Friday, June 20, 2008

Why Never to Buy a Timeshare

By Ric Edelman From Inside Personal Finance.
I’ve spoken to a lot of people who love ‘em. For a set number of days a year, you have a vacation home you can use as you wish. And the best part is it’s an investment ... until you want to sell it.

I recently took a call from Jim, who epitomizes the time-share investor. He owns one in San Francisco and hasn’t been able to use it during his prearranged vacation times because of work conflicts. This has led Jim to consider getting out of his investment. What can he do?

He can try to swap his property with another time-share owner.  Not only must that person want his property, they must want it for the same week as Jim has it. And Jim must want theirs, too.  A difficult undertaking to say the least.

Jim’s next option is to sell. He tried that without much success.  A few companies specialize in selling time-shares, but all too often (as was the case with Jim) they collect up-front fees from you and then never succeed in finding you a buyer. 

With the first two options exhausted, Jim considered abandoning the time-share. But that doesn’t end the problem, because he signed a contract that obligates him to pay $600 in annual maintenance fees. Non-payment not only could affect his credit, but the property management can sue him. 

So what should Jim do? He needs to see a real estate attorney to identify his legal rights and obligations. It’s not a happy story.  The message for you: don’t buy a time-share. Don’t believe it is an investment, let alone a good one. If you want to regard it as a vacation destination , fine. Go ahead and buy it, then. But it will be the most expensive vacation you ever bought.

written 5/99 updated 11.29.05
http://www.ricedelman.com/planning/investing/timeshare.asp