Further Reading

While members of the wealthy upper class might not have difficulty buying a beach front property or vacation villa, it is not such an easy task for the common working man. When the concept of the timeshare burst upon the scene, however, ordinary people, who could not afford a vacation home, had reason to become hopeful. And that is primarily why the timeshare industry has been booming since its introduction in America.

One of the aspects of a timeshare property that attracts most people is that they can have a wonderful vacation home without having to worry about its upkeep and maintenance. But at the same time, people have many misconceptions about timeshares.

Buyers often misunderstand the concept of timeshares and consider them as regular real estate property and a viable investment option. But if a buyer is thinking about investing in a vacation home near a location they visit frequently, a timeshare might not be the best investment. Investing in real estate property with an outright purchase of a home could return a significant profit. But if you invest in a timeshare, a return is not guaranteed and could in fact cost you money.

But what if you still want to buy timeshares, expect no profit from them, but neither loss at the same time? There is always one question in the minds of those people who are planning to buy timeshares. Is it really worth buying a timeshare? To answer this question you have to go through an analysis of various factors. An analysis should consider factors like comparable rent of alternative accommodation, appreciation of the timeshare property and your finance rate. How do you do it? Here is a simple calculation...

Consider the worth of your investment as profitability. The profitability should be a measure of the comparable rental rate, rate of appreciation and your finance rate. If the sum of all these is a negative number then, assume that you are losing money in your investment. The rental rate is the ratio of the rent of that vacation property to the buying price of that timeshare. Suppose if corresponding rent of that vacation timeshare is $1,000 and the buying price is $10,000 then the rental rate is 10%. Now if we include the annual maintenance cost, membership and all other miscellaneous expenses, if it comes around $500. So the actual saving in rent will be $500 now and the rental rate will be the ratio of $500 to $10,000 which gives us 5%.

Now let's assume the annual appreciation of that property is 10% and the rate of our finances is 16%. If we add rental rate and appreciation and subtract the finance rate, you will end up with a negative percentage which means you are losing 1% every year compared to rent. But this formula is only a rough calculation of the profitability of your investment and may not be completely accurate. This is just to give you a starting place. The depreciation rate may vary and as may the finance rates.

The maintenance fees and other fees may also vary with different locations. Some resorts charge reasonable maintenance and other fees, but some exorbitantly high fees. So, this is also should be a factor in deciding which resort to choose. It is not a smart idea to pay unusually high fees when you don't know whether you can utilize the property year after year and you may think of renting out the unit which is not a profitable proposition either.

Another good idea is to add up the cost of your timeshare for the entire year (i.e., all fifty two weeks) and see. For the above investment, it may be around 520,000. But does the timeshare property cost that much if somebody wants to buy it as a real estate property? The extra money goes into the pockets of real estate developers who are selling the timeshare. So carefully weigh in all the factors discussed above before buying a timeshare property.

Buy-Timeshares-Online.com showcases hundreds of Florida timeshares as well as time shares around the world.