According to Consumer Reports, over nine million households in the United States have invested in timeshare properties. In most cases, a timeshare of a property means that you have part-ownership of a property, and can use it within a defined time frame.
However, the timeshare industry has fallen victim to many types of scams and investment pitfalls. You may be wondering, why are timeshares a scam? Here are some reasons why purchasing a timeshare may not be in your best interest.
Timeshares Don’t Make You Money
Some people make a great deal of passive income by investing in the vacation property market. In popular areas like California and Hawaii, you can rent out a property year-round, pay off the mortgage, and start generating income every month.
However, timeshares do not provide you with any kind of profit. You pay an initial fee, usually thousands of dollars, and then maintenance fees every year to maintain your stake in the property, but you do not make passive income off of your investment.
There Are Cheaper Alternatives
If your goal in owning a timeshare is a place to stay on vacation, then you can find other options that cost less. When you average out the number of days you get per year with a timeshare, they are often more expensive than an average hotel room.
Add in the maintenance fees that you pay every year and the lack of investment opportunity, and you might pay far more than you would for a hotel.
It’s Difficult to End Your Timeshare Mortgage
When you decide that you want to get out of your timeshare contract, you should definitely consult an attorney if the contract is less than straightforward. Timeshares are notoriously difficult to get rid of, so you should try to do it as quickly as possible.
You can also hire a business to help you get out of your timeshare contract, like this timeshare mortgage cancellation company. Sometimes they can help you to negotiate with the timeshare company or resort that you purchased it from, in order to make the process smoother.
They Have Limited Flexibility
Another disadvantage of timeshares is that they are much less flexible. Often when you purchase a stake in a timeshare, you can only have access for a few days a year, and you have to schedule the time in advance.
A drawback of timeshares is that they are limited to one place, so you pay a fee every year and have less flexibility to where you travel. Instead, you can pay for a hotel and travel anywhere you want to, with no restrictions on lodging.
Why Are Timeshares a Scam?
You might still be asking yourself, why are timeshares a scam? With these tips, you can make the right choice when investing in a property like a timeshare.
Want to learn more about managing your money and investment properties? Check out the rest of our website for more details.