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Behind the Scenes with Kiplinger: Does a Timeshare Make Sense for You?

Timeshare Resales Make Sense To Us

Does a Timeshare Make Sense For You? >>Kevin McCormally: I’m Kevin McCormally of Kiplinger’s and in our most recent issue we take a look at Timeshares. You know those deals that let you buy a week or two at a luxury resort to use every year, for many years into the future. And this eposide of Behind the Scenes with Kiplinger, brought to you by Ally Bank, I’m with Susannnah Snider, who will explain how you can figure out whether or not a Timeshare makes sense for you. >>Kevin: Susannah, is a Timeshare like buying tomorrow’s vacations at today’s prices? >>Susannah Snider: Sort of. You pay $10,000 dollars or maybe more for the right to stay in a resort for a week or two each year. But, that’s not all you pay. There are also annual maintenance fees and those can go up every year. >>Kevin: So, if I buy a Timeshare, and I stuck going to the same place at the same time year after year? >>Susannah: Hey, that’s what some folks want! It’s kind of like buying a vacation home, but with a much small initial outlay and less hassle with owning a place.

But typically you’re not locked in. Most Timeshare arrangements let you travel to other resorts around the country and even around the world. >>Kevin: Downsides? >>Susannah: Don’t think of it as an investment in real esate, think of it as an investment in future vacations. It won’t depreciate in value and some sellers are lucky to get a third of what they paid. >>Kevin: Speaking of selling, let’s say I wanted to get rid of the Timeshare. How do you unload a timeshare if you decide you don’t want it anymore or you can’t afford the annual maintenance fee? >>Susannah: You can try to sell on Craigslist or www.redweek.com, or hire an agent who specializes in Timeshare resells. But be weary of scams and don’t expect to make a profit. >>Kevin: Ok, can you help me figure out how you crunch the numbers to figure out whether financially it makes more sense to buy a Timeshare versus simply renting year after year and paying for your vacations one year at a time.

>Susannah: It’s not easy, but try this. You need to think of it over the long term – say 25 years. So, if you pay $20,000 dollars for a timeshare to use for one week every year, over 25 years, that’s $800 dollars a week. Now, add annual maintenance fees, say $1000 dollars, that’s $1800 dollars per week or $260 dollars per night. Could you rent a comparable place for less? >>Kevin: Now, that’s interesting, but that price is going to go up year after year with inflation. But I assume that the Timeshare will go up more slowly because it only affects the annual maintenance part, whereas with the rental it’s 100 percent of the cost.

>Susannah: That’s right. That’s why it’s important to think about it over the long-term to decide whether that large initial outlay will pay off for you in the end. >>Kevin: Thank you, Susannah. .

Where Timeshare Makes Sense

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