Monday, March 05, 2007

Timeshare Tips

Timeshares, and their accompanying reputations, have been around for decades. They are still out there, but the sleazy operators have been weeded out, and the reputable developers can usually be trusted. But….

Why do you want a timeshare, and if you do, how do you plan to use or exchange it?

One of our favorite travel bloggers, Wendy Perrin of the Perrin Post, discussed timeshares in her March 5, 2007 post. She also referenced another popular blogger, Ed Perkins of Smarter Travel. Both articles contained the conventional wisdom about timeshare pitches and buying.

What is quite frequently not mentioned in these articles is the timeshare resale market. Basically, one can often buy a timeshare for a few hundred dollars from timeshare resale brokers, or even on ebay. When the upfront cost is reduced from, say, $10,000 to $600, a timeshare can make great sense. If….

1) You plan to use it every year, or trade it and use the trade every year. Once you miss a year, your annual maintenance fees effectively double.

2) You only buy a timeshare in a place you want to visit frequently, or you know your travel habits enough to know you’ll enjoy a trip where you’re based in one location for a week (the usual timeshare interval).

We’ve had great success with timeshare trades, despite the stories that “it’s hard to trade for a good resort/week/etc.” In prime color season last fall, we traded into a timeshare in the heart of Vermont (photo above). And the week before Christmas, we traded for a ski week in Banff, Canada (photo below).

The key to good trades is to buy a good trading property. Which means, basically, that you own….

1) A prime (“red”) week.

2) Preferably a two-bedroom unit.

3) And have low annual maintenance fees.

Do the math. Figure your amortization of the initial purchase price (including closing costs). Add you annual maintenance fees. If you plan to trade, add the cost of the trade company membership (the two big ones are RCI and II). Add the cost of the actual trade.

If, like us, you know that your annual costs work out to about $700 per year (trade), you can make an informed decision that you can or can’t find lodging for a ski week in Canada for $100 per night.

Bottom line, for us, is that we'd never purchase a new timeshare, but we'd certainly purchase a resale that afforded us good trades or was in a location we knew we'd visit every year.