Take your time with time shares

Think over the purchase and remember: It's not an investment; it's a vacation

By Andrea K. Walker

September 7, 2008

You're vacationing in the Bahamas with your girlfriends when the charming man in the flowered shirt comes by with offers of a free bottle of rum, breakfast and access to exclusive beachfront property for the day.

All you have to do is tour a time-share resort that just opened on the island.

You're intrigued by the prospect and find yourself in a luxury resort seated next to a salesperson trying to persuade you to buy a unit at the property.

He promises a deal you can get only for that day. You're tempted by the thought of being able to visit the pristine piece of beachfront property every year.

But wait before you sign any papers. Never make a decision in a day. And make sure before you spend thousands on a vacation spot that you're going to use it for years to come.

Time shares - where consumers typically purchase a piece of a vacation property for the right to use it once a year - are growing in popularity. Industry leaders describe the purchase as a good vacation option for many people.

About 4.7 million households owned the vacation properties last year, compared with 4.4 million in 2006.

Many people like to invest in the properties because it helps push them to take a big vacation at least once a year, and it can provide them the opportunity to visit many different places.

But some customers buy a time share only to realize later that it's not the thing for them. And the properties can be difficult to sell once you own one, according to industry experts.

"As soon as you buy it, you're practically stuck with it for life," said Brian Rogers, who with his father runs the Timeshare User Group, an online community of time-share owners that provides information on how to buy and sell the properties. Resale Internet sites are filled with properties that people find they don't use or the value isn't quite what they expected. Some sell for as little as a dollar.

Many properties drop in value as soon as you buy them, much like a car. Some properties at resorts such as Walt Disney World and other popular spots provide better resale values.

Experts point out that while time shares are often considered a real estate transaction, they don't have the same kind of return as a house or condominium.

"I think they're good options if people understand it's about better vacationing and that it's not a real estate investment," said Howard Nusbaum, president and chief executive officer of the American Resort Development Association, an industry trade group.

There are three main types of time shares: fixed and floating weeks, and point systems.

A fixed week is better for people who like to go to the same place at the same time every year. For instance, a family that takes an annual trip to Ocean City would likely enjoy such a setup, according to industry experts.

The floating week is good for people who may want to trade their time with someone who has a time share at a different location. For example, someone who buys a time share at a Disney World resort could trade the stay for a New York City hotel one year.

The point system, where you use points to go to various places, is the most flexible and best for those who like to try different locations.

If you're not one to take a vacation every year, a time share might not be the best option. Likewise, if you're a spontaneous traveler, a time share might not fit your needs because you often have to book several months in advance, said Lisa Ann Schreier, a former time-share saleswoman and author of the book Timeshare for Dummies.

"If your idea of a vacation is sleeping on grandma's couch, a time share is probably not a good product for you," Nusbaum said. "If you spend a couple of thousand dollars a year on a vacation, you'll like it because you're going to get more for your money."

There are also other factors to consider, such as yearly maintenance and penalty fees if you don't use the time share enough. Some properties will charge fees for repairs if the resort is hit by a hurricane or damaged in some other way. Others might charge parking and cleaning fees once you arrive.