If you attend a timeshare presentation, you will be pitched on how great a value timeshare ownership is. You will be shown how you can lock-in the cost of your vacations, and how you can use your ownership to travel the world, and you can stay at exotic places. You will likely be offered nice gifts such as tickets, free vacations, cash, or other valuables just to listen to the opportunities that are available. You might even be told you are not being sold to, but that you are getting access to a unique opportunity that might save you countless dollars on your vacations!

Regardless of what is said to you, the question of whether a timeshare is a good value is relatively easy to answer. Before buying you should make sure you know the answer to this question

Attending a timeshare presentation can earn you cheaper vacations, money, tickets, and other items. In a separate article, I present tips that include questions to ask if you choose to attend a timeshare presentation. In this article, I’m going to focus on one area only – the value of a timeshare financially. Do the savings add up? With this focus, I hope to help you understand if the opportunity being offered truly is as good as what is being said.

Here are the important areas to consider regarding financials for a timeshare:

• Upfront cost
• Maintenance and other fees
• Special Assessments fees
• Timeshare Exchange Fees

It is important to understand each of these costs as ultimately if you buy a timeshare you could end up paying each of them.

Timeshare Upfront Costs

When you ‘buy a timeshare’ you are generally buying a specific week in a specific location at a specific resort. You might be offered to buy points, but roughly speaking, those points add up to what it takes to obtain a week at a specific time within a specific location at a specific resort. Whether you are pitched a week or points, both are generally sold with the flexibility to be used at different times within the resort, the resort chain, or even outside of the resort. In many cases, you are also told you can use what you are buying for other products such as car rentals, cruises, hotels stays, and more.

When you buy, you are often offered a specific unit size that can range from a studio to numerous bedrooms. In the most recent presentation that I attended at a Westgate resort, I was pitched a standard 2-bedroom unit during the most popular time at the resort, the peak time. While I was told the rates would be going up (“due to demand”), I could still get the current rate (standard sales pitch is that rates are going up, units are about sold out, and you don’t want to miss the deal). The rate was roughly $50,000 for a two-bedroom unit for a week at the resort.

That $50,000 let me own that week, “just like” I own the home I live in.

Of course, if you don’t jump on an initial offer, there is generally a better deal that is available. When I didn’t jump on the $50,000 price at Westgate, I was informed they just had an owner upgrade to a high-end unit, so there was a unit that had been partially paid for. I could have their equity and get a similar 2-bedroom unit to what they had just offered, but for just around $29,500! It was my lucky day!

Of course, this type of discount is standard. Just like buying a car from most automotive dealers, the first price is not the price you should accept or pay.

Financing will also be offered on this $29,500. I believe the payments would be roughly $165 a month, spread over about 15 years. For the sake of keeping numbers simple, that number doesn’t really take into account interest, so the payment would actually be higher depending on the financing.

Buying this unit would allow me to lock in the ability to take a week vacation each year. The pitch tells you that you are buying today, so you are locking in your ownership at today’s price. Let’s assume that you are 40 to 50, then this means you could be using the unit for over 30 years and thus over 30 vacations. By buying the unit, you’d lock your vacation cost at (roughly) $1,000 per year ($29,500/30). If you consider inflation and the changing value of the dollar, then, overall, this sounds like a good deal since it indicates you’ve locked in cost of your vacations!

Timeshare Maintenance Fees

In the presentation, they might tell you about other fees. The big one is the maintenance fees. In addition to the up-front cost, you’ll be charged an annual fee. These are often presented as a simple Homeowner’s (HOA) fee. This charge will be to maintain and cover your week’s use of things ranging from electricity, water, and cable, as well as cover the cost of house cleaning and more. It will also be your share of the cost to maintain the grounds and any amenities.

There will be other fees included in your annual assessment as well. When buying a timeshare, it is critical to ask what fees are charged and to get a clear understanding all the fees. For the unit above, I was told the current maintenance fees were roughly $800 a year. When I asked if this included property taxes, I was told that was “roughly $20 more”. That wasn’t included in the maintenance fees. As a note, $20 property taxes on a 2-bedroom timeshare seems unrealistically low to me. My timeshare property taxes are over $100 a year for a unit in Orlando.

