How to profit from timeshares

Timeshares have a bad reputation, and deservedly so: when purchased new, they are almost always a horrible, horrible investment. They’re so bad, in fact, that in some cases the word “scam” would apply quite well, which is why a search for “timeshare scam” gets 750,000 hits. You pay a bunch of money up front, and in return you get to vacation at the same place every year and pay an annual fee for the privilege of doing so.

The poor value they often represent is why the industry is known for using shady, high-pressure sales tactics to con people into buying, and also why timeshares never come anywhere close to their original price on the resale market. Take a look at the timeshare listings on eBay: you’ll see some with premium locations going for a few grand and others with no bids even though the listing price is a dollar.

Here’s one which did sell for $1–except the seller tossed in a $250 Visa gift card. That’s right: sometimes you have to pay people to take timeshares off your hands. And sometimes you’ll have to pay more than $250. They are often more of a liability than an asset.

So obviously, the first rules of timeshares is never, ever buy one new. Even if you think it’s something you might be interested in, buy one from somebody who’s already eaten the massive depreciation.

But even if you could get a timeshare for free (aside from those pesky annual maintenance payments, that is), are they a worthwhile investment? The answer, as always: it depends. One angle to work with timeshares is that once you own one, you may be able to parlay it into a stay at a better location. In a recent timeshare thread on Fatwallet, poster Horseymen had this to say:

I love timeshares and travel almost exclusively with them. Much like Fatwallet, Frequent Flyer miles – and similar – there’s the “game” – and if you can play the game, you can do well.

 Generally speaking, you are looking for properties where your maintenance fees return about 1 RCI point per dollar. Also, you’re looking for a history of not having many special maintenance fees where they hit you with a one time fee of $1000 bucks or so because it’s time to reconstruct the property or settle a lawsuit.

 If you get a 1:1 ratio, that would be considered a “good” (but not screaming) deal.

 So it looks like you’re getting 30k RCI points for $450 a year. This is not considered a good deal. You’re getting 2/3rds of a point for a dollar. I’d hold out for a 1:1 deal if not better – with specific plans on how you’ll use it. We saved up 3 years this year for a killer deal on a Disney property (if you consider Disney properties to be killer deals) – retail for a 2 bedroom condo on site is about 4,000 a week for the time we went – and I ended up getting it considering RCI fees, membership and dues on points for about $1800. Some people would rather stay off-site and stay for about $100 a day, so good deal is relative (much like flying first class with miles) to what your family wants to do.

If you have specific plans for how you will aim to use your RCI points, it’s a great deal to get in – but know you’ll also be on the hook for about $100 dollars a year in RCI fees and $150-$200 dollars everytime you use it.

Not something we’d be interested in, but possibly a good deal for a few people out there. Thinking differently may help. Here’s Frugal Travel Guy on why he owns a timeshare:

 I bought the timeshare for $1,000 several years ago and have put it in the Marriott points program. We will never use the actual timeshare unit, a two bedroom with a week in January, (low time on Hilton Head). We bought the week at the Grande Ocean Marriott of Hilton Head as they give local owners use of the common facilities year round even though we only own one week. Katy uses the gym overlooking the ocean often and we plan on taking the grand kids there when they get a little older (notice the plural now of grand kids J ). Our yearly maintenance fee is $1,100 which is quite reasonable when you consider the gym membership, year round use of the facilities and points we now have to trade.

Gym membership, use of facilities at the beach, points to trade for stays at other locations: that’s not a bad value if you’re in the market for that kind of thing. As always, it pays to know the market, know the rules, and spend some time figuring out the best deal for yourself.

We’ll close with the most brilliant timeshare idea we’ve seen, courtesy of FWF poster dshibb:

…The only smart move I ever thought of in the timeshare space: Once you’re positive you’re going to die soon offer to take anybody’s time share off of them for like $2k+ each and then when you collect like 100 of them die and pass your kids the cash

Genius! It says something about the value of timeshares that the best plan for them involves death.