Personal
Finance Best Practices
Are Timeshares Worth Your Time?
By Cathy A.
Norris CFP®, CLTC, CRPC®
Published: June / July 2008
We commonly read about wealthy celebrities having
vacation homes in the mountains of Colorado, on a
tropical island or in the French Riviera. Who doesn’t
dream of owning a little slice of vacation luxury? It is
a wonderful goal, but your heart can overrule your head.
More Americans have made the leap to owning a vacation
home. For some, it turns into a place to retire. For
others, it may just be a getaway, possibly in the form
of a “timeshare” property that allows access to an
attractive location for one or two weeks each year. The
good news is that there are a wide variety of options to
consider. That fact should also encourage you to take
your time to make a wise buying decision.
Below are five important issues to consider as you
assess the wisdom of making an investment in a timeshare
or vacation property:
1. Be aware of all costs
The purchase price is only part of the equation, but
there are other fees to consider. What will it cost to
maintain the property when you are away? What are the
property taxes? Will you need to do repairs? How much
will it cost you to travel to that destination in order
to enjoy it?
2. Location, location, location
It is easy to get caught up in the beauty of a place
you are visiting for the first or second time. Be sure
if you consider a home there, you know that it is a
place you will want to return to again and again.
3. Rental market possibilities
Your financial decision can be made easier if you
know there is potential to generate rental income during
parts of the year when you don’t use your property. Is
there a market for renters where you want to buy? You
need to investigate and possibly be willing to set up
rental arrangements.
4. Think about retirement
Does the home have potential as a place you’d want
to retire? Retirement can have a big impact on your
investment decision, and give you more leeway in terms
of your options. The most important factor is to know
this is a location you are comfortable spending most or
all of your time when retirement comes.
5. Resale opportunity
If you have a home, you want to make sure you can
obtain fair value for it when you sell. This is a far
more complicated issue with a timeshare, where the
resale market is more challenging. Find out what the
secondary market is like for timeshare units before
making an investment.
The key point is to avoid making snap decisions on any
vacation property purchase. Carefully weigh your options
and read over all documents carefully before signing
anything that commits you to a purchase.
A financial advisor may be able to help identify a plan
for buying a timeshare or vacation property. He/she may
be able to help you develop a savings and cost strategy
for helping you plan your dreams.
This column is provided
for informational purposes only. The information is
intended to be generic in nature and should not be
applied or relied upon in any particular situation
without the advice of your tax,
legal and/or your
financial advisor. Neither Ameriprise Financial nor its
advisors or representatives provide tax or
legal advice.
The views expressed may not be suitable for every
situation. Consult with qualified tax and legal advisors
concerning your own situation.
Financial planning services and investments offered
through Ameriprise Financial Services, Inc., Member
FINRA & SIPC.
© 2008 Ameriprise Financial, Inc. All rights reserved.
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