Eight Differences Between a Timeshare and Vacation Home

Timeshare ownership can sometimes be promoted as a type of vacation home, but is it really? There are certainly some similarities between a timeshare and a vacation home, most notably the obvious – that they are both vacation accommodations. However, there are several differences between a timeshare and a vacation home. Let’s explore a few.

Initial Price

This is the most striking difference, especially if a vacation home has a lucrative zip code such as South Beach or Martha’s Vineyard. But most people don’t have the resources to own property in these areas, which makes timeshare ownership such an attractive alternative.

A vacation home can cost hundreds of thousands, if not millions of dollars. By comparison, the average cost of a week of timeshare bought through the resorts is just shy of $23,000 according to the American Resort Development Association. Timeshare cost can go up depending on how much timeshare you buy, but most Americans have trouble even using two weeks a year of vacation time.

Realistically, the buy-in price of a timeshare is going to win out the majority of the time based on how much you would really use it. Especially on the resale market where prices are at least 50-60 percent less than the new sale price at a resort.

As I touched on earlier, a big advantage for owning timeshare is being able to vacation in places that you might not be able to afford otherwise. Timeshare accommodations are in some of the most desirable destinations in the world – the heart of Manhattan, Maui, the coast of southern California and others along with the aforementioned South Beach and Martha’s Vineyard.

With points programs and exchange operators such as RCI or Interval International, you’re able to vacation in highly desirable destinations for a fraction of the cost of vacation home ownership.

Maintenance Costs

Yes, the dreaded maintenance fee issue. Timeshare owners complain all the time about paying it, but compared to the cost of maintaining a vacation home this is a no-brainer. The average cost of yearly maintenance fees is about $1,000 for each week of ownership. Compare that with having to maintain a vacation home and this cost is fairly reasonable.

If a vacation home has a pool that needs to be maintained, that costs between $1,200 and $1,800 a year just to maintain the pool according to HomeAdvisor. Try adding items such as lawn maintenance and home security and you can see how quickly the costs can add up for a vacation home.

Upkeep Responsibilities

This would be a separate conversation than the maintenance cost issue because of unexpected problems that can creep up. In the timeshare world this would be known as a special assessment in situations such as a roof repair in the case of storm damage. Such costs are spread among the owners, whereas repair costs for a vacation home would be solely met by the home owner.

This is a tough one to compare but this tends to favor the timeshare owner because of the spreading out of the costs. However, it really depends on the problem at hand.

Ownership Responsibilities

Here, we’re talking about more of the legal and regulatory items associated with costs. Annual timeshare fees tend to lump in everything from taxes and insurance to on-going maintenance costs, so that $1,000 annual figure mentioned earlier can include these areas as well.

For the vacation home owner, items such as HOA fees, utilities, insurance and taxes can total an average of $600 per month (according to realestatescorecard.com) which is a tall order for a home that you may only use a few weeks of the year. Plus, as the owner of the home you are the contact on record for anything and everything that could go wrong, such as dealing with a possible break-in or a trespassing problem.

Property Management

Just keeping track of everything can be a chore, which is why timeshare resorts hire a property management company to deal with all the issues which arise in relation to the property. Most of the time it is the management company that will send you the annual bill for your fees and all you need to do is stroke a check.

With vacation home ownership, unless you hire a company to look after your place, you are the one to pull together all of the loose ends to keep the place running. Paying the bills, hiring and managing any vendors such as a lawn maintenance company, or getting any repairs done – it’s on the owner. For many vacation home owners, this isn’t a big deal. It’s mainly a personal preference issue, one that timeshare owners don’t have to deal with.

Real Estate vs Time Spent

This comparison is becoming more divergent with the pure points programs that are on the market. Sure, the traditional timeshare week ownership is considered real estate, as are some points programs which are deeded to a home resort. But are they really?

Deeded timeshare weeks are really only real estate in the legal/regulatory sense. Realistically, it does not compare to a whole ownership vacation home. Think about it – you can’t paint over the walls of a timeshare unit, nor can you change the furniture or remodel the kitchen.

With timeshare, you are really buying the time spent in that unit as a shared owner of the resort. On the other hand, a vacation home is traditional real estate where you can pretty much do what you want to with the home, keeping in mind any covenant restrictions that may apply. Build a deck or put in a pool – go for it.

The pure points programs such as WorldMark are really more of a vacation club/travel club program than a timeshare product, even though members stay at timeshare resorts within the network.   

Multi-Site vs Single Site

Traditional timeshare ownership began with an owner buying a deeded week of time at a single resort and sharing ownership of the resort with other owners. In this sense, it is similar to a vacation home in that both feature ownership at a single property.

However, with the advent of exchange companies such as RCI and Interval International the idea of vacationing at a single site resort every year became fairly obsolete. Owners could bank their week into an exchange platform and choose a different resort to stay at from thousands of affiliated resorts in the network.

As the major hospitality brands such as Marriott, Hilton and Wyndham entered the timeshare space, they offered internal exchange options within their respective resort networks.

Compare this kind of destination flexibility with the idea of owning a vacation home and traveling to the same place every year and you can see the attractiveness of the timeshare product.

Certainly there can be sentimental or financial reasons for owning a vacation home. And activities in high demand locations such as multiple skiing trips to Vail or Aspen each year could lend more toward owning a vacation home. But in the broader context of comparison, the options for timeshare would outweigh the desire for vacation home ownership.

Lifestyle vs Investment

This is where vacation home ownership really stands out – while timeshare can be a confusing choice.

For a vacation home, most are in locations with solid if not high demand or owners wouldn’t want to vacation there. This allows the vacation home to appreciate in price and the owner to often sell for a profit. Hence, the investment decision. 

Much of the confusion with timeshare as a possible investment option is self-inflicted, as resort sales staff for years promoted timeshare as a financial investment similar to traditional real estate. Many sales teams told buyers that their timeshare would appreciate in value, which is overwhelmingly not the case.

In reality, a timeshare is a use product where the real value is in the use of the unit for a vacation. Similar to the way a car’s real worth is in its use (not just sitting in a driveway), both depreciate in value with time.

This is why the lifestyle moniker was created to describe timeshare ownership, because it is about making a vacation an important priority in the life of an owner and not about making a profit on the resale.

I’ve heard the analogy that you wouldn’t go back to a hotel after a vacation and expect to get all of your money back after staying in the room, so why would you expect to get all of your money back from the timeshare resort? It’s considered a lifestyle investment rather than a financial investment because of the health, emotional and family benefits of the actual vacation.

That said, it is possible to recoup some of the purchase price of a timeshare by selling it, which is the good news. Just don’t expect to get close to what you originally paid for it, with the exception of a few places such as Disney timeshares in Orlando or some Hawaii timeshares. 

Hopefully, these topics have given you food for thought when it comes to the advantages of timeshare ownership. If you have any questions, please give our licensed agents at Timeshare Broker Associates a call on 877-624-6889 or reach out by clicking here and they’ll get back to you as soon as possible.