Timeshare bargains
Monday, 9 June 2008 Lynelle Johnson
TIMESHARE investment doesn't have the best of reputations due to high pressure sales and heavy depreciation. But the timeshare market is booming, and if you approach it the right way you can get in very cheaply.
What are they good for?
Buying timeshare property is a bit like buying a new car. If you leave it in the garage for years and never use it then it's not a great way to have spent your money.
But if your lifestyle sees you making the most of it then – as with a car – it can have some real upsides. And the business is booming both in Australia, particularly on the Sunshine and Gold Coasts, and worldwide.
How do they work?
Confusion surrounds the timeshare industry. This confusion isn’t helped by the complex rules and the multiplicity of offerings.
Some timeshares are leases which expire after 25 years, others are based on property deeds with no fixed expiry. Some are called ‘holiday clubs’ others look more like a straightforward real estate deal.
Just a few of the forms they can come in include:
In the simplest instance a time share books you two weeks at the same time of year in the same apartment at an attractive location
Moving up the scale, timeshare entitlements can 'float' from year to year ensuring everyone gets a chance at prime school holiday spots
Alternatively the access may be arranged so that better times of the year are based on the investments price
At the more complex end of the spectrum, the deed to your timeshare accrues points, which can be spent securing accommodation at any resort in the chain across the globe
But bear in mind the variations are endless.
Traps for the unwary
Sales of timeshare are often done at 'free' resort weekends (beware, as extras are often priced to recoup the costs) where high pressure salesmen ply their trade. The result of these expensive sales techniques is high prices for buying into new timeshares.
And even after you pay out $15,000 for a two week slice of paradise, there are the fees to be considered. Averaging around $600 a year, they pay for ongoing maintenance and the administration of the scheme.
Accor's Home Club budget for 2008 sees them expecting to make 45% of their revenue from the fees alone: a whopping $12 million.
Why by new when you can buy used?
There is a cheaper way to get into the significant holiday savings offered by the industry, and that's in the booming second hand market for timeshare deeds.
Steve Luba is the director of communications at Sell My Timeshare Now. They're based in New Hampshire in the United States but sell timeshares all over the world.
Last year their customers sold $274 million worth of timeshares and so far this year $150 million worth have moved.
Steve says the timeshare industry has changed dramatically over the last few years with companies like Hilton, Marriott, and Disney moving into the market, offering global networks of destination accommodation with water parks, spas and golf courses.
The internet has also transformed the market, with organisations like Steve's acting like clearinghouses both for the sale of timeshare and allowing owners to rent out unused entitlements.
"With rental you can expect to cover your maintenance fee plus a couple of hundred bucks," says Steve.
Timeshares selling new for around $6-7,000 go for $2,500 on the second hand market he says.
For the truly brave some timeshares can be snapped up on eBay for as little as a dollar.
Sell My Timeshare Now's director of sales, Rosanne Luba (Steve's wife as it happens), told SuperLiving that she had one client who had snapped up 78 timeshare properties on eBay for around $1 each, which he is now selling through them.
While this may sound like an unbelievable bargain, you need to remember that the liability for the timeshare fees kicks in from the time you buy them – and it might take some time to find a buyer for this 'bargain.'
Going through an established re-seller gives more peace of mind that you're getting what you pay for and not just a bill for maintenance fees.
"It can take around a year, or even 18 months to sell some of these timeshares," Rosanne says, "but during that time you can be renting out your share."
Timeshare isn't for everyone, but if you take your annual vacation seriously they can offer a luxury experience at budget costs. With the emergence of a secondary market there are some serious bargains to be had.
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