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The idea behind vacation ownership is that owning a timeshare or real estate interest could be a more economical choice than repeatedly paying for hotel rooms for yearly or frequent vacations. The reasoning is simple: why keep saving for hotel rooms when you can own your piece of paradise? However, in reality, timeshare ownership has not always met these expectations. Even deeded timeshares and fixed-week fractional interests come with multiple annual fees, including maintenance fees, property taxes, HOA fees, and special assessments, which can create a financial burden. Moreover, the current trend of vacation clubs with point systems, exchange company fees, and complex reservation systems has only made things more complicated and costly. Unfortunately, timeshare sales presentations often do not disclose the full extent of the financial obligations, and buyers may only realize the actual costs when they receive their first bills. This article aims to help readers understand the actual costs of owning a timeshare by outlining the various expenses involved, including the purchase price, mortgage, tax payments, and special assessments. In many cases, buying a timeshare may not be a wise financial decision.

The Costs That Come With a Timeshare

Even experienced buyers may be surprised to discover that a timeshare is not a good investment when they factor in all the expenses. Hence, having knowledge of the costs is vital to avoid being taken advantage of by timeshare companies. In this article, we will delve into the various expenses that come with timeshare ownership.

The Timeshare Purchase and Mortgage

When individuals consider purchasing a timeshare, the primary cost that comes to mind is the initial payment made to the developer for the timeshare interest. The amount can vary depending on the type of timeshare, such as fixed- or floating-week deeded timeshare or a points-based vacation club like Hilton Grand Vacations Max, Marriott, or Disney Vacation Club. Generally, the higher the purchase amount, the higher the price tag. According to the American Resort Development Association (ARDA), the average cost of a timeshare interval exceeds $24,000, with some timeshares exceeding $100,000. For the purpose of illustration, let’s assume a $30,000 purchase price with a $3,000 down payment, which would leave a balance of $27,000 to be paid via mortgage. However, unlike home loans, mortgage interest rates for timeshares can be quite high, with some reaching up to 20%. Assuming a standard interest rate of 15.9% for ten years, your $30,000 timeshare will ultimately cost you $54,072.51 over a decade. This means you will pay nearly as much in interest ($27,072.51) as you will in principal over 120 payments. It’s worth noting that this figure does not include any of the other associated fees.

Annual Timeshare Maintenance Fees

According to research conducted by the American Resort Development Association (ARDA) in 2019, maintenance fees for timeshares can range from $640 to almost $1,300 per year, depending on the size of the unit. For the purpose of this example, let’s assume a maintenance fee of $1,000 per year for a seven-night timeshare usage. It’s important to keep in mind that maintenance fees are subject to inflation, just like other expenses. Assuming an annual inflation rate of 8.5%, the maintenance fee for our hypothetical scenario would be $17,096 over ten years and a staggering $53,489 over 20 years. It’s worth noting that maintenance fees can vary significantly by company, so the actual amount you’ll pay over time may differ. You can use the Maintenance Fee Inflation Calculator to estimate the inflation rate of your particular fees.

Timeshare Property Taxes, Homeowners Association (HOA) Fees, and Special Assessments

When you purchase a timeshare, you also take on legal taxes, obligations, and regular payments that must be made. If you fail to make these payments, it could lead to foreclosure. Property taxes vary depending on the location of the timeshare and its size. Assuming a yearly property tax of $500, you would need to pay $5,000 over 10 years and $10,000 over 20 years. Another cost associated with timeshares is membership in the resort’s homeowner’s association (HOA), which covers the expenses for maintaining the resort’s amenities and common areas. Typically, you would need to pay around $400 per year for regular HOA fees, resulting in a payment of $4,000 over 10 years and $8,000 over 20 years. However, regular HOA fees may not cover expenses related to natural disasters or resort renovations. In such cases, the HOA may impose a special assessment fee, which can be unpredictable. Assuming a $500 special assessment fee every 10 years, you would need to pay a total of $1,000 over 20 years.

Fees for Using, Reserving, and Exchanging Your Timeshare

Owning a timeshare comes with a set of legal obligations, taxes, and various monthly and annual fees, which must be paid according to the law. Failing to pay these fees may result in foreclosure of the timeshare property. Property taxes are determined by the state and size of the timeshare interest, with an assumed annual amount of $500 for this example, totaling $5,000 over 10 years and $10,000 over 20 years. Additionally, a maintenance fee of approximately $400 per year is charged to cover the resort’s upkeep costs, amounting to $4,000 over 10 years and $8,000 over 20 years. Special assessment fees may also be charged, with an assumed fee of $500 every 10 years, totaling $1,000 over 20 years.

However, these expenses only allow you to own the timeshare, not use it. Timeshare companies often have hidden fees that may not be revealed until later. To make a reservation, a fee of approximately $50 per stay is required, amounting to $500 over 10 years and $1,000 over 20 years. If you lend your timeshare to someone, a guest certificate will cost $100 each, resulting in $300 after 10 years and $600 after 20 years.

If you choose to join a timeshare exchange company such as Interval International or RCI, an annual fee of around $65 is charged, totaling $650 over 10 years and an additional $1,300 over 20 years. Furthermore, a reservation fee of around $270 is required to book a stay through an exchange company, resulting in $2,700 over 10 years and $5,400 over 20 years.

Moreover, timeshare resorts have various fees for specific situations such as reselling or renting out the timeshare. These fees vary and can be difficult to plan for. If you plan to use your timeshare to earn money, expect to pay extra for that opportunity.

So, What Is The Total Cost of a Timeshare?

When all of the associated costs of owning a timeshare are taken into account, it becomes clear just how expensive it can be. It’s important to note that some of the estimates provided may be lower than the actual costs. For a timeshare unit costing $30,000, the total cost for 10 years is estimated to be $84,818.51.

Assuming that you get to use the timeshare for seven nights every year, which is not always the case, the cost per night would be $1,211.69. If you don’t use all your nights, the cost per night would be even higher.

Over a 20-year period, the total cost of owning a timeshare would be $126,861.51, which is over four times the original purchase price. Even if you manage to use all your nights for 20 years, which is rare, the cost per night would be $906.15. While this may be slightly cheaper than the 10-year scenario, it is still considerably more expensive than staying at a nice hotel or resort.

Tired of Paying Through the Nose? Centerstone Group Can Help

Examining these expenses may shed light on why many timeshare owners are looking for ways to end their contracts. That is where Centerstone Group can help. We are a leading timeshare exit company committed to providing our clients with legal and ethical ways to exit their timeshare agreements. With years of experience, we are able to find effective solutions for our clients using techniques like contract cancellation, our unique pressure campaigns, or by leveraging the expertise of our legal partners.

If you are a timeshare owner seeking to terminate your contract, we would be honored to assist you. Our company has an A+ rating with the Better Business Bureau (BBB), and we have numerous satisfied customers who can attest to our exceptional services. Contact us today for a free consultation and case review.