Are Timeshares A SCAM?... Timeshare Traveler Episode 177

[Clifbell]

There are many reasons why people can feel like timeshares are a scam. I don't necessarily disagree with how people feel. In some cases people made a decision based on lies or they made a purchase that wasn't big enough to be useful, or they didn't ever learn how to use the timeshare. All of these outcomes could make someone feel like timeshares are a scam.

People like me try to provide support for people who want to learn how to best leverage any purchase of a timeshare. No system is perfect and this includes all timeshares. I just know for me I have saved money using my timesahres vs. having rented hotels, airbnb's or timeshares. But that wasn't without effort. Each person has to decide if it is worth the effort.

Are Timeshares A SCAM?... Timeshare Traveler Episode 177

Map of all my timeshare reviews

 

[e.bram]

Buy Oceanfront Resort Oceanfront Unit good week.

 

[MabelP]

It takes ALOT of time and effort to learn the nuances of timeshare vacationing. Sometimes I think it is a job! But all the time and effort has truly paid off for my family for twenty-five years.

 

[Clifbell]

It takes ALOT of time and effort to learn the nuances of timeshare vacationing. Sometimes I think it is a job! But all the time and effort has truly paid off for my family for twenty-five years.

I feel the same as you... Like most things in life, you get out what you put in.

 

[Clifbell]

Buy Oceanfront Resort Oceanfront Unit good week.

An excellent stategy

 

[jp10558]

I think the sales people lie enough that I really don't know how they don't get hit with fraud more TBH. I guess the actual contract is not lying, and people really ought to read the contract. It's obviously not a scam technically, they're to large with obvious nexuses in the US that if it was an outright scam they'd have been shut down by now. You're not sending your money off to a Nigerian Prince or random internet front. You will be able to book *some* week each year if you start by February I think, and in many systems you have a pretty good chance of getting a location and date you want if you book it like a college class sign up (i.e. early as possible). I do think you can really increase your ROI buying resale into good systems, and really reduce the sunk cost issues or loan issues.

To really get the benefit though you do have to be willing to spend time learning, and I think it's very important to be able to think of timeshares like a Sam's Club for vacations. You have a bit of a limited selection, and a membership fee, but you get bulk rates and either get higher quality for "the same price" or more for "the same quality". Just like Sam's Club, if you can only use IDK 2 rolls of paper towels a month, the bulk rate for 15 probably doesn't work for you.

 

[MrbeanOnVacation]

I am curious why timeshares are “not” referred to as investments.

If I bought a rental income beach home I would call it an investment property. I would pump $$ into the mortgage, property taxes, hoa, and labor to upkeep. I would hope to recoup my principle over time and then have rental income.

From Cliff’s own analysis (and my own) if you get the right resale timeshare you can rent it out and recoup investment in
Isn’t that an investment?

 

[sponger76]

I am curious why timeshares are “not” referred to as investments.

If I bought a rental income beach home I would call it an investment property. I would pump $$ into the mortgage, property taxes, hoa, and labor to upkeep. I would hope to recoup my principle over time and then have rental income.

From Cliff’s own analysis (and my own) if you get the right resale timeshare you can rent it out and recoup investment in
Isn’t that an investment?

Seeing how the vast majority of timeshares lose you money in that they immediately have a much lower resale value as soon as you complete the retail purchase, it's hard to classify them as an investment, and that's before you even start factoring in annual Maintenance Fees. But beyond that, I think usage plays a part in it. If you NEVER use it for yourself/friends/family and ONLY rent it out each year, it might be considered a business investment rather than a personal asset purchase (or some might say liability due to the combination of inability to influence the increase rate of MFs with the difficulty of exiting the ownership).

Complicating it further is that many timeshares have clauses in their governing documents prohibiting "commercial use," which some, especially the timeshare companies themselves, interpret as renting with the intent (you don't have to actually be successful) to make a profit.

 

[MrbeanOnVacation]

Gotcha

Maybe it’s “timeshares CAN be an investment” but require X, Y, Z.

However if these clauses prohibiting renting don’t exist and you can buy on resale for a good price in a desirable area: seems like a smart $ move to me

 

[LannyPC]

...and you can buy on resale for a good price in a desirable area: seems like a smart $ move to me

It doesn't really matter how much you originally pay (even if you acquire it for free). The "smart $ Move" would be the ratio of rental income to maintenance fees. If what could easily received from rental income exceeds the MFs, then it can be a smart $ move. However, if, like 90+% of the TSs out there, the MFs exceed what could easily be received from rental income, then it's not so smart a move regardless of how much you paid for it in the beginning.

 

[sponger76]

Gotcha

Maybe it’s “timeshares CAN be an investment” but require X, Y, Z.

However if these clauses prohibiting renting don’t exist and you can buy on resale for a good price in a desirable area: seems like a smart $ move to me

Perhaps. There are those that make money in this game, but it isn't quite as much of a slam dunk as you might think.

Keep in mind that the cheap resales are usually priced that way for a reason. The desirable resorts, and particularly their most desirable weeks/seasons that can reliably get you rental rates significantly higher than Maintenance Fees, are very difficult to find cheap even on the resale market. Because of those very qualities, there is a lot of competition for them, driving up the price. And that higher purchase price, coupled with the typically higher Maintenance Fees those higher end resorts that fetch those higher rents tend to carry, means that your horizon for breaking even and eventually making an actual profit is not a short one.

