Property affordability has become a real challenge for many Australians. It has opened up many other strategic ways to buy real estate. One type of property investment is a timeshare. However are they really worth buying?
What is a timeshare?
A timeshare is a property owned by a divided share. Timeshares are common to properties such as hotels, resort, casinos, snow lodges to name a few. The ownership of a timeshare can provide certain rights to use the property including limited accommodation.
It is a popular type of ownership among families and semi-retired couples looking to take advantage of an annual holiday. However the allotted accommodation is often in off-peak holiday seasons. The question often raised, is it a scam or a great way to holiday?
How much does it cost?
Timeshares differ greatly depending on the property, the internal amenities, concierge services, maintenance costs, how many owners are involved etc. The list can be quite extensive. Payments may also be required monthly, quarterly or annually.
Before considering a timeshare, you need to find out the costs involved, if they vary and how often you need to pay.
The Australian Timeshare Holiday Owners Council (ATHOC) shows consumers pay an average of:
- An annual membership of $23,000
- A further $800 in ongoing administration fees
- 13.5% p.a for their loan interest rate
Are timeshares a scam or a great way to holiday?
The answer will differ depending on who you ask. As buyer’s advocates, we help investors purchase property. If we were to compare a timeshare with a direct property of any sort, we feel a timeshare isn’t a good investment. The costs are often unpredictable and many owners don’t enjoy the accommodation. If the property is located overseas or interstate, it is difficult for families or semi-retirees to afford the flight.
Our clients who have or are invested in timeshares often buy them while on holiday. They get emotionally attached to the place while enjoying some well deserved rest. Unfortunately their impulse buying has them overlook the timeshare risks and the feasibility or trade off, to see if it is really worth it.
The Australian Securities and Investments Commission (ASIC) has previously released statements highlighting the fact buyers are unaware of what they are getting involved in. These schemes are quite complex and can force you into a long term commitment.
Is a timeshare a property investment?
Timeshares are not an investment. They are a personal expense with the anticipation of free accommodation. When looking at thee average ongoing costs, they don’t seem to look like a free holiday. If you own a timeshare or are thinking about buying one we recommend obtaining financial advice. What are the most common investment property goals? is an interesting article if you are considering buying a property.
If you want more information, please feel free to contact us.
While we have taken care to ensure the information above is true and correct at the time of publication, changes in circumstances and legislation after the displayed date may impact the accuracy of this article. If you want to learn more please contact us. We welcome the opportunity to assist you.
July 2020
