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8 Questions To Ask Before Signing Up For A Timeshare Package
Time shares are legitimate businesses. In some ways, they are also considered or marketed as investments.
It’s just a shame that questionable sales strategies are often (almost exclusively) used to market and sell them.
It is from the bad experiences that prospects have from these sales tactics which gives timesharing a often unjustified shaddy image.
Remember the cold call you had when the telemarketer on the other end of the phone told you about a free gold coin you will receive by just attending a 2 hours presentation?
It is then insisted that you will be under no obligation to buy anything and all you really need to do is to sit through the presentation to get that coin.
Once you get there, it is like a war zone of a battle of wits.
Your every objection is then nullified with proven counter measures that leave you speechless with no reply.
In the end, the smooth-talking salesmen make it look like you are stupid to turn down what they are offering.
When you think about it, travel timesharing is a revolutionary concept that is meant to benefit end consumers just like how taxi pooling apps help commuters save on transportation expenses.
I can imagine that timeshare promoters became millionaires overnight when the concept was first introduced those years ago.
They won’t even need to go to a bank for a mortgage. They will buy houses with cash.
Unlike scams that tell you to send money over for the processing fees to liquidate your free sports car won at a random lucky draw, timeshare travel plans actually sell something real.
You don’t need to get a cash loan from a friend to pay the high administrative fees for a lottery you won.
Because that’s not how time share works. Selling is done in seminar rooms with an audience in awe of the slick presentation.
When you buy a time share, you buy accommodation to a holiday home. It could be a week or 2 each year.
If for example, you get a week each year, you are effectively sharing the property with 52 other participants. Each party will use it once a year.
Isn’t that just a great idea?
This was even before real estate crowdfunding became a legitimate phrase found in the dictionary.
You get “ownership” of the property without the burden of repair and maintenance expenses.
The property could be anything, but usually because the element of vacation is involved, they are usually resorts, chalets, beach houses, etc.
The catch is that your holiday schedule has to match the availability of it.
You can also sell your share in future if you can find a buyer.
If this idea is attractive to you and you cannot wait to get your hands on one of these things, hold your horses.
Because like everything else, you need to be better informed before a buying decision.
Here are some questions to ask before making that commitment.
1) How popular is the vacation destination?
Ideally, you want it to be as popular as possible so that the area keeps on developing with more and more tourists attractions. This will make your investment more and more valuable over time.
It will also be easier to sell your stake should you decide to pull the plug in future.
Yes, there is a resale element to it. So you don’t want to buy at a destination that is a ghost town.
2) What is the company behind the resort?
If you haven’t had your hands burnt in the past, maybe you would have a friend who did.
Many stories float around concerning projects that were never completed.
Developers basically ran out of money to continue building and abandoned ship.
Maybe because they were paying themselves million-dollar salaries with the funding raised.
These days, there also seem to be more and more startups with an insatiable appetite for funding.
They keep seeking more financing when they have nothing to show for it.
And by the time their company crashes, these “entrepreneurs” walk away with millions of dollars in their pockets.
I just feel that there is something wrong somewhere when these things happen.
Whatever the case, you want a reputable company behind the project so that there is a lesser likelihood of abandonment.
They have their reputation built over decades at stake.
Also a branded resort will make it easier to trade your timeshare in future.
3) How flexible is the usage schedule?
This is time to get your business brain to work.
Certain resorts are seasonal and tend to have much more visitors during certain periods of the year.
If you are able to snag the peak periods, you will also be able to sell your slot to other travelers for more money.
How’s that for a quick profit?
4) Limited or deeded week?
Pardon the jargon.
These are 2 terms that you should get familiar with.
A limited time share means that you will have access to the place for a limited number of years.
A deeded one means that you can even pass on your membership to your descendants.
Needless to say, the latter is a more valuable one.
5) Floating or fixed?
Your mortgage may come to mind as soon as you see these 2 words.
But we are referring to the week you have on your package.
A fixed week is a fixed date for each year. While a floating week refers to the ability to change your usage dates.
Which is better depends on your personal preferences.
6) Where does the funds for repairs and maintenance come from?
Here is the bulk of the hidden costs. You are probably expecting this.
Like any real estate, repairs and maintenance is a significant expense to take on.
And you can be sure that the developer or management company will want to pass these costs to anyone except themselves.
Ask where the money is going to come from. You could be liable for it.
The jargon here is the “reserve”.
7) How much will it cost to keep your membership in the future?
You can bet that costs will increase over time accompanied by the overused reason of inflation.
Although no one can predict the future, it is fair to ask about the forecast and what you can expect.
Historical data could come in handy here.
8) What facilities come with the property?
Without doubt, you want the greatest value for your buck.
Ideally, you want your own pool with a sea view while resting on a beach chair on an open deck, accompanied by a barbecue pit and butlers to serve you cranberries.
The jacuzzi will rest beside the pool and the kitchen have a proper stove meant for light and heavy cooking.
These facilities can seem to be basic things that each house will have. But you need to ask to be sure.
Finally, if you are looking to put your money into timeshare packages for investment purposes, do remember to carefully consider macro and micro factors.
But if you are only interested in it for travels and vacations, are you sure the saving your could potentially make are too attractive to turn down?