After all of that, we have seen that situations such as the relatively recent COVID restrictions ,can totally screw that business model up. Timeshare rentals are also quicker to get hit in general economic downturns since travel is one of the first luxuries to get cut out of people's budgets. And if you can't rent it out, you are still on the hook for Maintenance Fees, at a time when fewer people are willing to buy timeshares or even take them for free..

 

[easyrider]

Timeshares aren't a scam. They are a luxury product and like all luxury products, timeshares are designed for those that can afford them. The problem might be that many people who can't afford these products are buying these products. This group is responsible for most of the delinquencies and foreclosures.

I've met many people that have paid plenty for a timeshare that pay their mf whether they use their weeks or not because they can afford to do so.

Bill

 

[sponger76]

Timeshares aren't a scam. They are a luxury product and like all luxury products, timeshares are designed for those that can afford them. The problem might be that many people who can't afford these products are buying these products. This group is responsible for most of the delinquencies and foreclosures.

I've met many people that have paid plenty for a timeshare that pay their mf whether they use their weeks or not because they can afford to do so.

Bill

Very true. Even on TUG, which is just a tiny portion of the overall timeshare owner population, we often see people coming on and posting about how they can't really afford what they signed up for. And that's just at the beginning of their ownership, when they haven't even experienced annual MF increases yet. I've seen similar issues with other luxury purchases. A common one in the military is junior enlisted Service Members at the bottom of the pay scale buying expensive cars that they can't really afford and then having them repo'd, or running into other financial issues that result in negative counselings from their superiors, or even affecting their security clearances.

On the other hand, as you noted there are also others who can easily afford expensive things, including high end timeshares and their accompanying MFs, without batting an eye.

And there are those of us who can afford it, but we do have to be smart about it and plan both purchases and how we use them somewhat carefully.

 

[jp10558]

Very true. Even on TUG, which is just a tiny portion of the overall timeshare owner population, we often see people coming on and posting about how they can't really afford what they signed up for. And that's just at the beginning of their ownership, when they haven't even experienced annual MF increases yet. I've seen similar issues with other luxury purchases. A common one in the military is junior enlisted Service Members at the bottom of the pay scale buying expensive cars that they can't really afford and then having them repo'd, or running into other financial issues that result in negative counselings from their superiors, or even affecting their security clearances.

On the other hand, as you noted there are also others who can easily afford expensive things, including high end timeshares and their accompanying MFs, without batting an eye.

And there are those of us who can afford it, but we do have to be smart about it and plan both purchases and how we use them somewhat carefully.

Yea, they're a lot like cars IMHO. Like most people don't think dealerships are a scam, but they do know they aren't going to do a financial analysis with you to determine the car that works best for your budget, they're going to try to sell you the most expensive thing with add-ons etc that they can get credit approval for. Used car salesmen I guess have a similar reputation but again, for some reason it attaches to the car salesman there, not the product itself. Ehh, the public perception of things is weird and often based on goodness only knows what. Like the hate for Nickelback as a band was basically a comedian's 2 second joke that was made a promo for a comedy show for a month back in 2003 or so. These things are weird.

And sadly, the public perception *hates* when the answer is "it's complicated" so there's always a demand for an issue to either be all good or all bad. Which also explains why if people live their life that way they're often befuddled by the state of the world, and find themselves outmaneuvered on all sides.

 

[dioxide45]

Timeshares aren't a scam. They are a luxury product and like all luxury products, timeshares are designed for those that can afford them. The problem might be that many people who can't afford these products are buying these products. This group is responsible for most of the delinquencies and foreclosures.

I've met many people that have paid plenty for a timeshare that pay their mf whether they use their weeks or not because they can afford to do so.

Bill

While perhaps a luxury product they are heavily marketed to the middle class.

 

[easyrider]

While perhaps a luxury product they are heavily marketed to the middle class.

That's true but so are many things like smart phones with smart watches. Even coffee. I always thought I wouldn't ever be the remember when guy, but remember when coffee was a dime or free ? To me, a $7 coffee or a $1000 phone seems like a luxury item, especially to people that can't afford gas. I think I'm beginning to sound like my wife's father, lol.

Bill

 

[jeffox]

for some reason it attaches to the car salesman there, not the product itself.

I think that's because timeshares try to sell you a new product every time you use what you already bought and even if you already have one, they will try to sell you another different brand. Many can be rented for less than the annual fees without the initial outlay and even resale can't save you from these increasing fees. Still not a scam, just a poor financial decision usually made by people who can least afford it.

 

[jp10558]

I think that's because timeshares try to sell you a new product every time you use what you already bought and even if you already have one, they will try to sell you another different brand.

Oh, car dealerships will do this too - one of my Uncle's was mentally ill, but not recognized and I swear near every time he went to the local GM dealer with his (mind you 2-3 year old truck) they'd convince him it couldn't be fixed (even though it was under warranty) and he'd get a new one, *and* they'd roll the underwater loan over. Luckily I guess he only managed to do it 3 times before we finally got him in a home to get taken care of and away from driving at all.

Many can be rented for less than the annual fees without the initial outlay and even resale can't save you from these increasing fees.

And this seems like a near existential issue for those timeshares. Now they're surviving not on any actual value but just by taking in "suckers" who don't know any better. This part still isn't exactly what I'd call a scam, because they *do* still get a service/product, but it is skeezy as all hell. Then again, I see it all the time with lots of "luxury" brands or just stuff where if you don't get into the forums and such first, you'll spend a lot more than you have to to get a similar or better product. I'm thinking like Snap On tools for mechanics etc.