Yes, we all dream of the cabin in the woods, the cottage by the lake, the bungalow on the golf course, or the grass shack on the beach as a vacation getaway. But before you make a commitment to buy such a dream, be sure to carefully map out the cost.
First, there’s the cost of the property itself. It’s likely to be far more than you’ll pay for a set of timeshares. If you pay cash, that’s cash you can’t invest in something that will give you a return on your money. The investment in the property itself may give you a return on your money someday (or not), but that day is when you sell the property, not while you own it.
Second, if you have to borrow money to buy the property, you have mortgage payments. The mortgage payments go on and on and on whether you use the property or not.
Third, the property taxes go on and on and on whether you use the property not.
Fourth, you own the property 100% of the time, not just for the weeks you use it. You will have to pay all the costs of owning a home including insurance, utilities, and maintenance. Even if you shut down the property for part of the year, certain costs also go on and on for as long as you own the property.
When you add it all up, it’s hard to see owning such a property for much less than $600 a month (not including the mortgage). Of course, many properties will cost much more than that.
Certainly there are benefits to owning your own place, but you have to weigh those against the cost and make a decision whether it’s really worthwhile., And while you’re at it, don’t forget that a second home takes a lot of your time and energy (physical maintenance and cleaning), because you are the overseer and slave as well as the owner of the property.
A timeshare can be a substitute for the cabin, cottage, or grass shack and can be a very cost-effective substitute. For instance, if you buy a summer home (second home), you’ll likely use it during the months of June, July, and August. You’re buying a building that’s going to be dormant nine months out of the year. And do you really use it during June, July, and August? It may be that you don’t get there until the end of the second week in June, and then you return home for the third week in August when your kids start the fall semester. In such a case, you need only eight timeshare weeks to duplicate your summer home.
Let’s say you can buy timeshares for $2,500 each and close for $500 each. For eight timeshares your purchase price will be $20,000. Your closing costs will be $4,000. So for $24,000 you have the equivalent of your summer home.
The timeshare is not really equivalent however, because someone else does all the management and maintenance, and all you have to do is show up to enjoy the unit. You get maid service once, twice, or even seven times a week, which is something that you have to provide for yourself in a second home. A timeshare is a no-muss-no-fuss deal. Of course, your timeshare condominium may not be as large as a second home, although in some cases it may be larger.
Now let’s look at the monthly assessment. If each timeshare (8 weeks) has an assessment of $850 per year, that’s a total of $6,800 per year. That’s likely to be less (in many cases much less) than maintaining and operating a second home. In addition, you have a purchase price of $24,000 compared to probably over $200,000 and as much as $600,000 or more for a second home. You can’t make any money when you sell your timeshare, but then you’re not tying up much of your capital either.
But that’s not the whole story. It’s possible to buy points in a resort. When you buy points, you spend them to use a unit for a week. Enough points are typically sold in one package to use a two-bedroom condo for one week during peak season. However, depending on the resort, you may be able to get two weeks of a one-bedroom condo for the same package of points.
So, let’s take another look at your summer season. Let’s say you buy four timeshares for the summer; that is, you buy four packages of points that entitle you to 4 times two-bedroom unit for one week or 8 times one-bedroom unit for one week. You go with the 8 weeks of a one-bedroom unit.
With this approach, you reduce your annual cost to $3,400 and your purchase cost to $12,000.
I have wanted to buy a place in my Colorado resort town. And I’ve had plenty of chances to buy a place at a bargain price. But every time I analyze it, a second home just doesn’t make sense. When I compare the cost of a second home to my timeshare cost at the local timeshare resort, it makes more sense to own timeshares.
So there you are. Timeshares can make a great second home. It depends on what your requirements are.
To conduct your own financial analysis, research the following:
- The duration of your annual stay (number of weeks)
- The type of unit you need (e.g., one-bedroom, two-bedroom)
- The price for the timeshares (points) you need. Timeshare websites (e.g., eBay) are a good source of sales data.
- Annual maintenance for the timeshares you need. Resort developers’ and timeshare websites are good sources of information.
- The price of a second home in the locale. Check the local MLS listings.
