Are Timeshares and Vacation Clubs Good Investments?
The Federal Trade Commission warns against buying timeshares as financial investments. Why? The value generally decreases sharply after purchasing. Despite the real estate adage of “Location, location, location,” ownership of a timeshare in Mexico or Aruba declines in value over time because of the sheer number of timeshares available as well as the ever-growing number of hotels around the world with timeshare options.
Additionally, hotels and resorts are more desirable when they’re first built, and their facilities and amenities are brand-new; they become increasingly less desirable. Simply put, supply exceeds demand, making your investment less valuable over time. In this way, owning a timeshare at a hotel is a little bit like owning a car: You may get a lot of use out of it over the course of twenty years, but it won’t be worth much once you try to sell it. Additionally, there’s no cap on yearly maintenance fees, so the amount you pay every year will most likely increase.