Invest in a vacation home or buy into a timeshare?

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August 15, 2019
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September 17, 2019

Invest in a vacation home or buy into a timeshare?

You go to the same destination every year for holiday, or you want to spend more time in some beauty spot — so you think, why not buy something? But should you go for a timeshare or buy your own vacation home? A vacation-related purchase or expense like this can make sense for some, but you need to carefully weigh your options before a vacation becomes a chore.

“Timeshares and vacation homes both have their pros and cons,” explains Richard Cayne of Meyer International. “It all depends on your commitment, both in terms of time and money.”

Timeshares are more about the vacation

A timeshare at its core is the right to use a property during a designated time. Nevertheless, this “designated time” can vary quite a bit, as well as what you can do with your “shares” when you’re not using it. There are fixed to flexible date arrangements, and some groups allow you to spend your shares across different properties, so you can still travel to different destinations.

Since a timeshare is almost more like renting than owning a property, you don’t have to worry about upkeep, but you do have to worry about maintenance fees, which may increase over time. Also, there may come a time when you cannot use your shares — some contracts don’t allow, or severely limit, the ability to transfer shares to a third party. And if you ever want to sell you interest in the timeshare, you may find it difficult as the market traditionally is saturated with timeshare opportunities.

“You should consider a timeshare more as a vacation choice, not an investment,” suggests Richard. “Since you’re basically paying for your holidays upfront, you should make sure it’s worth the expense or save you money in the long run.”

Vacation homes are a bigger investment

A vacation home is essentially a real estate purchase, with a view, which often requires a greater initial expenditure than a timeshare. It comes with all the responsibilities of a home, plus the added tasks of maintaining and managing (or getting someone to manage) the property when you’re not there. However, with the onset of such services as AirBnB and Homestay, getting rental income so that your vacation home helps pay for itself is not difficult. After a while, it could even become a source of extra income.

You must also be pretty attached to that location, as you probably won’t want to spend more money travelling to somewhere else. Yet, unlike a timeshare, if you ever decide to sell your vacation home, there’s a good chance you can do it for a profit.

“Buying a vacation home is an excellent idea as an investment, if you plan on using it to its fullest,” says Richard. “This is a serious financial commitment that has excellent perks as a getaway.”

Timeshare or vacation home?

So, which should it be? While a timeshare or vacation home may seem exciting and romantic while on holiday, this is not a decision to be made as you reminisce over fun memories. You need to seriously consider the benefits and issues for each option — having a trusted advisor take you through a reality check may be of great help before you jump the gun on planning your next holiday.

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