There are a number of other line items that might be added to your maintenance bill beyond the base maintenance or HOA fee and property taxes. This can include management services to pay for the people who are booking your week and billing you for your annual fees. There can be resort fees that are charged by the owning organization (often a hotel chain).

There can also be reserve fees, which are fees that are charged to use for unexpected or planned updates. This can be for something such as a new roof, painting, or replacement of furniture and items in the resort unit. As a partial owner of the property, you are also responsible for such things as new paint, furniture, dishes, pool maintenance, and more. You don’t have to directly deal with these, but rather will pay fees to cover the costs. There can be numerous other fees. The following is an example of fees charged at a resort in Orlando. These don’t include the property taxes or standard reserve fees, which would be in addition to these:

• Housekeeping & Rooms
• Administrative & General
• Financial Services
• Technology Services
• Annual Audit
• Security & Activities
• Reserve for Bad Debt
• Repairs & Maintenance
• Utilities (Electricity, Gas, Water, Sewer & Telephone)
• Cable Television
• Internet Access
• Insurance
• Income Taxes
• Personal Property Taxes
• Fees to Division of Land Sales
• Management Fees
• Vacation Club Dues
• Maintenance Association

When fees are all added together, a 2-bedroom unit is likely to average between $700 and $1200 a year. If you purchase in high-demand areas, there are resorts that have fees as high as $3,000 a year. Note that these fees are required to be paid each year you own, or you could lose your unit.

The following are examples of annual maintenance fees (based on listings from Redweek.com):

• Grand Pacific Palisades Resort (Carlsbad, CA) – 2 bed / 2 bath – $1278
• Hilton Grand Vacation Club at Paradise (Las Vegas, NV) – 2 bed / 2 bath – $969
• Discovery Beach Resort (Cocoa Beach, FL) – 2 bed / 2 bath – $$1849
• Grand Timber Lodge (Breckenridge, CO) – 2 bed / 2 bath – $1148
• Marriott’s Newport Coast Villas (Newport Coast, CA) – 2 bed / 2 bath – $1300
• The Westin Kaanpali Ocean Resort Villas North (Lahaina, Hawaii) – 2 bed / 2 bath – $2693
• Lake Condominiums at Big Sky (Big Sky, Montana) – 2 bed / 2 bath – $744
• Marriott’s Ocean Watch Villas at Grande Dunes (Myrtle Beach, SC) – 2 bed / 2 bath – $1400
• Harbor Ridge (Southwest Harbor, Maine) – 2 bed / 2.5 bath – $570
• Sheraton Vista Villages (Orlando, FL) – 2 bed / 2 bath – $1516

Timeshare Special Assessment Fees

A fee that most people are surprised by is the special assessment fee. Most timeshare contracts will include the ability to charge owners for special assessments. Just like with a home, there are big updates that need to happen at times. This can be a simple modernization of what you own to big-ticket items like a new roof. Timeshare salespeople are unlikely to mention that after 10 or 15 years, that new unit you bought isn’t going to be as new. To do an upgrade could require more money than was collected via the reserve fees that were withheld each year. When this happens, a special assessment can be charged. This is a fee you are required to pay within a given period of time, or risk losing your time share.

As an example, I have a two-bedroom unit that after 15 years was being modernized with new televisions, updated granite countertops, and other improvements. A special assessment fee of roughly $3,000 was done with the expectation of it being paid over 2 years ($1,500 a year).

If this were to happen every 15 years, that would add $6,000 to the cost of owning the unit for 30 years. This equates to another $200 a year.

Timeshare Exchange Fees

If you plan to go to the resort where you purchased your timeshare every year, then you can ignore this section. Most timeshare presentations; however, rave about how you can trade your week and go to exotic places all over the world! If you do plan to exchange, then there are additional costs involved.

Exchanging can happen at multiple levels. You can exchange within the network for the resort you own, or you can exchange with one of the world-wide exchange companies. There are basically two world-wide exchange companies that most people use, Resort Condominiums International (RCI) and Interval International (II).

