Tuesday, April 25, 2006
Partial Ownership & Timeshare Real Estate Financial Realities
Timeshares, fractional residences, and destination clubs offer the chance to spend time in a coastal home without the responsibility of maintenance. But do they make sense financially?
Before making a decision, answering the following questions can help you choose the best second-home or timeshare option.
Do you want to make a real estate investment, or an investment in your lifestyle? If you want a real estate investment, individually purchasing a second home not a timeshare is probably your best bet.
How much time do you spend in your coastal home each year? It depends on what you’re willing to pay, but you generally get one to two weeks with a timeshare, four to 13 weeks with a fractional residence, and four to eight weeks with a club membership. (Some clubs do offer unlimited stays.)
Do you like returning to the same place, or would you rather join a destination club and try different locales each year? If you decide on a fractional or timeshare, make sure you really love the area because—unless you can swap weeks at a different timeshare through an exchange company—it’s where you’ll be vacationing forever. When choosing a destination club, look for one that offers amenities you’ll use. If you’re an avid golfer, research clubs that specialize in locations with the best courses.
How much money do you want to spend? Timeshares typically cost the least, and club memberships, the most. All three most likely require annual dues, property upkeep fees, and other charges.
As with any property, resale prices for fractionals and timeshares depend on market conditions. However, real estate values are not comparable to those of a second home. Historically, timeshare resale values have been low. Many timeshare contracts require owners to offer the unit to the resort company before trying to sell it on the open market. This helps developers protect property values for all units, new and old. Fractional residences, which have fewer owners, can often compete more directly with the second-home market. Destination club memberships cannot be resold, though most are refundable at about 80 percent of the purchase price.
The bottom line:
Average timeshare: $12,000–$14,000 per week
Fractional: $300,000–$500,000 for four to 13 weeks
Destination club: $75,000–$500,000 or more; some offer unlimited stays
Before making a decision, answering the following questions can help you choose the best second-home or timeshare option.
Do you want to make a real estate investment, or an investment in your lifestyle? If you want a real estate investment, individually purchasing a second home not a timeshare is probably your best bet.
How much time do you spend in your coastal home each year? It depends on what you’re willing to pay, but you generally get one to two weeks with a timeshare, four to 13 weeks with a fractional residence, and four to eight weeks with a club membership. (Some clubs do offer unlimited stays.)
Do you like returning to the same place, or would you rather join a destination club and try different locales each year? If you decide on a fractional or timeshare, make sure you really love the area because—unless you can swap weeks at a different timeshare through an exchange company—it’s where you’ll be vacationing forever. When choosing a destination club, look for one that offers amenities you’ll use. If you’re an avid golfer, research clubs that specialize in locations with the best courses.
How much money do you want to spend? Timeshares typically cost the least, and club memberships, the most. All three most likely require annual dues, property upkeep fees, and other charges.
As with any property, resale prices for fractionals and timeshares depend on market conditions. However, real estate values are not comparable to those of a second home. Historically, timeshare resale values have been low. Many timeshare contracts require owners to offer the unit to the resort company before trying to sell it on the open market. This helps developers protect property values for all units, new and old. Fractional residences, which have fewer owners, can often compete more directly with the second-home market. Destination club memberships cannot be resold, though most are refundable at about 80 percent of the purchase price.
The bottom line:
Average timeshare: $12,000–$14,000 per week
Fractional: $300,000–$500,000 for four to 13 weeks
Destination club: $75,000–$500,000 or more; some offer unlimited stays
# posted by John @ 4:42 AM 
