Timesharing is not an investment, although it is promoted as a way to simultaneously invest and obtain vacation housing:
Unlike traditional real estate, timeshares typically depreciate in value. The resale market is often flooded, driving prices down.
Timeshares are notoriously difficult to sell. The secondary market is limited, and many owners struggle to recoup their initial investment. Be prepared to sell at a significant loss.
Owners must pay annual maintenance fees, which can increase over time. These fees can sometimes outweigh the benefits of ownership. Sometimes the maintenance fees are subsidized by the developer during the sales process. But when the initial push for sales is over, and the fees are left for the HOA to handle, these fees can go up dramatically without any warning. On average, you can expect these fees to grow by about 3% to 5% per year. This increase covers rising costs for property maintenance, utilities, insurance, and other operational expenses. Maintenance fees accounts for 80% of operating revenues, so expect them to rise with inflation and income growth.
Unlike rental properties, timeshares do not generate rental income. They are primarily a prepaid vacation plan rather than an investment.
Timeshares often have negative market value due to the perpetual obligation to pay unbounded maintenance fees (refer to section “Perpetuity”). Companies can raise these fees above the market rate for hotels, and only a few brands maintain any scarcity of supply. Most oversell and flood the market with ‘points’.