| Buying a beach front property or a vacation villa | | | | negative number then, assume that you are losing |
| may be easy for rich and wealthy but not for | | | | money in your investment. The rental rate is the |
| common middle class people. The introduction of | | | | ratio of the rent of that vacation property to the |
| timeshare concept gave hope to those people | | | | buying price of that timeshare. Suppose if |
| who could not afford to buy a brand new | | | | corresponding rent of that vacation timeshare is |
| vacation home. Buying a beach front property or | | | | $1,000 and the buying price is $10,000 then the |
| a vacation villa may be easy for rich and wealthy | | | | rental rate is 10%. Now if we include the annual |
| but not for common middle class people. The | | | | maintenance cost, membership and all other |
| introduction of timeshare concept gave hope to | | | | miscellaneous expenses, if it comes around $500. |
| those people who could not afford to buy a brand | | | | So the actual saving in rent will be $500 now and |
| new vacation home. That is one of the reasons | | | | the rental rate will be the ratio of $500 to |
| why the timeshare industry has grown by leaps | | | | $10,000 which gives us 5%. |
| and bounds ever since its inception in the United | | | | Now if we assume the annual appreciation of that |
| States. One of the aspects of a timeshare | | | | property is 10% and the rate of our finances is |
| property that attracts most people is that they | | | | 16%. If we add rental rate and appreciation and |
| can have a wonderful vacation home without | | | | subtract the finance rate you will end up with a |
| having to worry about its upkeep and | | | | negative percentage which means you are losing |
| maintenance. But at the same time people have | | | | 1% every year compared to rent. But this |
| many misconceptions about timeshares. One of | | | | formula is only a rough calculation of the profitable |
| the biggest misconceptions is that they compare | | | | of your investment and may not be accurate. |
| timeshares to regular real estate property and | | | | This is just to give you a start up. The |
| consider it as an investment option. But in fact it | | | | depreciation rate may vary and so as the finance |
| should be thought as an investment in your | | | | rates. The maintenance fees and other fees may |
| dreams i.e. vacationing at a place where you want | | | | also vary with different locations. Some resorts |
| to go every year. Investing in real estate could | | | | have charge reasonable maintenance fee and |
| reap profitable returns but if you invest in a | | | | other fees but some exorbitantly high fees. So, |
| timeshare it may not be guarantee in fact you | | | | this is also should be a factor in deciding which |
| may end up losing money. | | | | resort to choose, it is not a smart idea to pay |
| But what if you still want to buy it and you | | | | unusually high fees when you don’t know |
| expect no profit from it but neither loss also at | | | | whether you can utilize the property year after |
| the same time. There is always one question in | | | | year and you may think of renting out the unit |
| the minds of those people who are planning to | | | | which is not a profitable proposition too. |
| buy timeshares. Is it really worth buying a | | | | Another good idea is to add up the cost of your |
| timeshare? To answer this question you have to | | | | timeshare for the entire year i.e. all fifty two |
| go through an analysis of various factors. An | | | | weeks and see. For the above investment it may |
| analysis should consider factors like comparable | | | | be around 520,000. But, does the timeshare |
| rent of alternative accommodation, appreciation of | | | | property cost that much if somebody wants to |
| the timeshare property and your finance rate. | | | | buy it as a real estate property. The extra |
| How do you do it? Here is a simple calculation. | | | | money goes into the pockets of real estate |
| Consider the worth of your investment as | | | | developers who are selling the timeshare. So |
| profitability. The profitability should be a measure | | | | carefully weigh in all the factors discussed above |
| of the comparable rental rate, rate of appreciation | | | | before buying a timeshare property. |
| and your finance rate. If the sum of all these is a | | | | |