Timeshares for Dummies: What Are They, and Why Would I Want One?

Timeshares are a fairly recent way to make vacation homes affordable for the average household by splitting up the cost of the home between a number of households who then share the use of the time at the vacation home. This introduction will help you to understand exactly how a timeshare works, and why it might be a good idea for you to consider purchasing one.

Timeshare Introduction: The Vacant Vacation Home Problem

Before digging into timeshares, let's first think about vacation homes. These homes are owned by individuals who do not live in them all year, but rather spend anywhere from a few days to a few months in the home as a vacation. The fate of the vacation home during the remainder of the year has a few options. First, it can remain vacant. Second, it can be rented out to other vacationers who pay the owner by the night, week, or month for use of the home (which the owners fully own and are stuck with all damages done to it by the tenants).

Timeshare Introduction: The Third Option

The third option for how to use a vacant vacation home when you are not vacationing in it is where timeshares came into the picture. This option sees the vacation home as not being owned by just one person, but jointly owned by a number of people, and managed by a larger entity. The owners then share the time, depending on the percentage of ownership they have.

Timeshare Introduction: How Time Sharing Works

Most timeshares are divided into 52 weeks, and therefore have 52 owners. Each owner has the right to say in the timeshare for one week every year. Some timeshares are designed to specify the exact week that each owner owns, whereas others that have a large number of units can leave the specific week open, to be booked in advance by the owners.

Timeshare Introduction: Maintenance and Fees

In addition to the cost of purchasing the week in the home, timeshare owners also take responsibility for other annual costs associated with home ownership. Taxes, insurance, maintenance, gas, electricity, and any other fees that the typical homeowner would pay are all found in timeshare ownership as well. The annual cost can be significant, especially with insurance in some locations, so this is something to consider when purchasing a timeshare. See this article for more information on the outside costs associated with timeshare ownership.

Timeshare Introduction: Trading Networks

The last important element of timeshare ownership that deserves a mention here is the possibility of trading within a network of timeshares. When you purchase a timeshare, you get a week in one specific house or resort, but most timeshares give you the opportunity (for a small charge) to trade that week for one of equal or lesser value at another resort. This allows you to vacation in a number of different locations over your years of your timeshare ownership, all without having to pay nightly fees as you typically would at a hotel or resort.