About 25 years ago, I bought a timeshare. It was a truly stupid financial decision and one I’ve kicked myself more times over than can be counted. Now I’m now longer working full time, the moment has come for some serious payback. Here’s how I’m achieving this …
Here’s the costs
First there’s the initial cost ….
In 1990, a week in a timeshare was worth A$9-10,000. This amount was enough for a small deposit on a flat or cheaper home. So to compare with a value in 2016, I figure it’s the equivalent of about A$40,000.
In real terms, the timeshare was worth about $2,400 but timeshare sales people with their magically misleading calculations, infrastructure and incentives to entice you to part with your dough all have to be paid for.
Hence the huge markup and over-the-top profits the industry made (and still do).
Here’s the math, and don’t panic because it’s very simple:
a 52 weeks x $10,000 = $520,000
So, in 1990, was a 2 bedroom unit in any resort worth $520,000? Not on your pickled gherkin. Absolutely not. In 1990, that unit would’ve been worth about $125,000 on a very sunny day.
Then there’s the maintenance fee …
Each year you get slugged a maintenance fee for your week (or credits or points). And yes, it’s a disproportionately huge amount to what you actually own.
For example, I own a holiday apartment in Queensland. The body corporate fee plus additional maintenance is $5,000pa – that’s $96 per week. But the fee for a week at the timeshare this year was $770. How can it be worth $674 more?
And the cost to exchange …
You’ve bought the timeshare and now you want to stay in a resort that you don’t own. Time to fork out some more money to exchange your week. Generally this costs between $119-150, depending on who you use.
Selling a timeshare
I could sell my week, but unfortunately I will NEVER get back its real value, let alone what I paid for it. Even now, if you purchase a timeshare (be it points, weeks or credits), I’m incredibly safe in saying you can kiss most of your money goodbye.
Right now, my timeshare is worth A$1,500 – on a very optimistic day. In reality, I’d be lucky to get $1,000, if I could sell it at all. It’s been this way for decades and it will not change.
So having spent precious money on a timeshare and realising it’s fairly pointless trying to sell it, how do you make the most of it?
Here’s how I’m getting payback for all that lost money.
- Use your timeshare – you’ve forked out a maintenance fee so you might as well take your week. You’re wasting that money if you don’t use it. If you can’t use it, rent or sell the week to friends or family members.
- Make the most of bonus weeks. The timeshare company should send you an email with a list of resorts available in the next couple of months at cheap rates. This is easier if you’re not working full time and can be flexible with where you stay. We love bonus weeks.
- If you’re invited to a timeshare presentation and you’re promised a good deal for a meal, a cruise or a new dressing gown, take it up. Assuming you have time. I occasionally do this for payback and inevitably learn something in the process.
- To spend your timeshare week in another resort, put in your exchange request as early as you can. Timeshare presentations can be sneaky and misleading when it comes to the strength of your resort’s trading power, and so the only real way to get in is to beat everyone else to it.
It’s annoying because you have to plan so far ahead (2 years or more) but apparently this is the best way to get what you want. Personally we don’t work that far ahead so we frequently miss out … then use AirB&B when caught short. We love AirB&B.
- Timeshare companies say you should think of timeshare as a holiday which you’ve paid for in advance. Personally this doesn’t make me feel better because I pay for all accommodation in advance anyway, but you might find comfort from it.
- Timeshare resorts actually provide great amenities such as kitchens, washer/dryers, and are often more spacious than other resorts. Some are even quite luxurious, particularly if they’re new or recently renovated. When you compare with the cost of a hotel, motel or similar resorts, it often works out you’re getting a good deal.
- Use bonus weeks or points offered by your timeshare company. They can be used over a weekend, to house your friends for a period of time, or to add another week to an area you’re visiting. Now we’re retired, we use bonus weeks as much as possible as we travel around. It’s great because you get to stay in nice places you didn’t know existed.
- If you use points, you can also:
- exchange for airline tickets, hotels, travel packages, cruises, amusement park tickets
- rent part of your points
- rent more points from the exchange company or another owner to get a larger unit, more holiday time or a better location
- save or move points from one year to another
For more thoughts on timeshare, see my post on timeshare tattle.