Our friends at After Inside Timeshare recently ran an article on the problems surrounding buying timeshare to then rent it out. The major focus of the article surrounded Bluegreen Vacations; however other developers were mentioned, all not in a very favourable light.
A common thread was resort sales staff promoting the rental of the owners’ timeshare weeks or points to assist with the payment of maintenance fees, at TCA we find this quite alarming for reasons we will go into later. Whilst many timeshare contracts have terms allowing for renting ownership to say family members and friends, they also have, often not mentioned or published rules that make renting prohibitive, if possible at all, as the article link above confirms.
Rental, we just don’t get it
Don’t get us wrong, we fully understand that there may be times when taking a holiday may not be possible so the ability to rent out your timeshare is a great idea; however, that should be an occasional decision. The whole idea of buying a timeshare is to take annual or more frequent holidays not to attempt to make a profit or even cover costs by renting.
For resort sales staff to pitch rental seems to go against the reason timeshare exists, it further introduces a somewhat more worrying point.
Affordability
Here is the crux of the matter; very few purchasers can actually afford to buy timeshare. With entry level timeshare costing around $20,000 not many have that sort of spare money laying around so taking finance is often required, expensive finance at that. Add to this an annual maintenance fee of around $800, for most the whole deal is bordering on unaffordable, but if the sales rep can sweeten the deal by introducing rental, then the numbers are easier to crunch.
On average sales reps know that they are selling timeshare to those who really can’t afford it so by financially proving that taking money in one hand that may be given back by rental with the other, affordability may be proven, of course we all know this is just financial sleight of hand.
The camper van (RV to our American readers)
This author has a friend who decided, with his wife, that owning a camper van would be a good idea. His purchase was funded by a dealer finance agreement. Two years down the line he has established that the couple have used the van for a total of eight weeks only.
During the two years, the couple have had to make loan repayments, pay for road tax, insurance premiums and servicing costs and it’s all becoming financially straining. Now our stalwart mobile campers have but two options, sell the van, at a loss or approach specialist rental companies who will rent the van out to the general public and generate an income to potentially cover costs.
The hard facts are that more homework should have been done before committing to the purchase. Our friend shouldn’t really have purchased the van in the first place. We use this ditty as a similar example when looking at a timeshare purchase, the one advantage with the camper van is at least it’s a saleable product and can return money if sold.
TCA Comment
As with most things in life, if you can’t afford it, don’t buy it. If you can’t afford the upkeep, don’t buy it. Timeshare is a product whose only feature and benefit is that it supplies holidays. Under no circumstances should ownership be entered into with a view to making a profit or an income.
If any resort sales presentations mention investment and/or income then it’s a sure sign that the sales rep has already figured out that you can’t afford it. Once again our friends at After Inside Timeshare have pages full of comments from many American purchasers who have had to stop making both loan repayments and maintenance fees because they were oversold and can’t afford the costs, the upshot of which is the developer has foreclosed on their ownership.
Under most circumstances, we would say think a lot more than twice before committing to buy a timeshare. Be honest with yourself as to whether you can not only afford to buy but also maintain. If you have to start thinking about renting it out to cover costs as opposed to using it, then walk away.
For more information regarding this article or assistance in any other timeshare related issues please contact the TCA on 01908 881058 or email: info@TimeshareConsumerAssociation.org.uk