently misguided.

The advantages of a timeshare vacation property often include larger accommodations and a feel of being at home, but timeshares are not a good idea for everyone. In fact, the timeshare market is rife with gray areas and questionable business practices, so it is important for prospective customers to do their research before buying. The best timeshare investment opportunities tend to be in the resale market rather than in the market created by property developers.

Disadvantages of Timeshares

Many timeshare purchases end up being impulsive and emotional buys. For example, Las Vegas is one of many cities rife with timeshare marketers who entice customers to listen to an off-site timeshare presentation by promising goodies such as free tickets and a free stay. The salespeople at timeshare presentations work for property developers and frequently employ high-pressure sales approaches designed to turn constant "no's" into a "yes." The prices that developers charge are many times more than what a buyer could get on the secondary market, and the extra money goes toward commissions and marketing costs. In addition, timeshare salespeople may conceal the true cost of timeshare ownership and exaggerate potential benefits.

Even if a timeshare owner knows the full costs and the true nature of timeshare benefits, a few disadvantages remain. For instance, timeshares depreciate quickly, and maintenance fees can rise every year, even to the point that timeshare owners decide to sell their timeshares rather than continue paying the fees. The American Resort Development Association said in 2014 that the average annual maintenance fee for a timeshare is $660, and that figure does not include the timeshare purchase price.

Advantages of Timeshares

Timeshare disadvantages aside, some people do enjoy owning them. They are especially beneficial for people who like vacationing in the same place every year and who are patient enough to wait a year or more if necessary to make a timeshare exchange so that they can vacation elsewhere. Such a wait is common when there is a mismatch between supply and demand. Someone with a timeshare in Myrtle Beach, South Carolina, for example, would have a harder time making an exchange for a week's stay at a Paris timeshare than a Paris timeshare owner would have to exchange for a stay in Myrtle Beach, because the demand to vacation in Paris is high.

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