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What is a time-share investment?

time share investment

In our experience, a time-share investment rarely provides you with any real advantage.

If you visit a vacation resort this winter, you may get invited to a complimentary dinner, cocktail party or other event. In return for the free drinks, food or entertainment, all you’ll have to do is sit through a pitch for an “investment” in a time-share. It may be worthwhile to attend, depending on what else you have to do. But in my experience, a time-share investment rarely provides you with any real advantage.

You might look on a time-share investment as the vacationers’ version of the new stock issue. Some of them seem to work out well for some people, at least for a while. But on the whole, it’s a good idea to stay out of new issues, and an even better idea to stay out of time-shares.

Before locking yourself into any time-share investment, check the Internet for resales of comparable time-shares. You’ll often find they sell way below the initial time-share sales price.

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Even if you find what looks like a great deal on a time-share resale, I see no point in committing yourself to any one resort operator, much less one resort. You won’t be there often enough to develop any rapport with your neighbours or the staff. Management can get sloppy at existing resorts, especially after the time-shares are sold out. For that matter, your interests or tastes may change, or you may be unable to travel for health or other reasons. To top things off, new resorts open up all the time.

You can always resell your time-share—many buyers do. But transaction costs are high and resale prices are likely to be below your cost.

Time-share investments are marketed as something of a cross between a real-estate investment and a hedge against inflation. But, generally speaking, only the land portion of any real-estate investment provides a hedge against inflation. The buildings and equipment are going to depreciate, just like your car, though maybe not as quickly. This depreciation poses a greater risk if you over-pay for the asset to begin with.

If there is any profit to be squeezed out of the land portion of a timeshare property—for instance, by building additional units on the existing land, or adding floors to the existing building—it generally will go to the management of the facility, not to holders of individual time-shares. But construction and expansion may inconvenience time-share holders. It may reduce the value of their shares, or cost them money or value in other ways.

It’s a heads-you-break-even, tails-you-lose situation. Buying a time-share is unlikely to cut your long-term vacation costs, much less produce anything resembling a profit. But you face the risk that the property, the location or the operator will run into problems, and your purchase will turn out to be a colossal disappointment. If so, you’re stuck with it.

You can always rent a week or two at a time in the resort where the time-shares are on sale, or someplace comparable. It’s a big world out there, with lots of resorts to choose from.

Time-share investment promoters know that vacationers may be in a holiday mood that leaves them less skeptical than they would ordinarily be with a major financial outlay. They also know they can afford to put a lot of expense into their sales efforts, because they are in a high-profit business. When you sell a resort property in time-share-sized slices, after all, you multiply its value.

One common marketing ploy is to make a limited-time offer to buy the time-share at a discount from the “regular” price, or throw in seemingly valuable bonuses like tours of the area, meals or whatever. The offer may also include a guarantee that you can get out of the deal if you change your mind within a stated period of perhaps a few days. The salesperson urges you to buy now and nail down the deal before the offer ends, then think about it during the guarantee period. However, time-share promoters are not uniformly scrupulous about honouring these guarantees.

They may stall when you ask for the return of your deposit. They may tell you to download a form and mail it in, then claim they never got your request for a refund, or that it arrived after the deadline.

A friend of mine, a financial type who acknowledges he ought to have known better, once succumbed to a time-share sales pitch while on a holiday in Mexico.

He changed his mind—came to his senses, as he puts it—and tried to get his money back. He tried asking nicely. Then he wrote and hand-delivered a stern request. Then he showed up at the time-share sales office. He got lots of excuses but no results.

In the end, to get his down-payment cheque returned, he had to resort to what you might call a weapon of mass time-share sales destruction: he threatened to crash and disrupt the next time-share sales party.

Have you jumped into a real estate time-share investment deal before coming to your senses? Or have you made a profit from the sale of your time-share? Please share your experience in the comments.


  • I have yet to meet anyone who has had a positive time share experience.
    Just try booking a “flight only” to time share destinations, especially in Mexico. You will fine the majority of flights are all inclusive packages.

  • Michael 

    I understand what you are saying, although we have a time share with RCI and it has allowed us to visit New York City and stay right beside Central Park for a fraction of what it would cost to get a hotel Room. We had a one bedroom suite. (approx $500 per night) to rent. Also they do have places all around the world so for us it has been worth it. But the best reason it has been a good investment is that when I realized that Wyndham Worldwide owned RCI I bought shares in Wyndham. (up 300% since I bought)

  • As Pat points out, Time-Shares are not really an ‘investment’. Buying in the secondary market is certainly the way to keep the initial cost down as long as you keep in mind that there will always be a significant annual fee for maintenance and taxes and likely other fees for booking, banking time, swapping weeks etc.
    That being said, I’m pretty happy with the end result of our purchases. We can spend a full winter in a southern resort where we get maid service every week for less than it would cost to rent. Now, we got lucky with some ownership changes and some fortuitous grandfathering that allowed this to happen so I don’t recommend time-shares to friends and if they insist I suggest, as Pat does, that they look into resales of units from well known resort operators and even then, to make sure that a resale gives them the same rights as a ‘retail’ purchase because some do not.
    We have been owners for 15 years and we’re still figuring out some of the wrinkles. We try to get the maximum value out of our payments and it still takes some work, planning and lots of questions (lots!) to get the best advantage.

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