April 10, 2019 Chris J

Timeshare: Asset or Liability?

With the cool evening breeze calming you down after a long day of vacation activities, a salesperson aggressively uses every tactic in the book to convince you that you NEED to buy a timeshare. This is one asset you won’t regret owning, they say. They make you believe – even if they do not say it out loud – this is a nice investment which only increases in value. It is real estate after all!

True, a timeshare gives you partial ownership of a vacation property, providing you with access to the property for a particular time period each year. The relaxed nature of a vacation outing, plus a lack of awareness of the real costs of “owning” a timeshare has many vacationers falling into the timeshare trap. But is this really you purchasing an asset?

No Ownership, No Asset

As the high pressure sales pitch rings through your ears, the salesperson does all in their power to keep you from asking the real questions. They likely sell you a confusion that you will be co-owning a high value property. Too good to pass up, right? In reality, though, all you are doing is buying the right to use that property for a week or two each year.

A timeshare lacks the number one qualifying factor of an asset: ownership. But that’s not all. An asset is called an asset because it is cash or it can be fairly easily converted to cash. This qualifies stocks, bonds, and even real estate as assets. Your timeshare, however, is hardly convertible. And, when you consider the large number of persons looking to sell their “ownership” to a willing buyer, this is no surprise.

With a huge resale market out there, many re-sellers end up selling for less than 10% the original purchase price just to be rid of it. Confining your purchase to a fixed time slot each year makes it harder to sell. Thus, its value is lost the moment you take the bait and make the purchase. Sadly, a timeshare is the textbook definition of illiquid.

A Lifetime Liability

Far from being an asset or an investment of any sort, a timeshare qualifies much more as a liability. Lacking a resale value is only one part of the problem. Most timeshare owners quickly realize that the yearly maintenance fees leave a big hole in your pocket. Throw in taxes and what you have is something that actually improves the debt side of your balance sheet each year.

What’s worse? A timeshare is a lifetime contract that gets passed up to your next of kin at death. Your timeshare is a contractual obligation where you agree to keep paying maintenance fees each year, whether you actually use your time slot or not, until the end of time. Even at death, if left unserviced by your relatives, a timeshare company could open a probate to go after your assets in order to cover your obligation.

If you are yet to make the plunge, this is one “investment” you do not want to make. If you are already bound to a contract, though, you can still get out of it. Simply talk to a timeshare exit specialist or a timeshare attorney as quickly as possible, and find out legal ways you could get out of your timeshare contract.

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