“John, shall we buy an apartment in the Algarve?”
“Why? Would you want to go there all the time?”
May be not all the time. Still, I love the Algarve and wouldn’t mind going there some times. Particularly now that our dream to build a house in the high mountains of Bulgarian is obviously not happening.
Before we go any further, I need to explain something about this one. Dreams don’t happen for many reasons and one that pops up often is that people don’t have money to make them reality. In my case, it is more about the conclusion that it would be very hard for me to spend in Bulgaria long periods of time (don’t ask) and that it would be hard to justify building a house that will be empty most of the time.
And this is the problem just there: on the one hand, I’ll be happy to have a holiday place; a place with sun, snow and fun. On the other hand, buying a holiday apartment or a house is a great responsibility I don’t wish to take on; also I refuse to continue building a property portfolio that is under-used and takes away money that can otherwise go into my investment accounts.
This is what made me look a bit more carefully at timeshares.
#1. What is Timeshare?
Timeshare is a bit like crowd-sourcing for holidays. A bit more conventionally defined, timeshare is a form of ownership of property that gives particular rights of use. Usually, the co-ownership (or lease) allows for a week or two use of the property at the same time of the year.
As many interesting developments, timeshare started in the UK. This notion is thought to have its origins at the beginning of the 20th century when three or four families would pool together and buy a holiday home. After that, they’d have three or four months each every year to enjoy the property.
In the 1960s this developed into what is the contemporary model of timeshare where families buy a ‘week’. In this case, a resort or a developer would split the occupancy of their villas and apartments and sell ‘timeshare’.
There are four types of timeshare:
- Fixed week: This type of timeshare means that the buyer owns the rights to a specific unit for a specific week; every year as long as the contract continues. This type of timeshare allows swapping with other timeshare owners, so desirability is critical.
- Floating: The byer can reserve any week during the year but there is no guarantee that the property would available when you want it to be. Some level of negotiation and flexibility on all sides is necessary.
- Right-to-use: In this case the buyer leases the property for certain time over a number of years. Ownership is retained by the developer or the resort, however.
- Points club: This arrangement has the flexibility of the floating timeshare but points accumulated in various ways are used as currency. In principle, the buyer can stay at different locations but this is organised on a ‘first come, first serve’ basis.
#2. Buying a timeshare is worth it when:
You value the comfort of the familiar
Some people tell me that going on holiday stresses them. You know what this is about?
Yes, it is about having to cope with, and figure out, a completely un-known and potentially full of surprises environment. There is a lot to be said about going back to a place you know and start exhaling immediately. I should know; we’ve been going to the same place on a Greek island for the last couple of years and we probably will go again this year. We like the place, we like and know the people and have already worked out routines for life. All that is left is to relax.
You have found the perfect spot
Buying a timeshare is quite a commitment: you’d either be going to the same place over and over again or you’d like to swap your timeshare for the use of a property at different location.
And let me tell you, if you don’t absolutely adore the place where the timeshare is there is no level of commitment that will make it feel like a holiday. In fact, you may risk making the time for relaxing and recharging seem like a chore.
If you wish to exchange your timeshare this would be so much easier if it is located in a highly desirable spot.
So, you see, irrespective of whether your timeshare is for repeated use or you’d fancy exchanging it, you ought to find the perfect spot.
You remember that timeshare is not a property investment
Sometimes it is amazing how people can get confused about investing. I don’t think this needs long explanation; just remember that buying a timeshare is as much of an investment as buying a new car. Or buying a new pair of shoes.
You pay to use a property and even if you acquire a partial ownership capital gains cannot be realised. Translated this means that your timeshare is highly unlikely to increase in value; thinking about it, it may not even hold its value.
You have clear exit strategy
Most people buy things to keep and think little about the next steps. This is fine most of the time but can be a failing when it comes to large and durable purchases.
You’ve guessed right: buying property, or even long term right to use, fits the bill nicely.
When you buy timeshare, make sure that it allows for exchanges and that you can sell it on if you wish to do so. Most timeshares allow this and there is help in hand to make your exit easier and, possibly, more profitable. Online businesses like BuyaTimeshare.com can smooth out the process whether you are looking to buy, resell or rent a timeshare: they have operated for a long time, have all necessary accreditation and have a good ‘stock’ of sellers and buyers on the site.
It is well worth using help where help is needed.
#3. What can go wrong?
Not much if you use a reputable timeshare company and keep in mind the simple check-list above.
You still need to be warned though: like with most booming enterprises, the timeshare industry can be vulnerable to scams and fraud. So, remember ‘due diligence’ and keep your wits about you; you may also consider researching some of the most common scams and fraud so you don’t fall prey to it.
BuyaTimeshare.com also offer helpful source of information on different timeshare resale scams.
Now is the time for the million dollar question: would I be able to convince John that buying a timeshare is the way to go.
I doubt this very much. And it is not because there is something we inherently dislike about timeshare and similar arrangements; it is because of the kind of people we are and the kind of retirement we see for ourselves.
Both John and I – probably more I – have ‘the gypsy blood’. I don’t think we’d be happy to be tied up to a place, or property, for any length of time; and if we were to go somewhere more than once, we wish to know that we can easily change our minds about it.
We are not the likely buyers of timeshare since we fail the first condition that makes it worth it.