Why are timeshares generally considered a “scam” or “rip-off”?
Do any legitimate timeshares exist where the deal works as advertised?
Generally, Timeshares are talked about in the context of a joke and are rarely taken seriously, but they must have been, or at least to appear to have been, viewed and taken more seriously at some point.
In: Economics
They are not necessarily a scam/ripoff (though some are), but like many things the pitch vs. the reality can be very different.
They are often pitched as easy to afford/finance, flexible, with lots of perks. But you always have to read the fine print because there are often (always) many hidden rules, fees, obligations, etc. that make them difficult to downright usurious in practice.
The general idea is “why pay for a house/cabin/condo/chalet/etc. year round when you’ll only use it a few weeks a year? its way better to split the cost with lots of people and share it!”
The main problem with this should be obvious, sharing means you can’t use it whenever you want. In particular times of year where multiple people/groups of people are all likely to want to use it (fixed holidays like Christmas, Thanksgiving, 4th of July, etc.) mean you could be paying for something that you rarely get to use when its appealing/convenient.
The second problem is the financing options offered for these properties are often quite predatory and you can quickly find yourself owing a lot of money on something you barely if ever get to use PLUS since you are only a part owner, you can’t even just sell it when you want to get out.
Time share networks where you don’t own a specific unit but have access to multiple possible locations is better, in theory, but it also means you are competing with more people for spots. Sure you can TRY and go to a new destination this year, but if its full you might get stuck with a mediocre to bad spot, or the same spot every year, or going to Hawaii during the middle of the rainy season, etc.
Its one of those things where if your schedule is flexible AND you are good at planning ahead AND you don’t mind staying within your location/network every year the deal CAN be more cost effective than paying for vacations piecemeal. But it turns out that the majority of people don’t fit that category so in the end most people probably end up paying more than they otherwise would have.
And all of that assumes it’s a legitimate, decently run, well maintained operation. If its poorly run, poorly maintained, or an out right scam, you can be screwed out of a LOT of money with very little recourse.
So there are some basic things you have to take into consideration:
1. Is this a place you’re going to travel year after year *OR*
1.a. Does the timeshare company have a wide enough network that you’re willing to take a slight loss in value to travel elsewhere?
2. Can you easily afford the annual maintenance fees?
3. Can you live with the rules set out by the property (booking process, blackout dates, booking for a friend, etc.)?
If you answer yes to all three of those things, then you start doing math. Anecdotally I’ve found the maintenance fees are about 30% of what the room would cost when booked as a hotel. So the math works out to asking which is more:
Purchase price + (maintenance fees x number of years)
Maintenance fees x 3.3 x number of years
Fox Sr. and Mama Fox love their timeshare, but I don’t think they’re going to profit on it in their lifetime. When my sister and I inherit it, it will be like 70% off rooms for a week anywhere we want to go.
there are 52 weeks in a year. imagine 1040 people, agreeing to buy 20 properties, each getting 1 week per year. take the total cost and divide it by 1040, and that’s how much each person pays. the problem is that some weeks are desirable, and others are not.
so, either the party arranging the whole deal has to pretend everyone who buys in will get to use it whatever week they want, or the party actually has to buy more properties and increase the cost somehow.
the end result is you either don’t get what you thought you were buying, or you end up having to cough up more money later to help even get you closer to the use you thought you were getting in the first place
there are other gimmicks with the larger companies, too. they hide your money behind points, and you can use more points to get more desirable things, like fancier properties and/or high demand weeks. but by the end of it, you’re overpaying because even though airbnbs and hotels have some of the same fees to maintain and manage the properties(salespeople’s commissions excluded), they’ve effectively locked you into an agreement where they don’t have to be competitive
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