Buying timeshare property has grown as a trend over the years for a number of reasons. It is mostly followed in vacation houses and condos that are not supposed to be inhabited all year long and that a number of different people can benefit from it. But what exactly is timeshare to begin with?
Buying time share real estate means that instead of purchasing a property at its full cost, you buy few shares of the property or in other words, you pay certain percentage of the cost in exchange for using it at a specified time during the year. Specifically in the case of condos, beach houses and vacation homes, this helps as rather than having to buy the house entirely and using it only once or twice a year, you pay partially and respectively, use partially.
The general rule that’s followed pertaining to the time each owner can use it for is based on total number of weeks of the year. For example, if an owner has purchased a ‘two by fifty-two’ share, it implies that he can use the property for two weeks each year since one year has fifty-two weeks. The cost you pay depends on the number of weeks you wish to use it for each year.
But before you become an owner of a timesharing real estate, let’s look into few pro and cons of each to help you get some perspective;
Pros
- Timesharing is affordable and more realizable for middle and upper middle class families that cannot afford to buy the whole property. Vacationing and getting away, without having to spend thousands of dollars on accommodation only, gets easier for them.
- Vacation houses are only used once or at the most, twice a year for few days each. As such, owning an entire house costly and impractical. In timesharing, you only pay for what you use, while the total cost of the property is shared among all the owners.
- In case your vacation plan to some other place doesn’t work out, you don’t have to give up on vacationing entirely as your timeshare real estate is a guaranteed spot to visit as a backup plan also.
Cons
- You have to keep in concern the annual fees and there is nothing you can do about the incremental increase in that fee. Failing to pay that fee, and any additional costs associated with the house, can put you at risk of facing foreclosure.
- Selling timeshare properties is quite difficult in the first place and what makes it even more impractical is the fact that they often have to be sold at a loss. This happens because there are a large number of timeshare properties available in the market and getting hold of one at a cheaper cost is no big deal. Also, if you sell it at a loss, you won’t be eligible to file for capital loss with the IRS as it is not applicable on timeshare properties.
- Timesharing properties are bought on the basis of contracts and you have to keep paying for your share until the contract ends. This means that even if the place where the property is located loses it value and appeal, you have to keep up with the payments till the end date of the contract.