Lifestyle What is a timeshare and is it worth the cost?

For some, a yearly or twice-yearly vacation is what makes working during the rest of the year worth it. Some may book exotic getaways to brand new faraway locations, while others pick a favorite spot and make their annual trip a tradition.

For the latter group, the ideal situation may be owning a vacation home. But owning a second home can be costly and require a lot of upkeep that may not be appealing if you’re not there most of the time. This is where the concept of a timeshare is applicable.

A timeshare is basically a contract that gives you access to a vacation property during certain periods of the year. You pay for it, yes, but it can be more affordable and less complicated than outright owning a vacation home. Plus, you’ll never have to worry about booking a hotel again.

Here’s a breakdown of timeshares, what they cost and how to evaluate if they’re the right fit for you and your family.

What is a timeshare?

A timeshare is a contractual commitment to paying for vacations to the same property at certain times of the year. There are several kinds of timeshares, so you could be paying for use of a single-family home or trips to the same resort or family of resorts. How often and when you go depends on the type of timeshare.

Paying for a timeshare usually involves an upfront buy-in cost, as well as annual maintenance costs.¹

Types of timeshares

Broadly, there are two main types of timeshares.

• Shared deeded contract: This is essentially the shared ownership of a house or condo between a group of people. Each owner is given a specific time for when they’re able to use the property and can also sell or gift their portion of the timeshare if they no longer want it.
• Shared leased or right-to-use contract: Rather than ownership, this functions as a shared lease between a group of people, meaning it cannot be sold or rented to others. When the lease is up, a person may choose to exit the contract if preferred. As with a shared deeded contract, use of the property is divided into certain times of the year.

How often can I use a timeshare?

How often a timeshare can be used is dependent on the contract, as there are many ways to divide a timeshare. These include:

• A fixed-week timeshare that gives each person a set week or weeks to use the timeshare every year.
• A floating-week timeshare where owners can use the property for a week during a specific season, or even at any point in the year. However, this is often managed by a booking system and desirable times may book quickly.
• A point system timeshare where people earn/purchase points that can be redeemed for use of the timeshare. This is a popular choice for resort timeshares.

How much does a timeshare cost?

As mentioned, there is usually both a buy-in cost for a timeshare and yearly maintenance fees. There is also no one-size-fits-all for timeshares – every timeshare will come with a different price based upon the property, terms of the contract and circumstances of the purchase.

For example, buying a timeshare on resale – where the previous owner is transferring ownership to you – is often more affordable than directly purchasing a timeshare from the management company. But, much like buying a used car, this may come with its own set of drawbacks as a resale timeshare may not include all the benefits of a direct purchase.

According to the American Resort Development Association (ARDA), the average price of a timeshare transaction is $23,940.² This amount reflects that initial buy-in cost for a timeshare, which again, may vary greatly.

As far as maintenance fees go, the average fee per one-week interval stood at $1,170 according to the ARDA’s 2023 State of the Industry Report.³

Benefits of a timeshare

There may be many benefits to a timeshare for you, particularly if yearly vacations are a staple in your life. These benefits include:

• Guaranteed vacation residence at the times detailed by your contract.
• Flexibility with some types of timeshares to move around your vacation times or even skip certain years.
• Flexibility of location if you buy a contract from a family of resorts.
• For more traditional timeshares, you get the private use of a vacation home for part of the year without having to absorb the full cost.
• Potential for vacation discounts and access to luxurious amenities depending on the type of timeshare selected.⁴

Risks of a timeshare

The appeal of a timeshare may be clear for certain scenarios, but they aren’t for everyone. Some drawbacks to timeshares include:

• Depending on your contract, you will likely be limited in how often you can visit your timeshare and when you can visit. Some timeshares, most commonly for resorts, include “blackout dates” which prohibit use during certain peak travel dates.
• If you decide you no longer want to use the timeshare, transferring ownership or breaking the lease may be complicated and expensive.
• Maintenance fees are often subject to yearly increases and you may not know the full cost when you purchase the timeshare.
• If there’s an emergency that leads to cancelation of your trip, you may lose out on using your timeshare for that year.
• Although there are more flexible resort-style timeshares, timeshares are generally set in location, so you will be committing to traveling to the same place each time.⁵

It’s also worth noting that scammers could be lurking, particularly if or when you are looking to resell your timeshare down the line. Proper due diligence may be necessary to ensure you don’t fall victim to fraud. You should take this into consideration when evaluating if a timeshare is right for you.⁶

Is a timeshare worth the cost?

Deciding whether a timeshare is worth the cost is a personal choice that reflects your lifestyle and finances.

The first question to ask yourself is: Do you want a timeshare? It is important to think about if you truly know and love the location you’re considering enough to commit to returning for years on end. Considering all the benefits and drawbacks, if buying a timeshare seems like the right move, then the next question is: Can you afford to buy one? There is a wide range of costs for timeshares, so this step requires research. Keep in mind that you likely won’t be able to plan for increases in cost over time, so you should feel financially comfortable with that possibility. It might also be helpful to think through any significant life changes coming down the pipeline that could impact your use of the timeshare or ability to afford it, such as plans to have children, return to school or save for a down payment.

Once you’ve determined that you want and can afford a timeshare, it comes down to selecting the right type of timeshare that suits your lifestyle (or vacation style) and pocketbook.

Bottom line

Timeshares can potentially be a great solution for individuals or families who have a beloved vacation spot but don’t want to commit to buying a vacation home. Given the many types of timeshares, they can suit a wide variety of needs, from more traditional family-style homes with a set trip schedule to more luxurious resorts that book based on a points system. 

Before you make the decision to buy a timeshare, it’s always wise to work the cost into your long-term financial plan and ensure it aligns with your needs and goals.