Timeshares and Vacation properties come in nearly as many varieties as there are locations to enjoy them and lifestyles of the people who buy them. Earlier this week, we looked at Types of Timeshares with a quick review of Ownership types and Usage types. Check out that post as a primer.
Now that you know a bit more about Vacation Timeshares, lets talk about the critical factors of Financial Investment (cha-ching) and Time Investment.
It's all about Cash and Time.....
Financial Investment/Affordabiliy: Can you afford a second home? According to the National Association of Realtors, 2011 Investment and Vacation Home Buyers Survey, the median vacation-home price in 2010 was $150,000, down 11.2% from 2009. Lawrence Yun, NAR Chief Economist said,
“Despite extraordinarily tight credit conditions for purchasing a second home, the market share for vacation and investment homes held steady,....a sizeable number of buyers made deals with all-cash offerings.”
In fact, in 2010 a whopping 59% of investment buyers paid all cash for second homes and 36% of vacation home purchasers paid cash. In my opinion, if the median vacation-home price was $150k, a sizable number of those purchases were Vacation Timeshares/Fractional Ownerships.
Getting financing for a second home may be a barrier to entry, especially if borrowing rates for a low-level investment spells higher than average interest rates. This is something to talk over with your lender to understand how smaller loans for second homes may impact your overall investment.
Assuming you've got a cash or financing plan in mind for your Vacation Home Purchase, lets talk about the.....
Time Investment: How much time do you really have to enjoy your vacation home? Do you want that time all in one place or spread out around multiple destinations?
84% of vacation home buyers in 2010 said they were buying the property for family retreats and nearly a third bought properites withing 100 miles of their primary residence.
The average age of a vacation home buyer in 2010 was 49 yrs old.
Contrast that with second home investment buyers who really see longer-term rental income as the primary motivator for their purchase.
We're talking VACATION TIME here, so be certain that you consider
(1) Location, Location, Loation: Where do you want to spend your time? Think that ski house timeshare in Stowe, Vermont looks idealic? How about that ocean front condo timeshare on Martha's Vinyard or the amazing mountainside ski-in, ski-out condo in Jackson Hole, WY?
Statistically speaking, vacation properties purchased in 2010 had a median distance of 375 miles from your primary residence; 31% were less than 100 miles away and 41% were more than 500 miles away. How far are you willing to travel to get to your vacation timeshare and how often are you going to visit.
Caroline's 2 cents: For my family, a timeshare vacation home purchase 850 miles away worked well because we only travel there a maximum of 4 times a year and we can stay for 7-14 days each time. I'd never own a full-time vacation house that was 800 miles away, but a timeshare worked perfectly. On the other hand, we bought a full-time Vacation Home 180 miles away. That distance is driveable every weekend or several weekends a month, so the closer distance was perfect for a year-around investment.
(2) It's the same 'ole scene - Do you need variety? This gets to the question of Fixed Location and Changing Location timeshare properties. Will your family want to spend every vacation at the same location year after year, or will you want more variety in your vacation plan. There are pros and cons to consider.
Maybe you'll love Vermont mountain house in the winter, but what about mud season and the summer months? That ocean-front timeshare in Myrtle Beach is fantastic from May to September, but what October to April?
Oh the world of possibilities. No matter what you may be considering on the road to a possible Vacation Home/Timeshare purchase, never, ever make a quick decision during a marketing presentation.
Got a friend with a timeshare? Ask them how much they use it. Go use it yourself and see what you think. Every bit of time you spend investigating will pay off when you make your final decision. Think that property on that mountain or beach will vanish and never be available again? Ha Ha! No such thing. There are LOTS of vacation home opportunities out there.
Take your time, do the research, decide what's right for you and your family. I want you to LOVE your vacation home as much as we love ours!
Photo Credits: Stowe Meadows, Flickr - Dollar Sign-Adria Richards, Flickr Time-AlanCleaver_2000