You can probably make a good guess at the costs of operating a second home based on your own home ownership experience. If not, research the utilities and maintenance costs for houses in the locale.
My Experience
I use 4 timeshares (points) to get 6 weeks at my favorite resort in Colorado. I get 4 weeks of a one-bedroom and 2 weeks of a two-bedroom. The two-bedroom time is when my wife and I have relatives and friends visit. But some summers we forego hosting and use a one-bedroom for 8 weeks.
What do you do in a timeshare that you’re using as a summer home? Well, that depends on where it is. My timeshare summer home happens to be in a remote Colorado mountain resort town. The town has over a dozen good restaurants, a bluegrass festival, a folk music festival, a rodeo, a county fair, an arts and crafts festival, summer theater, a major hot springs, a 10K race, a long Fourth of July parade and fireworks, a full golf course, tennis courts, a huge fitness center, a regional ski area, a variety of local clubs, over a dozen churches, and a ten-bed hospital.
In addition, it offers all the mountain outdoor activities that you could ever ask for. If you’re an outdoor enthusiast, as I am, there’s never a lack of anything to do. The resort is located at the golf course right on the edge of town. Everything I need, including adequate shopping, is close at hand. That’s the way I like it.
You will likely have a different idea about where you want your timeshare summer home. You might be inclined to have it at a resort where there are more non-outdoor activities going on. Or you might want to have your timeshare summer home in a location where there is easy access to several resort towns. On the other hand, you may want to have your timeshare summer home at a resort that is isolated from any sort of population center, such as a place where all there is to do is relax, read, and take an occasional walk or swim.
Whatever you’re looking for, there’s probably a timeshare resort that fits your desires. Indeed, there are dozens of timeshare resorts in Las Vegas, a place which seems to attract a lot of people. And then there’s Orlando. Orlando has a huge percentage (some say 33%) of all the timeshares in the world.
My stays at my timeshare summer home are working vacations. With internet access I can get a lot done when I work. And I can schedule my work around whatever activities I pursue. I belong to the local photography club and hiking club both of which have social activities where I’ve made friends. Consequently, besides pursuing outdoor activities, I also have an active social life. There are many people who have a summer home there, and I am one of them. It just happens that my summer home is a string of consecutive timeshare weeks.
What’s my cost? It’s about $70 a day for a one-bedroom condo that is 970 square feet. At a time when a tent site at a campground is $25 a day and Motel 6 is typically $70 a day, I feel like I’m getting a good deal.
At this particular timeshare resort, is there anyone else doing this? Yes, there is. I have run across several other people who are doing the same thing as I am. Since the resort has over 400 units, however, that is just a small sample, and I assume that a significant number of people whom I haven’t met are doing the same too.
What’s next for me? Sometime soon I expect to start skiing again. Consequently, I will acquire more timeshares at my current timeshare resort and visit during the winter for two or three weeks. I have friends there with whom to downhill ski with and to pursue other winter outdoor activities such as cross-country skiing and snowshoeing. But the winter weeks will also be a working vacation for me. I will get some work done while there.
One of the people I know at my timeshare summer home has about three months of consecutive timeshare weeks, most of which she uses in the wintertime for skiing. She’s a working gal, and is able to work for her corporate employer via the internet.
When you buy a timeshare, you box off a week of your calendar each year. When that gets old, it’s time to think outside the box. One solution is become an active exchanger and go to a new resort every year. Or instead of trying to desperately get rid of the timeshare, another solution is to acquire more timeshares at a resort where you can establish a summer or winter home.
Alas, what happens when you get bored with your timeshare summer home? So long as you’re in a timeshare resort chain that has multiple resort locations, you’re free to choose other resorts within the system and do an exchange typically at no cost or low cost. Thus, you can shift your timeshare summer home from one resort to another quite easily. Indeed, when I become too old (95, or whenever) to hike, backpack, fly fish, and climb peaks, I may switch my timeshare summer home in Colorado to a timeshare fall home at a resort on a coastal island in South Carolina where all I have to do is relax on the beach, wrestle alligators, and drink the local swamp brew.
