Timeshare Investment – Not for the Faint of Heart!

Ever get those temp;ting “Come-on” invites for free vacation? All you have to do is show up, listen to some hustler for 90 minutes and you have earned the vacation. So easy!

Chances are the sponsor of this event is a Timeshare development company and they are betting that many people will take them up on the offer and enough of those that attend will end up buying one or two weeks or more of the Timeshare property that is being promoted.

So let us break down the puzzle.

What is Timeshare?

Timeshare purchase is fractional purchase of (usually) a condo or apartment at a specified location in a complex managed by the Timeshare development company or their designate. Such a purchase is called “deeded” or “fee simple” purchase. It may also mean fractional purchase of simply a right to use a condo or apartment or right to use real estate. This is a “non-deeded” purchase.

Fractional purchase refers to one, two or more weeks. So a condo or apartment will be “deeded” or sold to 50 or 52 other buyers (some Timeshare companies only sell 50 weeks out of the year, keeping two for maintenance or rental). So I may pay $30,000 to use a 1 bedroom apartment in Honolulu, Hawaii, every year from March 1 to March 7. This is called my “home” unit.

Your rights as a Timeshare owner

This depends upon the Timeshare company. Each purchase is different. Here are some common rights you get when you buy a Timeshare.

1. Right to use a designated or available condo. In the above example, I have exclusive right to use my home unit week (March 1-7) but I have to make that decision several months in advance, other wise I lose the exclusivity.

2. Right to exchange your deeded or right-to-use property for another, in a different location and at a different time. Exchange privilege is an excellent benefit as most Timeshare developers have signed up with clearing houses such as Interval and RCI and as such have a huge inventory to choose from all over the world.

3. Right convert the “staying” right to a pre-determined number of points which can be used for different types of travel amenities, much like the loyalty points you accrue with airlines or hotels.

4. Right to elect the board that oversees management of the condo complex where my home unit is.

What Timeshare does not give you:

1. You cannot sell the condo–you may be able to “sell” your week if it is a deeded property, or the right to use if non-deeded to someone else.

2. Property rights–you cannot make any changes to the property even if deeded, since you do not own it outright.

3. Free right to convert or book. Most Timeshare developers charge for any transaction.

4. Exclusivity. Again since you own only a fractional share of an apartment, your exclusivity is very limited and only with respect to a pre-designated week in a year.

5. Guarantee that the property where you have a deed is 100% owned by the Timeshare developer. He may have it in partnership with another company, or may be just managing it for investors.

6. Unconditional right to sell your share—many developers have “first claw” or right of refusal so you are forced to offer it to them, at least initially.

My suggestion is to do a thorough investigation of the Timeshare developer–history, afflialiatons, annual maintenance fee increases and time lapse between remodeling.

Source by Shyam A Sunder

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