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Imagine visiting your favorite vacation spot every year. You eat good food, enjoy the outdoors, visit the local attractions, maybe lounge on a beach, and then spend the night in your temporary home – an upscale place of your own. Then when your vacation ends, you go home and don’t worry about it until your next vacation.
For people that own a timeshare, that kind of vacation is a reality. And in times of inflation, timeshare owners can come out on top.
This could be a reality for you, but only if you know how timeshares operate.
If you’re wondering, “How do timeshares work?” keep reading – we’ll fill you in on everything you need to know.
What Is a Timeshare?
A timeshare is an agreement between multiple owners of a real estate property. The intention is to share the same property amongst the owners throughout the year, with each owner having access to it at set times of the year. A timeshare could be a condominium, apartment, villa, or another property type.
Timeshares are often marketed to people who don’t have a lot of time to plan vacations and intend on visiting the same place every year. With a timeshare, the owner knows exactly what weeks they can plan their vacation around.
Unlike a vacation home that you pay for and can access throughout the year, a timeshare is more of a permanent reservation. Unlike hotel rooms, timeshares are often more spacious and home-like.
How Do Timeshares Work?
Before you purchase a timeshare, there are two things you need to consider. First, you need to understand the difference between deeded and non-deeded timeshares. Second, you need to understand the types of ownership.
Deeded vs. Non-deeded
Timeshares are either deeded or non-deeded.
A deeded timeshare is when each owner is granted a percentage of the property, often based on the time intended to use it. Each owner is usually tied to a specific week or set of weeks they can use. This type of ownership can be willed, given, or sold to others.
A non-deeded timeshare is a timeshare in which you do not have an ownership interest in the property. Instead, you purchase a license or lease to use the property for a certain number of years.
Types of Ownership
Timeshare buyers have the exclusive right to use a vacation property for a defined period. These timeshare options are usually measured in one-week periods. Depending on the timeshare, it may be on a fixed weeks, floating weeks, or points system.
In a fixed week system, the buyer has exclusive use of a property at the same time every year. The downside is that it can be very difficult to change the fixed weeks.
A floating week timeshare gives the buyer exclusive use of the property during a predefined period. Each buyer isn’t restricted to visiting the property during the same period each year. The period or range of weeks could be very narrow (i.e. weeks 3-5) or very broad (i.e. every week of the year).
However, in order to maximize this flexibility, you need to reserve your spot in advance. It can also be hard to secure the timeshare during popular weekends or holidays.
A timeshare with a points system represents ownership with points. The size, availability, and location of the property determine the points. These points can be used for timeshare exchanges either within their own resorts (an internal exchange) or with other resorts (external exchange).
Pros and Cons of Timeshares
There’s no yes or no answer to if a timeshare is worth it. Instead, you need to take into consideration the pros and cons and decide for yourself.
Pros of Owning a Timeshare
If you and your family enjoy vacationing in the same place each year, a timeshare could be a good choice. It guarantees you a place to stay at your favorite location.
With a timeshare, you don’t have to worry about property upkeep, unlike with a vacation home. You only pay for the time you use, plus maintenance fees.
Cons of Owning a Timeshare
Arguably the biggest downside to owning a timeshare is selling a timeshare. The resale market for timeshares is crowded. If you do manage to sell, you may be selling it at a loss.
Usually, that sale will have to be to a private seller. While it’s possible to sell it back to the timeshare company, this can be hard to do.
If you are looking into buying a timeshare, there are third-party sites that can facilitate buying one at a discount. This extends to a lot of different timeshare properties, even popular ones like Disney Vacation Club (DVC).
DVC properties are considered some of the best timeshare properties. If you and your family are Disney fans, there’s no other timeshare property like the DVC.
However, reselling any timeshare takes time. For example, the DVC resale timeline is at least 10-12 weeks for most properties, but some may take an additional 2-4 weeks to close.
There’s also the issue of scammers. You need to be wary when selling a timeshare since there are many scammers out there who prey on owners selling their timeshares.
That’s How Timeshares Work
If you’ve ever wondered, “How do timeshares work?” now you know. Understanding the ins and outs of timeshares will inform your decision on whether or not a timeshare is right for you. While they have their drawbacks, timeshares can be good for the right person.
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