If your timeshare resort has their own network, then those fees are likely to be included in your annual maintenance fees. Many smaller resorts will use RCI and II for exchanging. Additionally, if you want more options, then you’ll also tend to use RCI or II.

While you could belong to both RCI and II, they each have an annual subscription price. To exchange you must be a subscriber. For RCI, the current price starts at $99 a year for weekly ownership ($124 a year for points owners). The average annual price can go down if you subscribe to multiple years at once. If you want added benefits including better trading, you can subscribe to gold or platinum membership levels. Gold increases the price by $49 a year and platinum increases it by $89 a year. For Interval International, the prices are similar to RCI including the gold and platinum levels.

In short, to have the option to exchange, you need to add roughly $99 a year to your timeshare ownership costs. 

Once you’ve become a member of RCI or II, you then can exchange. Assuming you find a unit to trade for, you will be assessed an additional exchange fee. Note that finding a unit you want is not as easy as implied by those selling timeshares.

Exchange fees can vary based on a couple of factors, and over time they increase in the same way maintenance, property tax, and other fees increase. Overall, the average is close to $200 to make an exchange. If you use Interval International, then some exchanges are cheaper if you own at a Sheraton or Marriott resort. Sheraton owns Interval International, and Sheraton and Marriott recently combined some business.

There are additional fees that are optional when exchanging. These can include trip insurance in case something goes wrong. You can also buy the ability to change your exchange. Generally, 24 hours after you exchange, you are stuck with the trade. The exchange companies will sell you the ability to re-trade. This can add roughly $50 to $60 dollars to your costs.

If you have a unit that breaks can be broken into pieces either by the bedrooms (called a lock-off) or by using only a few of your days at a time, then you pay the exchange fee for each individual exchange. The subscription fee is one time per year regardless of the number of weeks you own.

Pulling it all together: Is a Timeshare Worth the Cost?

If you pull all the numbers that have been mentioned in this article together, then you you’ll see the following annual costs for a 2-bedroom unit if you consider a 30-year value:

• Upfront cost: $1000
• Maintenance fees: $1000 (maintenance/HOA/property tax)
• Special Assessment Average: $200

Total cost to own: $2,200 a year. This equates to over $310 a night.

If you also subscribe to an exchange company and use the exchange, then you need to add the following:

• Base subscription: $100
• Exchange fee:  $200

Adding this to the other costs puts you at $2,500 a year, or over $350 a night.

At $2500 a week or $350 a night, you can rent at most resorts. If you know a person that has a timeshare and belongs to RCI or II, they can rent resort units for a lot less than that for you. There are often times when the rental prices through the exchange companies are lower than the total annual maintenance fees for the units. Even checking on travel sites can turn up units and specials that are substantially cheaper to rent than own.

Final Thoughts

While timeshare presentations will pitch the idea of locking in the cost of your future vacations at today’s dollars, it is important to realize that this is not completely true. The maintenance, property tax, exchange, and other fees will continue to increase. The average increases many of these fees can easily exceed inflation. Thus, you are only locking in your commitment to pay for your vacation, not the cost of the vacation.

You can also get a good idea of the value of timeshare ownership by reviewing the number of units available for resale and their price. Many units are for sale online and through timeshare resell businesses. These can often be purchased at a fraction of the cost of buying directly from the resorts, with reports of units available for a penny not being uncommon. The price paid at resorts for a timeshare are generally the highest prices, even after discounts.

In short, don’t be fooled by the numbers the timeshare people bombard you with. Ask your resort if they will buy back your unit or what the resell value is. That also will help you understand the value. In the meantime, enjoy the presentations if you think the tickets, cash, or other offers are worth your time. Just remember that if you don’t say “no”, you should make sure you know the real total cost.

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Note: Numbers are based on the time this article was written and are subject to change. There is variability in how timeshares are presented and sold; however, in general the information provided here applies. In some cases, timeshares are sold for a set number of years (such as 20) instead of for life. The math and numbers, however, would still be similar.