Buying a Vacation Home or Investing in a Timeshare?

Buying a Vacation Home or Investing in a Timeshare?

Having a place to escape to when they take time off is a dream for many people. There are plenty of options out there for finding a consistent vacation spot. Two of the most popular are buying a vacation home or buying into a timeshare group. The one that makes the most sense for you will depend on your preferences and circumstances.

Why Buy a Vacation Home?

If you have one particular place that you love to vacation, you could buy your own property there to visit as often as you like. You’d never have to worry about availability. 

And although buying a vacation home is a larger overall investment than a timeshare, home prices generally appreciate over time. That means you could purchase a vacation home, enjoy spending your free time there for a few decades, and then sell it for a profit, cashing in on all that equity gained over the years. 

Another benefit of buying a vacation home is the potential to rent it out when you are not using it. If your property is in a popular or touristy area, you’ll likely be able to keep it booked as much as you like, hopefully earning you enough to cover the mortgage every month and perhaps even more. The return on your investment could be very high.

Why Not Buy a Vacation Home?

Buying a second home is a significant financial investment. In addition to the closing costs and large down payment at the outset, you will also have to continue paying for monthly mortgage payments, taxes, homeowners insurance, and all the regular maintenance and repairs that come with homeownership. If you decide to rent out your vacation home, you may also decide to pay for a rental company to handle the logistics.

Why Buy a Timeshare?

A timeshare allows you to buy into a piece of an entire group of vacation accommodations. You pay so much a month or a year, and then you have access to properties owned by your timeshare for a certain number of days annually. The benefits include being able to enjoy resort-style rooms and amenities and being able to frequent your favorite spot or try new destinations for variety.

Why Not Buy a Timeshare?

With a timeshare you are limited in your options and timing based on your signing contract. You cannot simply use your timeshare property whenever you like. 

You will also have to pay for maintenance fees for the upkeep of all the properties. This fee is due every year even if you don’t get a chance to use the facilities. 

If you ever decide you no longer want your timeshare, it can be difficult to sell your stake because there are plenty of others trying to sell their shares at any given time and plenty of salespeople clinching deals with the new customers, taking away potential buyers.

And when you sell, you typically do not turn a profit. Unlike buying a vacation property, you do not earn equity in a timeshare. You do not walk away with a financial gain like you do when you buy your own second home. 

While both timeshares and vacation homes have their pros and cons, if you are looking for a good investment vehicle that also allows you to spend time in your favorite place, buying a vacation home may be the better fit for you. 

If buying a vacation home is something that you would like to explore, give us a call today and we can help you understand what it takes to buy the vacation property that you want.

These materials are not from HUD or FHA and were not approved by HUD or a government agency.