Is a Timeshare a Real Estate Investment?

Is a Timeshare a Real Estate Investment?

Pitchmen and marketers often emphasize that timeshares are a worthwhile real estate investment, and for good reason: It makes for an easier sell. Most of us still see real estate as a sound investment that will appreciate, or, at the very least, maintain its value.

But even as timeshare marketing continues to draw people in with the lure of real estate ownership, the industry has actually distanced itself from the notion of really owning a “piece of the rock” (that is, an actual, deeded interest to underlying real estate).

So, is a timeshare a real estate investment? This is really two questions. First, is a timeshare real estate? And, whether or not it is, is there any investment value to it?

Is a Timeshare Real Estate?

In the earliest days of the U.S. timeshare industry, starting back in the 1960s, the most typical method of timeshare unit ownership was, in fact, a deeded piece of real estate, a specific “slice” of a resort condominium that was also divided up for time. As owners started to request more flexibility in the use of their share – including spending time at different resort locations – a points and exchange system was set up to quantify the different values of different resorts’ locations and times of year. This point system was gradually adopted by the big multi-resort developers in the early 2000s.

The entire industry at this point has now essentially transitioned to a “points-based” or “right-to-use” model, which allows developers to increase sales enormously, as they are no longer restricted to sell the same timeshare unit only a set number of times.

But what does this mean for the purchaser? As the term “right-to-use” suggests, no real estate ownership is actually conveyed to the owner. While the purchaser does take on interest – and, more often than not, upwardly-trending maintenance costs and annual fees – he or she does not really acquire tangible real estate ownership. 

Is a There An Investment Value to My Timeshare?

While buyers are often led to believe that a timeshare is a real estate investment that will have value that can be re-made through a sale or passed on to loved ones, “nothing can be further from the truth,” as our own Michael D. Finn recently told the New York Times.

In the absence of tangible real estate ownership and the rise of the “right-to-use” points model, the residual value and ultimate re-marketability of a timeshare is severely impaired, and most have no resale or inherited value whatsoever.

Have any more questions or concerns about timeshare ownership or the “right-to-use” system? We’d love to hear from you!

Led by Attorney Michael D. Finn with 45 years of experience, the Finn Law Group is a consumer protection firm specializing in timeshare law. Our lawyers understand vacation ownership as well as the many pitfalls of the secondary market of timeshare resales. If you feel you have been victimized by a timeshare company, contact our offices for a free consultation. Know your rights as a consumer and don't hesitate to drop us a line with any questions or concerns.

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