How the Timeshare Concept Works

Timeshare and condominium units approximately have similar concept that these units are owned to a certain degree. However, timeshares are in a way different than condominiums as individual housing units are turned into weekly time slots. These weekly time slots are then bought and sold. In effect, timeshare units can have up to 52 owners, one for each week for its utilization for a specific week within the year on a per unit basis.

The allocation of weekly time slots on the timeshare varies widely and depends on the developer selling the timeshare units. Some timeshares have you buy a specific week in a specific unit within the vacation resort. Other timeshares offer floating time slots which simply assures you of an available unit in the building for a particular week. However, small these differences may seem, they can have enormous implications when trying to sell and trade your timeshare unit. As a result, it is imperative to understand exactly what you are purchasing if you decide to buy a timeshare unit.



Most of timeshare sales in the United States today are financed by taking a loan and cash purchases of timeshare are increasingly rare. As a result, buyers should consider the cost of the loan in addition to the associated cost of owning timeshare when considering the purchase of a timeshare. Relevant expenses in owning a timeshare include maintenance fees, special assessment fees and taxes on the property. When these figures are summed up to the timeshare's cost, it normally indicates that the timeshare is not nearly as attractive as the amount it will save you as the timeshare salesperson makes it out to be.

The primary disadvantage of taking out a loan to finance the purchase of the timeshare is that most timeshare units don't qualify for a standard housing loan. Consequently, interest costs on financing for timeshares are exorbitant, sometimes reaching as high as 20%, or even more. Most banks and financial institutions do not normally finance timeshares so the developer sometimes acts as the financier of the loan. When you add the finance charges into the other costs of the timeshare unit, the inexpensive vacation unit becomes a lot less appealing as a way to save money. At the end of the day, the timeshare will end up costing you a lot of money if you choose to finance the purchase of a timeshare.

There are three important factors to consider when investing in real estate: location, location and location. This saying is applicable with timeshare units as it is to regular real estate properties. Location of the timeshare does not only apply to the location of the vacation property, but also applies to the date of your weekly time slot.

Timeshare resort units in the best locations and dates can be absolutely arranged with other timeshare units around the world. However, timeshares that are located in an off-peak vacation time slot will find it difficult, if not impossible, to trade for other timeshares. However, purchasing a timeshare resort unit in a great location in high season generally costs more than timeshares in off-peak dates. As a result, you should avoid buying timeshare units in off-peak dates even if they are less expensive than peak timeshare units.