What's Not Included
Your timeshare purchase includes many things, including:
• A guaranteed week's worth of accommodations at a resort of your choosing every year
• The option of exchanging your timeshare unit for someone else's in a different location you've always wanted to visit
• The possibility of realizing substantial financial savings over several decades' time compared with outlays during the same number of years for hotel and motel rooms
• Vacation accommodations that often are larger and better-outfitted than standard hotel rooms
• Use of your exchange company's rating system to help you determine which worldwide resorts meet your demands and expectations
• The opportunity to own a vacation retreat without having to do year-round maintenance yourself
But there are some things — important things — that are not included in the base price of your timeshare unit. Many of these things are ongoing costs, as opposed to one-time fees, and it is important that you factor them into the price of your timeshare purchase when deciding whether it will be of good value to you over the long term.
Following is a look at many of the major additional expenses that go along with timeshare ownership. There are also smaller expenses and situational expenses that you many encounter when you decide to exchange, sell, or rent your timeshare unit, but you will learn more about those fees in later chapters.
Annual Maintenance Fees
Every resort charges timeshare unit owners an annual maintenance fee, usually in the neighborhood of $200 to $600. This fee covers everything from upkeep of the grounds to maid service and staff salaries. Sometimes, it also includes property taxes that are paid to the local government, but this is not always the case — and you should ask up front to determine whether you will be receiving a separate tax bill each year.
As prices for goods and wages tend to rise over the years, you should expect your annual maintenance fees to rise over the years, as well. A good rule before purchasing a timeshare unit is to ask the developer what the maintenance fees have been for several of the preceding years, so that you can anticipate whether a big upcharge is about to be levied.
Special Assessments
Special assessments are one-time fees charged to timeshare owners for things like capital improvements. Beachfront and golf-course timeshare resorts tend to have a fair number of special assessments, as their properties require more nonroutine maintenance than other types of properties. Things like beach erosion repair and replacement sod cost money, and those costs get passed on to you, the timeshare owner.
TRAVEL TIP
You are not likely to see a special assessment charge every single year, but you should expect to pay one at least every three to five years. If a developer promises you no special assessment charges, you know you are being had. After all, who would want to vacation at a property that makes no improvements during twenty or thirty years of time?
Mortgage Interest Payments
If you finance your timeshare purchase, you will have to factor mortgage interest payments into the overall cost of your timeshare.
Do not expect to get a timeshare mortgage for the same low rate that you may have gotten on your primary residence mortgage. Most timeshare mortgages are held by the developers of the resorts, not by banks, and thus the developers can — and do — charge far higher interest rates. If you finance a $10,000 timeshare, an interest rate that high can add a good $5,000 to the overall cost of your unit during the course of your loan.
Exchange Company Fees
Exchange fees are the payments you must make to your exchange company every time you decide to trade your timeshare unit for someone else's. These fees are how companies such as Interval International and Resort Condominiums International make their money, as they do not own the actual resorts where you purchase your unit. Again, as these fees are the main way the exchange companies earn their profits, you should expect them to rise along with inflation during the course of your timeshare ownership.
E-ALERT
If you plan to make a lot of exchanges during the length of your ownership, be sure to also factor in your exchange company's annual membership fee, and any additional fees for other services you might use including timeshare unit upgrades and bonus-week purchases.
Conversion Fees
In most cases, if you own a fixed or floating week of timeshare use and want to convert it into points that you can use for something else (say, airline miles or a cruise-ship vacation), you will have to pay a conversion fee. This fee varies from resort to resort and from exchange company to exchange company, but generally, you will not be able to make those kinds of conversions for free.
Should you come up short on points after converting the timeshare you own, you usually will be able to purchase additional points to make up the difference. This can be helpful if your timeshare is worth 10,000 points, but the cruise of your dreams costs 10,500 points.
