With the average timeshare price running about $20,000 a year, it can be a major investment for most families. If you don’t have the time to enjoy your timeshare, it could seem like a waste of money. This is what has gotten a lot of people interested in timeshare resale in recent years.
The demographic for timeshares is mostly people over 50 years old. With fewer people able to take vacations and more people renting than in the last 50 years, instability has driven younger people to vacation in different ways. Timeshares aren’t quite as attractive as they used to be.
While these changes to the overall economic ecosystem could make prices drop and investments seem like a better idea, you still need to read the fine print. Without a careful eye on the contract you sign, you could get screwed. Here are 5 timeshare resale roadblocks to make you reconsider investing.
1. Value Drops Fast
If you were considering buying a stock or a bond that you knew could be in freefall, you’d think twice. You might know that new cars lose massive amounts of resale value as soon they’re driven off the lot. For some timeshares, the same is true.
The investment returns on timeshare resale just aren’t as steady as other investments. Often a timeshare’s value will drop by as much as half by the time the owner is ready to sell.
The second-hand market, unfortunately, isn’t as large as many people selling timeshares might want you to believe it is. That makes a timeshare investment a pretty dependable way to lose money.
If the value of your investments can’t hold up for years to come, ideally growing, it’s best to avoid them altogether.
2. They’re Not Liquid
It’s really hard to turn any real estate asset into cold hard cash. The number of people trying to sell their timeshares has never been higher. Unfortunately, the people looking to buy are in the absolute minority.
If you offer a bargain price to a potential buyer, you might make your sale a little quicker, but you could lose out big time. Otherwise, you can hold out for awhile in hopes that the market bounces back.
Unfortunately, some major shifts in the overall economic landscape make it seem unlikely that the market will skyrocket anytime soon. While you’re waiting to sell your timeshare, you could be paying all of the fees, taxes, and mortgage costs associated with the property.
This could drive you into a bad position, where you need to take out additional loans from places like Aconsumercredit. You might not have the budget for this and be rolling the dice. Hopefully, someone scoops up your property soon.
3. Broker Scams Abound
With the huge number of people trying to sell timeshares right now, it’s a timeshare resale boon for a certain type of broker. They can be seen trying to prey on unassuming timeshare owners who are frustrated by the state of the market.
They will approach sellers and pose as a broker. After sellers have been positioned on the market for months or even years trying to get rid of a property, these “brokers” guarantee a deal in a few days.
This will, of course, excite the seller and get them to pony up a nominal fee. This fee is promised to be returned once the sale occurs. The problem is, this sale rarely occurs.
The “broker” disappears with the money, never to be heard from ever again.
4. Rental Isn’t Happening
Because you’re the owner of the property, you’re entitled to making attempts to rent out your timeshare as long as you’re paying for it. This works for a few people but raises more issues for others.
Finding a renter can be a massive challenge. There are so many options for renting timeshares since there are so many that are currently up for sale. Your rental income, even when you’re completely booked, may never pay for your annual costs.
With all of the additional maintenance, cleaning, and set up, it makes the whole process not seem worthwhile. You might even find rental restrictions in your lease.
And then there’s the vetting process. You don’t want to rent out to people who might ruin your space. You could be paying thousands out of pocket, basically ending up with a net loss because of carelessness from your renter.
Not everyone wants to be a landlord and not everyone has the wherewithal to fight against problem tenants. Unless that courses through your veins, a rental might not be for you.
5. Opportunity Costs Are High
In a buyer’s market, as it is right now, timeshares aren’t a very strong investment. In a lot of cases, you might lose money on your investment, meaning that just letting your money sit in a bank account might have worked out better.
A timeshare is a real estate investment and there are expectations placed on any kind of real estate investor. Even though it’s lower stakes than buying a house or a commercial property, you will have to perform maintenance and tend to it. If it doesn’t accrue wealth over time, you should consider another kind of investment.
Owning a home is how most American families build any wealth at all. If you’re renting but investing in a timeshare, you might want to consider owning a hope in a place you love rather than investing in a timeshare.
Timeshare Resale Is a Bear Market
As things change for a generation of people who don’t see the value of timeshares, more people are vacationing through apps like Airbnb. That leaves timeshare properties up for grabs and then turns into a lower value for them. Unless you want to devote a lot of time to timeshare resale, you should reconsider investing.
If you’re looking for more tips on investing in real estate, check out our list of must-have real estate apps.